House
File
2711
-
Introduced
HOUSE
FILE
2711
BY
ISENHART
A
BILL
FOR
An
Act
providing
for
a
specialty
food
beginning
farmer
tax
1
credit,
and
providing
for
fees.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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Section
1.
Section
16.58,
subsections
1,
9,
and
11,
Code
1
2024,
are
amended
to
read
as
follows:
2
1.
“Agricultural
assets”
means
agricultural
land,
3
agricultural
improvements,
depreciable
agricultural
property,
4
including
agricultural
commodities
such
as
crops
,
or
livestock
,
5
or
agricultural
products
processed
from
those
agricultural
6
commodities
.
7
9.
“Farming”
means
the
cultivation
use
of
agricultural
8
land
for
the
production
of
agricultural
commodities
including
9
agricultural
crops,
the
raising
of
livestock
or
poultry
,
;
the
10
production
of
eggs
,
;
the
production
of
milk
,
;
the
production
11
of
syrup
or
honey;
the
production
of
vegetables,
fruit
,
12
or
other
horticultural
crops
;
,
grazing,
the
production
of
13
livestock,
aquaculture
,
;
hydroponics
,
;
the
production
of
forest
14
products
,
;
or
other
activities
designated
by
rules
adopted
by
15
the
authority
by
rules
subject
to
pursuant
to
chapter
17A
.
16
11.
“Production
item”
includes
tools,
machinery,
or
17
equipment
principally
used
to
produce
crops
or
livestock
an
18
agricultural
commodity
.
19
Sec.
2.
Section
16.58,
Code
2024,
is
amended
by
adding
the
20
following
new
subsections:
21
NEW
SUBSECTION
.
1A.
“Agricultural
development
board”
means
22
the
agricultural
development
board
created
in
section
16.2C.
23
NEW
SUBSECTION
.
6A.
“Department”
means
the
department
of
24
revenue
created
in
section
421.2.
25
Sec.
3.
Section
16.77,
subsections
1
and
3,
Code
2024,
are
26
amended
by
striking
the
subsections.
27
Sec.
4.
Section
16.82A,
subsection
2,
Code
2024,
is
amended
28
to
read
as
follows:
29
2.
The
amount
of
beginning
farmer
tax
credits
that
may
be
30
awarded
by
the
authority
in
any
one
calendar
year
under
the
31
beginning
farmer
tax
credit
program
shall
not
in
the
aggregate
32
exceed
a
limit
of
twelve
six
million
dollars.
Tax
credits
33
shall
be
awarded
by
the
authority
not
later
than
December
34
15
of
each
calendar
year
after
the
agricultural
development
35
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board
reviews
applications
as
provided
in
section
16.81
and
1
the
authority
determines
tax
credit
amounts
for
the
approved
2
applications
as
provided
in
section
16.82
,
aggregated
for
3
purposes
of
meeting
the
annual
program
award
limits.
4
Sec.
5.
NEW
SECTION
.
16.85
Definitions.
5
As
used
in
this
subpart,
unless
the
context
otherwise
6
requires:
7
1.
“Eligible
taxpayer”
means
a
taxpayer
who
may
participate
8
in
the
specialty
food
beginning
farmer
tax
credit
program,
9
including
by
meeting
all
the
criteria
as
provided
in
section
10
16.87.
11
2.
“Food
animal”
means
an
animal
belonging
to
the
bovine,
12
caprine,
ovine,
or
porcine
species;
a
turkey,
chicken,
or
other
13
type
of
poultry;
a
farm
deer
as
defined
in
section
170.1;
a
14
fish
or
other
aquatic
organism
confined
in
private
waters
for
15
human
consumption;
or
a
bee
as
defined
in
section
160.1A.
16
3.
“Food
commodity”
means
any
of
the
following:
17
a.
A
food
animal
that
is
to
be
slaughtered
or
harvested
for
18
food
processing.
19
b.
An
item
regularly
generated
by
a
food
animal,
including
20
milk,
eggs,
or
honey,
that
has
been
collected
for
food
21
processing.
22
c.
Whole
produce,
including
vegetables
or
fruit,
sap,
whole
23
nuts,
or
whole
produce,
including
vegetables
or
fruit,
that
has
24
been
harvested
for
food
processing.
25
4.
“Food
processing”
means
to
prepare
a
food
product
26
for
sale
on
a
retail
basis,
including
by
doing
any
of
the
27
following:
28
a.
Removing
debris
from
a
food
commodity,
including
by
29
washing
it.
30
b.
Changing
the
form,
state,
or
physical
characteristics
31
of
a
food
commodity,
including
by
cutting,
trimming,
deboning
32
or
defeathering,
churning,
freezing
or
chilling,
heating,
33
pasteurizing,
shelling,
husking,
drying,
filtering,
fermenting,
34
distilling,
or
eviscerating
it.
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c.
Storing
or
packaging
the
food
commodity,
including
by
1
canning,
jarring,
boxing,
or
otherwise
enclosing
it.
2
5.
a.
“Food
product”
means
a
food
commodity
that
has
been
3
processed
for
sale
on
a
retail
basis
for
human
consumption.
4
b.
“Food
product”
includes
cuts
of
meat
or
poultry,
milk,
5
eggs,
syrup,
honey,
vegetables,
fruit,
or
nuts.
6
6.
“Program”
means
the
specialty
food
beginning
farmer
tax
7
credit
program
created
pursuant
to
section
16.78.
8
7.
“Tax
credit”
means
the
specialty
food
beginning
farmer
9
tax
credit
allowed
under
section
16.89.
10
Sec.
6.
NEW
SECTION
.
16.86
Administration.
11
1.
A
specialty
food
beginning
farmer
tax
credit
program
is
12
created
under
the
control
of
the
authority.
13
2.
The
authority
and
the
department
shall
cooperate
in
14
administering
the
program.
The
department
shall
have
all
15
rulemaking
powers
necessary
to
administer
its
responsibilities
16
under
this
subpart
as
it
does
under
chapter
422.
17
3.
To
every
extent
practicable,
the
authority
shall
18
administer
the
program
in
a
manner
that
provides
specialty
food
19
beginning
farmers
access
to
agricultural
land
used
in
producing
20
a
food
commodity
and
food
processing.
21
4.
The
authority
and
the
department
shall
each
adopt
22
rules
in
accordance
with
chapter
17A
as
necessary
for
the
23
administration
of
their
respective
responsibilities
under
this
24
subpart.
The
eligibility
requirements
for
eligible
taxpayers
25
as
provided
in
the
rules
shall
not
be
more
stringent
than
26
provided
in
this
subpart.
27
5.
The
authority
shall
provide
for
the
preparation
or
28
revision
and
publication
or
distribution
of
forms
necessary
29
to
administer
their
responsibilities
under
this
subpart.
The
30
authority
shall
make
an
effort
to
invite
participation
by
31
specialty
food
beginning
farmers,
including
those
engaged
in
32
the
production
and
processing
of
organic
foods
under
chapter
33
190C.
34
Sec.
7.
NEW
SECTION
.
16.87
Eligibility
criteria.
35
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A
taxpayer
is
eligible
to
participate
in
the
program
if
the
1
taxpayer
meets
all
of
the
following
requirements:
2
1.
The
taxpayer
must
be
able
to
legally
acquire
agricultural
3
land
in
this
state
pursuant
to
chapter
9H
or
9I.
The
taxpayer
4
must
also
not
be
a
person
who
may
legally
acquire
agricultural
5
land
exclusively
because
of
an
exception
provided
in
one
of
6
those
chapters
or
in
a
provision
of
another
chapter
of
this
7
Code
including
but
not
limited
to
chapter
10,
10D,
or
501,
or
8
section
15E.207.
9
2.
The
taxpayer
must
be
a
beginning
farmer
engaged
in
the
10
production
of
a
food
commodity
or
food
product
for
direct
11
sale
or
for
processing
by
one
or
more
Iowa-based
businesses
12
for
wholesale
or
retail
marketing
or
who
is
engaged
in
the
13
management
of
food
animals
for
the
production
of
food
products
14
processed
on
site
or
at
a
facility
that
is
eligible
for
the
15
choose
Iowa
promotional
program,
the
value-added
agriculture
16
grant
program,
the
dairy
innovation
program,
or
the
butchery
17
innovation
and
revitalization
program.
18
3.
The
taxpayer
must
not
have
been
at
fault
for
previously
19
terminating
participation
in
the
program
or
a
similar
program
20
in
which
the
taxpayer
was
allowed
to
claim
a
tax
credit.
21
4.
The
taxpayer
must
not
be
a
party
to
a
pending
22
administrative
or
judicial
action,
including
a
contested
case
23
proceeding
under
chapter
17A,
relating
to
an
alleged
violation
24
involving
an
animal
feeding
operation
as
regulated
by
the
25
department
of
natural
resources,
regardless
of
whether
the
26
pending
action
is
brought
by
the
department
or
the
attorney
27
general.
28
5.
The
taxpayer
must
not
be
classified
as
a
habitual
29
violator
for
a
violation
of
state
law
involving
an
animal
30
feeding
operation
as
regulated
by
the
department
of
natural
31
resources
under
chapter
459.
32
6.
The
taxpayer
must
have
access
to
adequate
working
capital
33
and
production
items.
34
7.
The
taxpayer
must
materially
and
substantially
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participate
in
the
specialized
farming
operation.
If
the
1
beginning
farmer
is
a
partnership,
family
farm
corporation,
2
or
family
farm
limited
liability
company,
at
least
one
of
the
3
partners,
shareholders,
or
members
who
is
not
a
minor
must
4
materially
and
substantially
participate
in
the
specialty
food
5
farming
operation.
6
8.
The
taxpayer
must
have
sufficient
education,
training,
7
or
experience
in
farming.
If
the
taxpayer
is
a
partnership,
8
at
least
one
partner
who
is
not
a
minor
must
have
sufficient
9
education,
training,
or
experience
in
farming.
If
the
taxpayer
10
is
a
family
farm
corporation,
at
least
one
shareholder
who
11
is
not
a
minor
must
have
sufficient
education,
training,
or
12
experience
in
farming.
If
the
taxpayer
is
a
family
farm
13
limited
liability
company,
at
least
one
member
who
is
not
a
14
minor
must
have
sufficient
education,
training,
or
experience
15
in
farming.
16
Sec.
8.
NEW
SECTION
.
16.88
Application.
17
1.
The
authority
shall
adopt
rules
establishing
a
deadline
18
for
persons
to
apply
to
participate
in
the
program.
The
19
authority
shall
require
that
the
applicant
provide
all
20
information
as
determined
relevant
by
the
authority
in
order
to
21
process
the
application.
Any
financial,
contractual,
or
legal
22
authorization
records
provided
to
the
authority
shall
be
kept
23
confidential
and
are
not
subject
to
chapter
22.
24
2.
The
authority
may
impose,
assess,
and
collect
25
application
fees
and
shall
adopt
rules
as
necessary
to
26
administer
this
subsection,
including
by
providing
for
27
different
rates
for
those
fees.
The
amount
of
application
28
fees
collected
by
the
authority
shall
be
considered
repayment
29
receipts
as
defined
in
section
8.2.
30
3.
The
agricultural
development
board
shall
review
and
31
recommend
approval
or
disapproval
of
an
application
to
the
32
authority
as
provided
by
rules
adopted
by
the
authority.
33
4.
An
applicant
may
be
provided
priority
based
on
soil
34
conservation
and
water
quality
practices
installed
on
the
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agricultural
land.
1
Sec.
9.
NEW
SECTION
.
16.89
Allowance.
2
1.
The
tax
credit
authorized
under
the
program
is
allowed
3
against
the
taxes
imposed
in
chapter
422,
subchapter
II,
as
4
provided
in
section
422.11E,
and
in
chapter
422,
subchapter
5
III,
as
provided
in
section
422.33,
subsection
21.
6
2.
The
amount
of
the
tax
credit
shall
equal
the
following:
7
a.
Thirty
percent
of
the
purchase
price
of
agricultural
land
8
not
to
exceed
forty
acres
paid
by
the
eligible
taxpayer,
if
the
9
agricultural
land
is
to
be
a
principal
part
of
a
specialty
food
10
farming
operation.
11
b.
Thirty
percent
of
the
purchase
price
of
machinery
or
12
equipment
paid
by
the
eligible
taxpayer,
if
the
machinery
or
13
equipment
is
used
as
a
principal
part
of
a
specialty
food
14
farming
operation.
15
c.
Fifty
percent
of
payments
made
to
an
accredited
16
educational
institution
recognized
by
the
authority
for
17
education
or
continuing
education
that
prepares
a
specialty
18
food
beginning
farmer
for
managing
or
assisting
in
the
19
operation
of
a
specialty
food
farm
operation.
20
3.
A
tax
credit
in
excess
of
the
eligible
taxpayer’s
tax
21
liability
for
the
tax
year
is
refundable.
The
tax
credit
may
22
be
credited
to
the
tax
liability
for
the
following
ten
tax
23
years
or
until
depleted,
whichever
is
earlier.
A
tax
credit
24
shall
not
be
carried
back
to
a
tax
year
prior
to
the
tax
year
in
25
which
the
eligible
taxpayer
redeems
the
tax
credit.
26
Sec.
10.
NEW
SECTION
.
16.89A
Limits.
27
1.
The
amount
of
a
tax
credit
that
may
be
awarded
to
an
28
eligible
taxpayer
for
any
twelve-month
period
shall
not
exceed
29
fifty
thousand
dollars.
30
2.
The
total
amount
that
the
authority
may
award
all
31
eligible
taxpayers
during
a
twelve-month
period
shall
not
32
exceed
the
maximum
amount
of
six
million
dollars.
The
33
authority
shall
award
each
eligible
taxpayer
the
full
amount
of
34
the
eligible
taxpayer’s
tax
credit
without
proration
until
the
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maximum
amount
is
reached.
1
Sec.
11.
NEW
SECTION
.
16.89B
Tax
credit
certificate.
2
1.
The
tax
credit
shall
be
for
a
twelve-month
period
3
beginning
and
ending
as
determined
by
rules
adopted
by
the
4
authority.
5
2.
The
tax
credit
certificate
shall
contain
information
6
required
by
the
department.
7
3.
The
tax
credit
certificate,
unless
rescinded
by
the
8
authority,
shall
be
accepted
by
the
department
of
revenue
as
9
payment
for
taxes
imposed
in
chapter
422,
subchapter
II,
as
10
provided
in
section
422.11E,
and
in
chapter
422,
subchapter
11
III,
as
provided
in
section
422.33,
subsection
21.
12
4.
A
tax
credit
certificate
may
be
transferred
to
any
13
person.
Within
ninety
days
of
transfer,
the
transferee
shall
14
submit
the
transferred
tax
credit
certificate
to
the
department
15
together
with
information
required
by
the
department.
16
5.
Within
thirty
days
of
receiving
the
transferred
tax
17
credit
certificate
and
the
transferee’s
statement,
the
18
department
shall
issue
one
or
more
replacement
tax
credit
19
certificates
to
the
transferee.
Each
replacement
tax
credit
20
certificate
must
contain
the
information
required
for
the
21
original
tax
credit
certificate
and
must
have
the
same
22
expiration
date
that
appeared
in
the
transferred
tax
credit
23
certificate.
A
tax
credit
certificate
amount
that
is
less
than
24
a
minimum
amount
established
by
rule
adopted
by
the
department
25
shall
not
be
transferable.
26
6.
A
tax
credit
shall
not
be
claimed
by
a
transferee
until
27
a
replacement
tax
credit
certificate
identifying
the
transferee
28
as
the
proper
holder
has
been
issued.
The
transferee
may
use
29
the
amount
of
the
tax
credit
transferred
for
any
tax
year
the
30
original
transferor
could
have
claimed
the
tax
credit.
Any
31
consideration
received
for
the
transfer
of
the
tax
credit
shall
32
not
be
included
as
income
under
chapter
422,
subchapters
II,
33
III,
and
V.
Any
consideration
paid
for
the
transfer
of
the
tax
34
credit
shall
not
be
deducted
from
income
under
chapter
422,
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subchapters
II,
III,
and
V.
1
7.
A
tax
credit
is
not
refundable.
2
Sec.
12.
Section
422.11E,
Code
2024,
is
amended
to
read
as
3
follows:
4
422.11E
Beginning
farmer
tax
credit
program.
5
The
taxes
imposed
under
this
subchapter
,
less
the
credits
6
allowed
under
section
422.12
,
shall
be
reduced
by
a
any
of
the
7
following:
8
1.
A
beginning
farmer
tax
credit
as
allowed
under
chapter
9
16,
subchapter
VIII,
part
5,
subpart
B
.
10
2.
A
specialized
beginning
farmer
tax
credit
as
allowed
11
under
chapter
16,
subchapter
VIII,
part
5,
subpart
C.
12
Sec.
13.
Section
422.33,
subsection
21,
Code
2024,
is
13
amended
to
read
as
follows:
14
21.
The
taxes
imposed
under
this
subchapter
shall
be
reduced
15
by
a
any
of
the
following:
16
a.
A
beginning
farmer
tax
credit
as
allowed
under
chapter
17
16,
subchapter
VIII,
part
5,
subpart
B
.
18
b.
A
specialized
beginning
farmer
tax
credit
as
allowed
19
under
chapter
16,
subchapter
VIII,
part
5,
subpart
C.
20
EXPLANATION
21
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
22
the
explanation’s
substance
by
the
members
of
the
general
assembly.
23
BACKGROUND.
This
bill
amends
provisions
in
Code
chapter
16
24
providing
for
a
number
of
development
programs
administered
by
25
the
Iowa
finance
authority
(IFA).
Subchapter
VIII
provides
26
for
agricultural
development
programs
under
the
supervision
27
of
the
agricultural
development
division
and
agricultural
28
development
board.
A
number
of
the
agricultural
development
29
programs
support
beginning
farmers
with
low
or
moderate
net
30
worth
to
acquire
agricultural
land
for
farming.
The
beginning
31
farmer
tax
credit
program
creates
a
tax
credit
against
the
32
tax
liability
of
the
owner
of
agricultural
land
entering
33
into
a
lease
with
a
beginning
farmer
for
agricultural
land,
34
equipment,
and
commodities
such
as
crops
or
livestock.
The
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taxpayer
may
be
either
an
individual
or
a
business
entity
1
that
can
hold
agricultural
land
under
Code
chapter
9H,
Iowa’s
2
corporate
farming
law.
A
taxpayer
participating
in
the
program
3
is
issued
a
tax
credit
certificate.
The
amount
of
the
tax
4
credit
is
calculated
differently
based
on
the
type
of
rent
5
payment
arrangement
described
in
the
agreement
and
a
taxpayer
6
is
not
eligible
to
claim
a
tax
credit
of
more
than
$50,000
in
7
a
tax
year.
The
agricultural
development
board
is
required
8
to
review
applications
subject
to
IFA’s
approval.
A
fee
is
9
imposed
for
processing
applications.
A
taxpayer
is
issued
10
a
tax
credit
certificate
by
the
department
of
revenue
(DOR)
11
which
may
be
redeemed
by
the
taxpayer.
The
tax
credit
may
be
12
carried
forward
but
not
carried
back
and
is
not
refundable.
13
Tax
credits
are
awarded
to
all
taxpayers
whose
applications
14
have
been
approved
during
a
calendar
year
so
long
as
the
amount
15
of
all
awards
does
not
exceed
the
$12
million
aggregate
award
16
limitation.
17
BILL’S
PROVISIONS.
The
bill
establishes
a
specialty
food
18
beginning
farmer
tax
credit
program
based
on
the
current
19
beginning
farmer
tax
credit
program.
In
this
case,
the
tax
20
credit
may
be
claimed
by
a
beginning
farmer
engaged
in
a
21
specialty
food
farming
operation
rather
than
a
landlord.
The
22
specialty
beginning
farmer
must
be
engaged
in
producing
a
23
food
commodity
and
may
be
engaged
in
processing
that
food
24
commodity
into
a
food
product.
The
food
commodity
includes
25
food
animals
used
for
meat
or
poultry
or
associated
items
such
26
as
milk
or
eggs.
It
may
also
include
fruit,
vegetables,
nuts,
27
or
honey.
Like
the
beginning
farmer
tax
credit
program,
this
28
program
is
administered
by
the
authority
and
the
department.
29
The
bill
provides
similar
eligibility
requirements
applied
30
to
a
beginning
farmer
engaged
in
specialty
production
31
or
processing.
IFA
is
required
to
establish
application
32
requirements,
including
the
establishment
of
fees.
The
33
amount
of
the
tax
credit
equals
30
percent
of
the
purchase
34
price
of
the
agricultural
land,
30
percent
of
the
purchase
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price
of
equipment
or
machinery,
and
50
percent
of
payments
1
made
to
an
accredited
educational
institution
that
prepares
2
a
beginning
farmer
for
managing
a
specialty
farm
operation
3
or
related
food
processing
operation.
The
amount
of
the
tax
4
credit
cannot
exceed
$50,000
per
any
12-month
period
and
the
5
total
amount
that
may
be
awarded
for
all
claims
cannot
exceed
6
$6
million
in
any
12-month
period.
The
$12
million
used
to
7
support
the
beginning
farmer
tax
credit
program
is
reduced
by
8
half
so
that
the
programs
share
half
of
the
current
total.
9
IFA
must
award
each
eligible
taxpayer
the
full
amount
of
the
10
eligible
taxpayer’s
tax
credit
without
proration
until
the
11
maximum
amount
is
reached.
The
eligible
taxpayer
is
issued
12
a
tax
certificate
which
may
be
transferred
to
a
new
holder
13
under
certain
conditions.
The
eligible
taxpayer,
but
not
a
14
transferee,
may
claim
the
tax
credit
as
a
refund.
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