Standing timber is defined to include softwood and hardwood pulpwood, chip and saw logs, saw timber, poles, posts, and fuel wood. Lump sum sales are where timber is to be harvested within three years after the date of sale, and the timber is sold for a lump sum price. This type of sale is assessed for taxation as of the date of sale at 100 percent of its fair market value. The fair market value of the timber is the lump sum price paid by the purchaser. Taxes are calculated by multiplying 100 percent of the fair market value times the millage rate levied by the tax authority for the previous calendar year.
Seller gives the purchaser a negotiable instrument to pay tax.
Once the seller receives payment for the timber the seller will immediately give the purchaser a negotiable instrument payable to the tax collector or tax commissioner to pay the ad valorem taxes on the sale. Purchaser remits negotiable instrument and report of sale to tax collector or tax commissioner. The purchaser has five days after receipt of the instrument to remit the negotiable instrument to the tax collector or tax commissioner. The purchaser is also required to remit a report of the sale. This report shows the lump sum sales price, the date of sale, the addresses of the seller and purchaser, and the location of the standing timber.