Bill Text: IA HF2490 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act providing for an agricultural assets transfer tax credit program, and including effective date and retroactive and other applicability provisions. (Formerly HF 495 and HSB 140.)
Spectrum: Committee Bill
Status: (Introduced - Dead) 2018-05-03 - Amendment H-8482 filed. H.J. 951. [HF2490 Detail]
Download: Iowa-2017-HF2490-Introduced.html
House File 2490 - Introduced HOUSE FILE BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 495) (SUCCESSOR TO HSB 140) A BILL FOR 1 An Act providing for an agricultural assets transfer tax credit 2 program, and including effective date and retroactive and 3 other applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 2617HZ (4) 87 da/rj PAG LIN 1 1 DIVISION I 1 2 AGRICULTURAL ASSETS TRANSFER TAX CREDIT PROGRAM 1 3 Section 1. Section 2.48, subsection 3, paragraph e, 1 4 subparagraph (1), Code 2018, is amended to read as follows: 1 5 (1) The agricultural assets transfer tax credit program as 1 6 provided insection 16.80chapter 16, subchapter VIII, part 5, 1 7 subpart B. 1 8 Sec. 2. Section 16.1, Code 2018, is amended by adding the 1 9 following new subsection: 1 10 NEW SUBSECTION. 38. "Veteran" means the same as defined in 1 11 section 35.1. 1 12 Sec. 3. NEW SECTION. 16.77 Administration. 1 13 1. To every extent practicable, the authority shall 1 14 administer an agricultural assets transfer tax credit program 1 15 in a manner that encourages participation by eligible taxpayers 1 16 and qualified beginning farmers. The authority shall determine 1 17 a beginning farmer's low or moderate net worth by using 1 18 a single method applicable to all its programs under this 1 19 subchapter as provided under section 16.59. 1 20 2. The authority shall establish a due date to receive 1 21 applications to participate in the agricultural assets transfer 1 22 tax credit program. 1 23 3. The department of revenue shall cooperate with the 1 24 authority in administering the agricultural assets transfer tax 1 25 credit program. 1 26 Sec. 4. NEW SECTION. 16.78 Criteria for participation. 1 27 1. A taxpayer is eligible to participate in the agricultural 1 28 assets transfer tax credit program as required by rules adopted 1 29 by the authority. At a minimum, the taxpayer must be a person 1 30 who may acquire or otherwise obtain or lease agricultural land 1 31 in this state pursuant to chapter 9H or 9I. However, the 1 32 taxpayer must not be a person who may acquire or otherwise 1 33 obtain or lease agricultural land exclusively because of an 1 34 exception provided in one of those chapters or in a provision 1 35 of another chapter of this Code including but not limited to 2 1 chapter 10, 10D, or 501, or section 15E.207. 2 2 2. A beginning farmer qualifies to participate in the 2 3 agricultural assets transfer tax credit program by meeting all 2 4 of the following criteria: 2 5 a. Is a resident of the state. If the beginning farmer is a 2 6 partnership, all partners must be residents of the state. If a 2 7 beginning farmer is a family farm corporation, all shareholders 2 8 must be residents of the state. If the beginning farmer is 2 9 a family farm limited liability company, all members must be 2 10 residents of the state. 2 11 b. Has sufficient education, training, or experience in 2 12 farming. If the beginning farmer is a partnership, each 2 13 partner who is not a minor must have sufficient education, 2 14 training, or experience in farming. If the beginning farmer 2 15 is a family farm corporation, each shareholder who is not a 2 16 minor must have sufficient education, training, or experience 2 17 in farming. If the beginning farmer is a family farm limited 2 18 liability company, each member who is not a minor must have 2 19 sufficient education, training, or experience in farming. 2 20 c. Has access to adequate working capital and production 2 21 items. 2 22 d. Will materially and substantially participate in 2 23 farming. If the beginning farmer is a partnership, family 2 24 farm corporation, or family farm limited liability company, 2 25 each partner, shareholder, or member who is not a minor must 2 26 materially and substantially participate in farming. 2 27 e. Is not responsible for managing or maintaining 2 28 agricultural land and other agricultural assets that are 2 29 greater than necessary to adequately support a beginning farmer 2 30 as determined by the authority according to rules which shall 2 31 be adopted by the authority. 2 32 Sec. 5. NEW SECTION. 16.79 Agricultural assets transfer 2 33 agreement. 2 34 1. An agricultural assets transfer tax credit is 2 35 allowed only for agricultural assets that are subject to an 3 1 agricultural assets transfer agreement executed by an eligible 3 2 taxpayer and a qualifying beginning farmer participating in the 3 3 agricultural assets transfer tax credit program. 3 4 2. The agricultural assets transfer agreement shall 3 5 include the lease of agricultural land located in this state, 3 6 including any improvements, and may provide for the rental of 3 7 agricultural equipment as defined in section 322F.1. 3 8 3. a. The agricultural assets transfer agreement shall 3 9 be made on a cash basis or on a commodity share basis which 3 10 includes a share of the crops or livestock produced on the 3 11 agricultural land. The agreement may be made on both a cash 3 12 basis and commodity share basis to the extent allowed by the 3 13 authority. 3 14 b. The agreement shall be in writing. 3 15 c. The agreement shall be for at least two years, but not 3 16 more than five years. The agreement may be renewed by the 3 17 taxpayer and beginning farmer for a term of at least two years, 3 18 but not more than five years. 3 19 d. The agreement shall not include a lease or the rental of 3 20 equipment intended as a security. 3 21 e. The agreement cannot be assigned and the agricultural 3 22 land subject to the agreement shall not be subleased. 3 23 Sec. 6. Section 16.80, Code 2018, is amended by striking the 3 24 section and inserting in lieu thereof the following: 3 25 16.80 Agricultural assets transfer tax credit ==== agreement. 3 26 1. An agricultural assets transfer tax credit is allowed 3 27 under the agricultural assets transfer tax credit program. The 3 28 tax credit is allowed against the taxes imposed in chapter 422, 3 29 division II, as provided in section 422.11M, and in chapter 3 30 422, division III, as provided in section 422.33, to facilitate 3 31 the transfer of agricultural assets from a participating 3 32 taxpayer to a participating beginning farmer as described in 3 33 section 16.78. 3 34 2. An individual may claim an agricultural assets transfer 3 35 tax credit under this section of a partnership, limited 4 1 liability company, S corporation, estate, or trust electing 4 2 to have income taxed directly to the individual. The amount 4 3 claimed by the individual shall be based upon the pro rata 4 4 share of the individual's earnings from the partnership, 4 5 limited liability company, S corporation, estate, or trust. 4 6 3. The agricultural assets transfer tax credit shall be 4 7 based on an agricultural assets transfer agreement as required 4 8 in section 16.79. 4 9 a. For an agreement made on a cash basis, the tax credit 4 10 shall be computed as follows: 4 11 (1) If the beginning farmer is not a veteran, the taxpayer 4 12 may claim a tax credit equal to five percent of the gross 4 13 amount paid to the taxpayer under the agreement for each tax 4 14 year that the tax credit is allowed. 4 15 (2) If the beginning farmer is a veteran, the taxpayer may 4 16 claim a tax credit equal to six percent of the gross amount 4 17 paid to the taxpayer under the agreement for the first year 4 18 that the tax credit is allowed and five percent of the gross 4 19 amount paid to the taxpayer for each subsequent tax year that 4 20 the taxpayer is allowed the tax credit. However, the taxpayer 4 21 may only claim five percent of the gross amount paid to the 4 22 taxpayer under a renewed agreement or a new agreement executed 4 23 by the same parties. 4 24 b. For an agreement made on a commodity share basis, the tax 4 25 credit shall be computed as follows: 4 26 (1) (a) If the beginning farmer is not a veteran, the 4 27 taxpayer may claim a tax credit equal to fifteen percent of the 4 28 amount paid to the taxpayer from crops or livestock sold under 4 29 the agreement. 4 30 (b) If the beginning farmer is a veteran, the taxpayer 4 31 may claim a tax credit equal to sixteen percent of the amount 4 32 paid to the taxpayer from crops or livestock sold under the 4 33 agreement for the first tax year that the taxpayer is allowed 4 34 the tax credit and fifteen percent of the amount paid to the 4 35 taxpayer for each subsequent tax year that the taxpayer is 5 1 allowed the tax credit. However, the taxpayer may only claim 5 2 fifteen percent of the amount paid to the taxpayer from crops 5 3 or livestock sold for any tax year under a renewed agreement or 5 4 a new agreement executed by the same parties. 5 5 (2) Notwithstanding subparagraph (1), the authority may 5 6 elect an alternative method to compute a tax credit for an 5 7 agreement based on a crop share basis. The alternative method 5 8 shall utilize a formula which uses data compiled by the United 5 9 States department of agriculture. The formula shall calculate 5 10 the amount of the tax credit by multiplying the average per 5 11 bushel yield for the same type of grain as produced under the 5 12 lease in the same county where the leased agricultural land is 5 13 located by a per bushel state price established for such type 5 14 of grain harvested the previous fall. 5 15 4. a. The authority must review and approve an application 5 16 for an agricultural assets transfer tax credit as provided by 5 17 rules adopted by the authority. The application must include 5 18 a copy of the agricultural assets transfer agreement. The 5 19 authority may require that the parties to an agreement provide 5 20 additional information as determined relevant by the authority. 5 21 The authority shall review an application which includes the 5 22 renewal of an agreement to determine that the parties to the 5 23 renewed agreement meet the same qualifications as required for 5 24 an original application. 5 25 b. After approving an application, the authority shall issue 5 26 an agricultural assets transfer tax credit certificate to a 5 27 taxpayer as provided in section 16.81, regardless of whether 5 28 the taxpayer has previously been allowed a tax credit under 5 29 this section or section 175.37 as it existed prior to January 5 30 1, 2015. 5 31 c. The authority shall not approve an application or issue 5 32 an agricultural assets transfer tax credit certificate to 5 33 a taxpayer for an amount in excess of twenty=five thousand 5 34 dollars. In addition, the authority shall not approve an 5 35 application or issue an agricultural assets transfer tax credit 6 1 certificate to a taxpayer if any of the following applies: 6 2 (1) The taxpayer is at fault for terminating a prior 6 3 agricultural assets transfer agreement as determined by the 6 4 authority. 6 5 (2) The taxpayer is any of the following: 6 6 (a) A party to a pending administrative or judicial action, 6 7 including a contested case proceeding under chapter 17A, 6 8 relating to an alleged violation involving an animal feeding 6 9 operation as regulated by the department of natural resources, 6 10 regardless of whether the pending action is brought by the 6 11 department or the attorney general. 6 12 (b) Classified as a habitual violator for a violation of 6 13 state law involving an animal feeding operation as regulated by 6 14 the department of natural resources under chapter 459. 6 15 (3) The agricultural assets are being leased or rented at 6 16 a rate that is substantially higher or lower than the market 6 17 rate for similar agricultural assets leased or rented within 6 18 the same community, as determined by the authority. 6 19 5. An agricultural assets transfer tax credit in excess 6 20 of the taxpayer's liability for the tax year may be credited 6 21 to the tax liability for the following ten tax years or until 6 22 depleted, whichever is earlier. A tax credit shall not be 6 23 carried back to a tax year prior to the tax year in which the 6 24 taxpayer redeems the tax credit. A tax credit shall not be 6 25 transferable to any other person other than the taxpayer's 6 26 estate or trust upon the taxpayer's death. 6 27 6. A taxpayer or the beginning farmer may terminate an 6 28 agricultural assets transfer agreement as provided in the 6 29 agreement or by law. The taxpayer must immediately notify 6 30 the authority of the termination. Any prior properly claimed 6 31 agricultural assets transfer tax credit shall be allowed. 6 32 a. If the authority determines that the taxpayer is not 6 33 at fault for the termination, the authority shall not issue 6 34 an agricultural assets transfer tax credit certificate to 6 35 the taxpayer for a subsequent tax year based on the approved 7 1 application. The taxpayer may apply for and be issued another 7 2 agricultural assets transfer tax credit certificate under a 7 3 new agreement for the same agricultural assets as provided in 7 4 this section for any remaining tax years for which a tax credit 7 5 certificate was not issued. 7 6 b. If the authority determines that the taxpayer is at 7 7 fault for the termination, the agricultural assets transfer 7 8 tax credit that had been allowed for that tax year shall be 7 9 disallowed and the amount shall be considered a tax payment 7 10 due. If a taxpayer does not immediately notify the authority 7 11 of the termination, the taxpayer shall be conclusively deemed 7 12 at fault for the termination. 7 13 Sec. 7. NEW SECTION. 16.81 Tax credit certificates ==== 7 14 amount and availability. 7 15 1. A taxpayer shall not claim an agricultural assets 7 16 transfer tax credit unless an agricultural assets transfer tax 7 17 credit certificate issued by the authority is included with the 7 18 taxpayer's tax return for the tax year for which the tax credit 7 19 is claimed. 7 20 2. The amount of the agricultural assets transfer tax credit 7 21 that may be issued under the agricultural assets transfer tax 7 22 credit program shall not in the aggregate exceed nine million 7 23 dollars in any year. 7 24 3. The authority shall issue agricultural assets transfer 7 25 tax credit certificates on a first=come, first=served basis. 7 26 Sec. 8. Section 422.11M, Code 2018, is amended to read as 7 27 follows: 7 28 422.11M Agricultural assets transfer tax credit. 7 29 The taxes imposed under this division, less the credits 7 30 allowed under section 422.12, shall be reduced by an 7 31 agricultural assets transfer tax creditas allowed under 7 32 section 16.80as provided in chapter 16, subchapter VIII, part 7 33 5, subpart B. 7 34 Sec. 9. Section 422.33, subsection 21, Code 2018, is amended 7 35 to read as follows: 8 1 21. The taxes imposed under this division shall be reduced 8 2 by an agricultural assets transfer tax credit as allowed under 8 3section 16.80chapter 16, subchapter VIII, part 5, subpart B. 8 4 Sec. 10. EFFECTIVE DATE. This division of this Act, being 8 5 deemed of immediate importance, takes effect upon enactment. 8 6 Sec. 11. RETROACTIVE APPLICABILITY. This division of this 8 7 Act applies retroactively to January 1, 2018, for tax years 8 8 beginning on or after that date. 8 9 DIVISION II 8 10 FUTURE REPEAL OF AGRICULTURAL ASSETS TRANSFER TAX CREDIT 8 11 PROGRAM AND REPLACEMENT WITH CURRENT AGRICULTURAL ASSETS 8 12 TRANSFER TAX CREDIT 8 13 Sec. 12. Section 2.48, subsection 3, paragraph e, 8 14 subparagraph (1), as amended by this Act, is amended by 8 15 striking the subparagraph and inserting in lieu thereof the 8 16 following: 8 17 (1) The agricultural assets transfer tax credit as provided 8 18 in section 16.80. 8 19 Sec. 13. Section 16.1, subsection 38, as amended by this 8 20 Act, is amended by striking the subsection. 8 21 Sec. 14. Section 16.80, as amended by this Act, is amended 8 22 by striking the section and inserting in lieu thereof the 8 23 following: 8 24 16.80 Agricultural assets transfer tax credit ==== agreement. 8 25 1. An agricultural assets transfer tax credit is allowed 8 26 under this section. The tax credit is allowed against the 8 27 taxes imposed in chapter 422, division II, as provided in 8 28 section 422.11M, and in chapter 422, division III, as provided 8 29 in section 422.33, to facilitate the transfer of agricultural 8 30 assets from a taxpayer to a beginning farmer. 8 31 2. In order to qualify for the tax credit, the taxpayer 8 32 must meet qualifications established by rules adopted by the 8 33 authority. At a minimum, the taxpayer must comply with all of 8 34 the following: 8 35 a. Be a person who may acquire or otherwise obtain or lease 9 1 agricultural land in this state pursuant to chapter 9H or 9I. 9 2 However, the taxpayer must not be a person who may acquire 9 3 or otherwise obtain or lease agricultural land exclusively 9 4 because of an exception provided in one of those chapters or in 9 5 a provision of another chapter of this Code including but not 9 6 limited to chapter 10, 10D, or 501, or section 15E.207. 9 7 b. Execute an agricultural assets transfer agreement with a 9 8 beginning farmer as provided in this section. 9 9 3. An individual may claim a tax credit under this section 9 10 of a partnership, limited liability company, S corporation, 9 11 estate, or trust electing to have income taxed directly to 9 12 the individual. The amount claimed by the individual shall 9 13 be based upon the pro rata share of the individual's earnings 9 14 from the partnership, limited liability company, S corporation, 9 15 estate, or trust. 9 16 4. The tax credit is allowed only for agricultural assets 9 17 that are subject to an agricultural assets transfer agreement. 9 18 The agreement shall provide for the lease of agricultural land 9 19 including any improvements and may provide for the rental of 9 20 agricultural equipment as defined in section 322F.1. 9 21 a. The agreement may be made on a cash basis or on a 9 22 commodity share basis which includes a share of the crops or 9 23 livestock produced on the agricultural land. The agreement 9 24 must be in writing. 9 25 b. The agreement shall be for at least two years, but 9 26 not more than five years. The agreement or that part of 9 27 the agreement providing for the lease may be renewed by the 9 28 beginning farmer for a term of at least two years, but not more 9 29 than five years. An agreement does not include a lease or the 9 30 rental of equipment intended as a security. 9 31 5. The tax credit shall be calculated based on the gross 9 32 amount paid to the taxpayer under the agricultural assets 9 33 transfer agreement. 9 34 a. Except as provided in paragraph "b", the tax credit shall 9 35 equal five percent of the amount paid to the taxpayer under the 10 1 agreement. 10 2 b. The tax credit shall equal fifteen percent of the 10 3 amount paid to the taxpayer from crops or animals sold under 10 4 an agreement in which the payment is exclusively made from the 10 5 sale of crops or animals. 10 6 6. In order to qualify as a beginning farmer, a person 10 7 must be eligible to receive financial assistance under section 10 8 16.75. 10 9 7. A tax credit in excess of the taxpayer's liability 10 10 for the tax year may be credited to the tax liability for 10 11 the following ten tax years or until depleted, whichever is 10 12 earlier. A tax credit shall not be carried back to a tax year 10 13 prior to the tax year in which the taxpayer redeems the tax 10 14 credit. A tax credit shall not be transferable to any other 10 15 person other than the taxpayer's estate or trust upon the 10 16 taxpayer's death. 10 17 8. A taxpayer shall not claim a tax credit under this 10 18 section unless a tax credit certificate issued by the authority 10 19 is included with the taxpayer's tax return for the tax year for 10 20 which the tax credit is claimed. The authority must review 10 21 and approve an application for a tax credit as provided by 10 22 rules adopted by the authority. The application must include 10 23 a copy of the agricultural assets transfer agreement. The 10 24 authority may approve an application and issue a tax credit 10 25 certificate to a taxpayer who has previously been allowed a 10 26 tax credit under this section. The authority may require 10 27 that the parties to an agricultural assets transfer agreement 10 28 provide additional information as determined relevant by the 10 29 authority. The authority shall review an application for a tax 10 30 credit which includes the renewal of an agricultural assets 10 31 transfer agreement to determine that the parties to the renewed 10 32 agreement meet the same qualifications as required for an 10 33 original application. However, the authority shall not approve 10 34 an application or issue a certificate to a taxpayer if any of 10 35 the following applies: 11 1 a. The taxpayer is at fault for terminating a prior 11 2 agricultural assets transfer agreement as determined by the 11 3 authority. 11 4 b. The taxpayer is any of the following: 11 5 (1) A party to a pending administrative or judicial action, 11 6 including a contested case proceeding under chapter 17A, 11 7 relating to an alleged violation involving an animal feeding 11 8 operation as regulated by the department of natural resources, 11 9 regardless of whether the pending action is brought by the 11 10 department or the attorney general. 11 11 (2) Classified as a habitual violator for a violation of 11 12 state law involving an animal feeding operation as regulated by 11 13 the department of natural resources. 11 14 c. The beginning farmer is responsible for managing or 11 15 maintaining agricultural land and other agricultural assets 11 16 that are greater than necessary to adequately support a 11 17 beginning farmer as determined by the authority according to 11 18 rules which shall be adopted by the authority. 11 19 d. The agricultural assets are being leased or rented at 11 20 a rate which is substantially higher or lower than the market 11 21 rate for similar agricultural assets leased or rented within 11 22 the same community, as determined by the authority. 11 23 9. A taxpayer or the beginning farmer may terminate an 11 24 agricultural assets transfer agreement as provided in the 11 25 agreement or by law. The taxpayer must immediately notify the 11 26 authority of the termination. 11 27 a. If the authority determines that the taxpayer is not 11 28 at fault for the termination, the authority shall not issue a 11 29 tax credit certificate to the taxpayer for a subsequent tax 11 30 year based on the approved application. Any prior tax credit 11 31 is allowed as provided in this section. The taxpayer may 11 32 apply for and be issued another tax credit certificate for the 11 33 same agricultural assets as provided in this section for any 11 34 remaining tax years for which a certificate was not issued. 11 35 b. If the authority determines that the taxpayer is at fault 12 1 for the termination, any prior tax credit allowed under this 12 2 section is disallowed. The tax credit shall be recaptured 12 3 and the amount of the tax credit shall be immediately due and 12 4 payable to the department of revenue. If a taxpayer does 12 5 not immediately notify the authority of the termination, 12 6 the taxpayer shall be conclusively deemed at fault for the 12 7 termination. 12 8 10. The amount of tax credit certificates that may be issued 12 9 pursuant to this section shall not exceed six million dollars 12 10 in any fiscal year. The authority shall issue the tax credit 12 11 certificates on a first=come, first=served basis. 12 12 Sec. 15. Section 422.11M, as amended by this Act, is amended 12 13 by striking the section and inserting in lieu thereof the 12 14 following: 12 15 422.11M Agricultural assets transfer tax credit. 12 16 The taxes imposed under this division, less the credits 12 17 allowed under section 422.12, shall be reduced by an 12 18 agricultural assets transfer tax credit as allowed under 12 19 section 16.80. 12 20 Sec. 16. Section 422.33, subsection 21, as amended by this 12 21 Act, is amended by striking the subsection and inserting in 12 22 lieu thereof the following: 12 23 21. The taxes imposed under this division shall be reduced 12 24 by an agricultural assets transfer tax credit as allowed under 12 25 section 16.80. 12 26 Sec. 17. REPEAL. Sections 16.77, 16.78, 16.79, and 16.81, 12 27 as enacted by this Act, are repealed. 12 28 Sec. 18. REPEAL. Any intervening provision effective prior 12 29 to January 1, 2023, that amends a section as enacted in another 12 30 division of this Act, and repealed in this division of this Act 12 31 is also repealed, unless that Act or another Act specifically 12 32 provides otherwise. 12 33 Sec. 19. EFFECTIVE DATE. 12 34 1. Except as provided in subsection 2, this division of this 12 35 Act takes effect January 1, 2023. 13 1 2. The section of this division of this Act that relates to 13 2 an intervening provision takes effect upon enactment. 13 3 Sec. 20. APPLICABILITY. This division of this Act applies 13 4 to tax years beginning on or after January 1, 2023. 13 5 EXPLANATION 13 6 The inclusion of this explanation does not constitute agreement with 13 7 the explanation's substance by the members of the general assembly. 13 8 GENERAL ==== THREE VERSIONS. This bill strikes the 13 9 agricultural assets transfer tax credit (tax credit) as it 13 10 has existed since January 1, 2018 (herein referred to as the 13 11 current version), and replaces it with the tax credit as it 13 12 had existed on December 31, 2017, with certain changes and 13 13 designated as the "Agricultural Assets Transfer Tax Credit 13 14 Program" (herein referred to as the new revised version). The 13 15 bill provides that the new revised version will be replaced 13 16 again with the current version on January 1, 2023 (herein 13 17 referred to as the restored current version). 13 18 PROCEDURAL HISTORY. The three versions are based on two 13 19 forms of earlier legislation. The current version and restored 13 20 current versions are based on SF 2268 enacted in 2006 which was 13 21 administered by the agricultural development board under Code 13 22 chapter 175 (2006 Iowa Acts, chapter 1161). The new revised 13 23 version is based on HF 599 enacted in 2013 that included 13 24 amendments to the original 2006 legislation (2013 Iowa Acts, 13 25 chapter 125) and a new custom farming contract tax credit. 13 26 Both tax credits were designated under the title "Beginning 13 27 Farmer Tax Credit Program". The program was administered 13 28 by the agricultural development board. In that same year, 13 29 supervision of the board was transferred to the Iowa finance 13 30 authority (authority) (2013 Iowa Acts, chapter 100) and a year 13 31 later the general assembly enacted SF 2328 transferring the 13 32 program to Code chapter 16 as reorganized (2014 Iowa Acts, 13 33 chapter 1080). 13 34 PROVISIONS IN COMMON. Under the three versions, a taxpayer 13 35 who holds agricultural assets which must include agricultural 14 1 land, and may include associated agricultural equipment, is 14 2 entitled to claim a tax credit based on an agricultural assets 14 3 transfer agreement (agreement) entered into by the taxpayer and 14 4 a beginning farmer. The agreement must provide for the lease 14 5 of agricultural land and may provide for the associated rental 14 6 of agricultural equipment. The tax credit applies against 14 7 individual or corporate tax liability equal to a percentage of 14 8 the rent paid to the taxpayer by the beginning farmer on a cash 14 9 or commodity share basis. A beginning farmer's eligibility 14 10 is based on the same requirements that apply to the beginning 14 11 farmer loan program that is now also administered under the 14 12 supervision of the authority. An agreement cannot be for less 14 13 than two and not more than five years, but renewal is allowed. 14 14 A tax credit is not available under certain circumstances, 14 15 including if the taxpayer is (1) at fault for terminating a 14 16 prior agreement, (2) a party to a pending administrative or 14 17 judicial action involving an environmental violation involving 14 18 an animal feeding operation, or (3) classified as a habitual 14 19 violator of such environmental regulations. It also cannot 14 20 be claimed if the agricultural assets are being leased or 14 21 rented at a rate that is substantially higher or lower than 14 22 the market rate. Finally, the tax credit is not available if 14 23 the agreement has been terminated. A tax credit certificate 14 24 is issued to the taxpayer on a first=come, first=served basis. 14 25 The number of tax credit certificates is limited by a ceiling 14 26 of moneys available to support the tax credit. The legislative 14 27 tax expenditure committee must review the tax credit according 14 28 to its scheduled review of a number of other credits. 14 29 DIFFERENCE IN PROVISIONS ==== TAX CREDIT CALCULATED. The 14 30 current and restored current versions provide that the tax 14 31 credit equals 5 percent of the amount paid to the taxpayer 14 32 under the agreement if made on a cash basis and 15 percent 14 33 of the amount paid to the taxpayer if made on a commodity 14 34 share basis. Note, under these versions, there is no cap on 14 35 the amount that may be claimed by the taxpayer in any tax 15 1 year. The new revised version provides the taxpayer may claim 15 2 the same percentages as provided in the current version but 15 3 also includes a preference for veterans. In that case, the 15 4 percentage is increased by 1 percent for the first tax year. 15 5 In addition, a taxpayer cannot claim more than $25,000 in any 15 6 tax year. Under the 2013 amendments, if the agreement was 15 7 made on a cash basis, the tax credit equaled 7 percent and 15 8 if the agreement was made on a commodity share basis the tax 15 9 credit equaled 17 percent. The 2013 amendments also included a 15 10 veterans preference equal to a one=year 1 percent increase for 15 11 both types of payment arrangements (8 percent for cash and 18 15 12 percent for veterans). The 2013 amendments also limited the 15 13 tax credit to not more than $50,000 in any tax year. 15 14 DIFFERENCE IN PROVISIONS ==== AVAILABLE CEILING. The current 15 15 version and restored current version provide a $6 million 15 16 ceiling on the aggregate amount of tax credit certificates 15 17 that may be issued during any one year. The new revised 15 18 version provides a $9 million ceiling. The 2013 amendments 15 19 had included a $12 million ceiling that supported both the 15 20 agricultural assets transfer tax credit and the custom farming 15 21 contract tax credit. The new revised version, based on the 15 22 2013 amendments, no longer includes a custom farming contract 15 23 tax credit. 15 24 DIFFERENCES IN PROVISIONS ==== MISCELLANEOUS. The current 15 25 version and restored current version provides that the tax 15 26 credit is based on an agreement which includes arrangements 15 27 for lease and rental payments based on either a cash or 15 28 commodity share basis. The new revised version provides that 15 29 the tax credit may be based on either or both arrangements 15 30 to the extent allowed by the authority. The 2013 amendments 15 31 also allowed for both arrangements but without an express 15 32 limitation. The current version and restored current version 15 33 allow for capturing a prior allowed tax credit while the new 15 34 revised version allows for any properly claimed tax credit but 15 35 provides that the tax credit that had been allowed for the 16 1 current tax year in which the termination occurs is disallowed. 16 2 The 2013 amendments had also included a recapture provision. 16 3 EFFECTIVE AND APPLICABILITY DATES. The provisions of 16 4 the bill that strike the current version and replace it with 16 5 the new revised version take effect upon enactment and apply 16 6 retroactively to January 1, 2018, for tax years beginning on 16 7 or after that date. The provisions of the bill that strike the 16 8 new revised version and replace it with the restored current 16 9 version take effect January 1, 2023, and apply to tax years 16 10 beginning on or after that date. LSB 2617HZ (4) 87 da/rj
