Bill Text: IA HF522 | 2015-2016 | 86th General Assembly | Introduced

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Bill Title: A bill for an act increasing the number of years that a taxpayer may claim a custom farming contract tax credit under a contract executed by the holder of agricultural land and a qualified beginning farmer, and including effective date and retroactive applicability provisions. (Formerly HSB 137) (See Cmte. Bill HF 624)

Sponsorship: Committee Bill

Status: (Introduced - Dead) 2015-04-21 - Withdrawn. H.J. 887. [HF522 Detail]

Download: Iowa-2015-HF522-Introduced.html

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House File 522 - Introduced




                                 HOUSE FILE       
                                 BY  COMMITTEE ON
                                     AGRICULTURE

                                 (SUCCESSOR TO HSB 137)

                                      A BILL FOR

  1 An Act increasing the number of years that a taxpayer may
  2    claim a custom farming contract tax credit under a contract
  3    executed by the holder of agricultural land and a qualified
  4    beginning farmer, and including effective date and
  5    retroactive applicability provisions.
  6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  Section 16.81, subsection 5, Code 2015, is
  1  2 amended to read as follows:
  1  3    5.  The custom farming contract must provide that the
  1  4 taxpayer pay the qualified beginning farmer on a cash basis.
  1  5 The contract must be in writing for a term of not more than
  1  6 twelve twenty=four months. The total cash payment for each tax
  1  7 year that the tax credit is claimed must equal at least one
  1  8 thousand dollars.
  1  9    Sec. 2.  Section 16.81, subsection 10, Code 2015, is amended
  1 10 to read as follows:
  1 11    10.  a.  A taxpayer shall not claim a custom farming contract
  1 12 tax credit unless a tax credit certificate issued by the
  1 13 authority under this section is included with the taxpayer's
  1 14 tax return for the each tax year for which the tax credit is
  1 15 claimed.
  1 16    b.  A taxpayer may submit a single application to the
  1 17 authority for the authority's review and approval of the
  1 18 issuance of a tax credit certificate for either one or two tax
  1 19 years as covered in the custom farming contract. The authority
  1 20 must review and approve an the application for a and each
  1 21  tax credit certificate as provided by rules adopted by the
  1 22 authority. The application must include a copy of the custom
  1 23 farming contract.  Either or both parties as required by the
  1 24 authority shall notify the authority of any amendment to the
  1 25 contract or other material changes affecting the application
  1 26 or contract.  The authority may require that the parties to
  1 27 the contract provide additional information as determined
  1 28 relevant by the authority. The information may include but
  1 29 is not limited to a list of all custom work completed and a
  1 30 verification of all payments made to the beginning farmer for
  1 31 each tax year that the tax credit may be claimed.
  1 32    c.  The authority may approve an application and issue a
  1 33 tax credit certificate to a taxpayer who has previously been
  1 34 allowed a tax credit under this section another application.
  1 35 The authority may require that the parties to the contract
  2  1 provide additional information as determined relevant by the
  2  2 authority. The authority shall review an application for a tax
  2  3 credit certificate which includes the renewal of a contract to
  2  4 determine that the parties to the renewed contract meet the
  2  5 same qualifications as required for an original application.
  2  6    d.  The authority shall not approve an application or issue
  2  7 a tax credit certificate to a taxpayer for an amount in excess
  2  8 of fifty thousand dollars. In addition, the authority shall
  2  9 not approve an application or issue a tax credit certificate to
  2 10 a taxpayer if any of the following applies:
  2 11    a.  (1)  The taxpayer is at fault for terminating another
  2 12 custom farming contract, as determined by the authority.
  2 13    b.  (2)  The taxpayer is party to a pending administrative or
  2 14 judicial action, or classified as a habitual violator in the
  2 15 same manner as provided in section 16.80.
  2 16    c.  (3)  The contract amount is substantially higher or lower
  2 17 than the market rate for a similar custom farming contract, as
  2 18 determined by the authority.
  2 19    Sec. 3.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of
  2 20 immediate importance, takes effect upon enactment.
  2 21    Sec. 4.  RETROACTIVE APPLICABILITY.  This Act applies
  2 22 retroactively to January 1, 2015, for tax years beginning on
  2 23 or after that date.
  2 24                           EXPLANATION
  2 25 The inclusion of this explanation does not constitute agreement with
  2 26 the explanation's substance by the members of the general assembly.
  2 27    BILL == PROVISIONS.  This bill increases the maximum period
  2 28 of a custom farming contract executed by a taxpayer who holds
  2 29 agricultural land and a qualified beginning farmer from 12 to
  2 30 24 months in order to meet the eligibility requirements for
  2 31 the taxpayer to claim the custom farming contract tax credit.
  2 32 The tax credit is administered by the Iowa finance authority
  2 33 and the department of revenue.  The bill provides that a party
  2 34 or both parties to the contract must notify the authority of
  2 35 any amendment to the contract or other material change to
  3  1 claim the tax credit.  The authority may require additional
  3  2 information which may include a list of custom work completed
  3  3 and a verification of payments made to the beginning farmer for
  3  4 each tax year that the tax credit is claimed.
  3  5    BILL EFFECTIVE DATE AND RETROACTIVE APPLICABILITY.  The
  3  6 bill takes effect upon enactment and applies retroactively to
  3  7 January 1, 2015, for tax years beginning on or after that date.
  3  8    BACKGROUND.  A taxpayer who holds agricultural land is
  3  9 entitled to claim a tax credit against individual or corporate
  3 10 tax liability under the terms of a custom farming contract
  3 11 executed with a qualified beginning farmer.  The contract
  3 12 amount cannot be substantially higher or lower than the
  3 13 market rate for similar contracts. The taxpayer must make all
  3 14 management decisions substantially contributing to or affecting
  3 15 the production of crops or livestock located on the taxpayer's
  3 16 agricultural land, although the qualified beginning farmer may
  3 17 make day=to=day operational decisions affecting production.
  3 18 The qualified beginning farmer must have a low or moderate net
  3 19 worth and have education or experience and resources necessary
  3 20 to participate in farming.  The tax credit is allowed only for
  3 21 the amount paid by the taxpayer to a qualified beginning farmer
  3 22 on a cash basis equaling at least $1,000. The tax credit is
  3 23 7 percent of the amount paid by the taxpayer to a qualified
  3 24 beginning farmer with one exception.  For the first tax year,
  3 25 the tax credit is 8 percent if the qualified beginning farmer
  3 26 is a veteran.
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