Bill Text: IA HSB69 | 2013-2014 | 85th General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: A study bill for providing a tax credit for lessors or lessees of agricultural land in order to support beginning farmers.
Spectrum: Unknown
Status: (N/A - Dead) 2013-02-13 - Voted - Agriculture. [HSB69 Detail]
Download: Iowa-2013-HSB69-Introduced.html
Bill Title: A study bill for providing a tax credit for lessors or lessees of agricultural land in order to support beginning farmers.
Spectrum: Unknown
Status: (N/A - Dead) 2013-02-13 - Voted - Agriculture. [HSB69 Detail]
Download: Iowa-2013-HSB69-Introduced.html
House
Study
Bill
69
-
Introduced
HOUSE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
AGRICULTURE
BILL
BY
CHAIRPERSON
GRASSLEY)
A
BILL
FOR
An
Act
providing
a
tax
credit
for
lessors
or
lessees
of
1
agricultural
land
in
order
to
support
beginning
farmers.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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1450YC
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H.F.
_____
Section
1.
Section
2.48,
subsection
3,
paragraph
e,
1
subparagraph
(1),
Code
2013,
is
amended
to
read
as
follows:
2
(1)
The
agricultural
assets
transfer
tax
credit
under
3
section
175.37
and
the
agricultural
expansion
tax
credit
as
4
provided
in
section
175.37A
.
5
Sec.
2.
Section
175.37,
subsection
5,
Code
2013,
is
amended
6
to
read
as
follows:
7
5.
The
tax
credit
shall
be
calculated
based
on
the
gross
8
amount
paid
to
the
taxpayer
under
the
agricultural
assets
9
transfer
agreement.
10
a.
Except
as
provided
in
paragraph
“b”
,
the
tax
credit
shall
11
equal
five
seven
percent
of
the
amount
paid
to
the
taxpayer
12
under
the
agreement.
13
b.
The
tax
credit
shall
equal
fifteen
seventeen
percent
14
of
the
amount
paid
to
the
taxpayer
from
crops
or
animals
sold
15
under
an
agreement
in
which
the
payment
is
exclusively
made
16
from
the
sale
of
crops
or
animals.
17
Sec.
3.
Section
175.37,
subsection
8,
unnumbered
paragraph
18
1,
Code
2013,
is
amended
to
read
as
follows:
19
A
taxpayer
shall
not
claim
a
tax
credit
under
this
section
20
unless
a
tax
credit
certificate
issued
by
the
authority
is
21
attached
to
the
taxpayer’s
tax
return
for
the
tax
year
for
22
which
the
tax
credit
is
claimed.
The
authority
must
review
23
and
approve
an
application
for
a
tax
credit
as
provided
by
24
rules
adopted
by
the
authority.
The
application
must
include
25
a
copy
of
the
agricultural
assets
transfer
agreement.
The
26
authority
may
approve
an
application
and
issue
a
tax
credit
27
certificate
to
a
taxpayer
who
has
previously
been
allowed
a
28
tax
credit
under
this
section
.
The
authority
may
require
29
that
the
parties
to
an
agricultural
assets
transfer
agreement
30
provide
additional
information
as
determined
relevant
by
the
31
authority.
The
authority
shall
review
an
application
for
32
a
tax
credit
which
includes
the
renewal
of
an
agricultural
33
assets
transfer
agreement
to
determine
that
the
parties
to
the
34
renewed
agreement
meet
the
same
qualifications
as
required
for
35
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_____
an
original
application.
However,
The
authority
shall
not
1
approve
an
application
or
issue
a
tax
credit
certificate
to
a
2
taxpayer
for
an
amount
in
excess
of
fifty
thousand
dollars.
3
In
addition,
the
authority
shall
not
approve
an
application
4
or
issue
a
tax
credit
certificate
to
a
taxpayer
if
any
of
the
5
following
applies:
6
Sec.
4.
Section
175.37,
subsection
10,
Code
2013,
is
amended
7
by
striking
the
subsection.
8
Sec.
5.
NEW
SECTION
.
175.37A
Agricultural
expansion
tax
9
credit.
10
1.
An
agricultural
expansion
tax
credit
is
allowed
under
11
this
section.
The
tax
credit
is
allowed
against
the
taxes
12
imposed
in
chapter
422,
division
II,
as
provided
in
section
13
422.11M,
and
in
chapter
422,
division
III,
as
provided
in
14
section
422.33,
to
facilitate
the
expansion
of
agricultural
15
production
by
beginning
farmers
who
qualify
under
this
section.
16
2.
In
order
to
qualify
for
the
agricultural
expansion
tax
17
credit,
a
beginning
farmer
must
be
a
party
to
an
agricultural
18
assets
transfer
agreement,
including
a
renewed
agreement,
19
approved
by
the
authority
as
provided
in
section
175.37.
The
20
beginning
farmer
may
claim
the
agricultural
expansion
tax
21
credit
even
if
the
other
party
to
the
agricultural
assets
22
transfer
agreement
does
not
claim
an
agricultural
assets
23
transfer
tax
credit
allowed
under
section
175.37.
24
3.
The
agricultural
expansion
tax
credit
applies
to
costs
25
incurred
by
the
beginning
farmer
that
are
attributable
to
the
26
expansion
of
an
agricultural
operation
on
land
leased
by
the
27
beginning
farmer
pursuant
to
the
agricultural
assets
transfer
28
agreement.
29
4.
The
agricultural
expansion
tax
credit
must
be
claimed
in
30
a
tax
year
that
is
all
of
the
following:
31
a.
Begins
at
least
twenty-four
months
after
the
original
32
agricultural
assets
transfer
agreement
is
approved
by
the
33
authority.
34
b.
Occurs
during
some
period
that
the
original
or
renewed
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agricultural
assets
transfer
agreement
is
effective.
1
5.
The
amount
of
the
agricultural
expansion
tax
credit
2
equals
seven
percent
of
the
total
amount
of
costs
incurred
by
3
the
beginning
farmer
for
the
acquisition
of
property
qualifying
4
under
subsection
6
in
the
tax
year
for
which
the
tax
credit
is
5
claimed.
The
total
amount
of
such
costs
must
equal
at
least
6
five
thousand
dollars.
7
6.
a.
The
acquired
property
qualifies
for
the
agricultural
8
expansion
tax
credit
if
it
is
any
of
the
following:
9
(1)
Farm
machinery
and
equipment
exempt
from
sales
and
10
use
tax
as
provided
in
chapter
423.
The
farm
machinery
and
11
equipment
must
be
stored
on
the
leased
land
subject
to
the
12
agreement
and
must
be
directly
and
primarily
used
on
the
leased
13
land
in
the
production
of
crops
as
defined
in
section
202.1
14
or
animals
as
defined
in
section
459.102
during
the
remaining
15
period
of
the
agreement
or
renewed
agreement.
16
(2)
An
animal
as
defined
in
section
459.102.
Each
animal
17
must
be
primarily
kept
on
the
leased
land
subject
to
the
18
agreement.
There
must
be
a
ten
percent
increase
in
the
number
19
of
animal
units
kept
by
the
beginning
farmer
on
the
leased
land
20
by
computing
the
maximum
number
of
animal
units
kept
at
any
one
21
time
on
the
leased
land
in
the
current
tax
year
when
compared
22
to
the
previous
tax
year.
Animal
units
shall
be
calculated
in
23
the
same
manner
as
provided
in
section
459.102.
24
b.
The
agricultural
expansion
tax
credit
is
only
allowed
25
for
the
reasonable
market
value
of
the
acquired
property
and
26
is
disallowed
if
the
acquired
property
is
transferred
for
less
27
than
its
reasonable
market
value.
The
authority
may
presume
28
that
the
property’s
reasonable
market
value
equals
the
sales
29
price
paid
or
received
by
the
beginning
farmer
when
purchasing
30
or
selling
the
property
in
the
ordinary
course
of
business.
31
7.
An
agricultural
expansion
tax
credit
in
excess
of
the
32
taxpayer’s
liability
for
the
tax
year
may
be
credited
to
the
33
tax
liability
for
the
following
five
years,
the
tax
year
34
following
the
expiration
of
the
agricultural
assets
transfer
35
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agreement,
or
until
depleted,
whichever
is
earlier.
A
tax
1
credit
shall
not
be
carried
back
to
a
tax
year
prior
to
the
tax
2
year
in
which
the
taxpayer
claims
the
tax
credit.
A
tax
credit
3
carried
forward
pursuant
to
this
subsection
is
not
transferable
4
other
than
to
the
beginning
farmer’s
estate
or
trust
upon
the
5
beginning
farmer’s
death.
6
8.
A
beginning
farmer
shall
not
claim
an
agricultural
7
expansion
tax
credit
unless
a
tax
credit
certificate
issued
by
8
the
authority
is
attached
to
the
taxpayer’s
tax
return
for
the
9
tax
year
for
which
the
tax
credit
is
claimed.
10
a.
The
authority
must
review
and
approve
an
application
11
for
a
tax
credit
certificate.
The
application
must
include
a
12
copy
of
the
agricultural
assets
transfer
agreement
and
evidence
13
that
the
taxpayer
has
complied
with
the
requirements
of
this
14
section.
The
authority
may
require
that
the
parties
to
an
15
agricultural
assets
transfer
agreement
provide
additional
16
information
as
determined
relevant
by
the
authority.
17
b.
The
tax
credit
certificate
shall
contain
the
beginning
18
farmer’s
name,
address,
and
tax
identification
number;
the
19
amount
of
the
tax
credit;
and
any
other
information
required
20
by
the
department
of
revenue.
21
c.
The
tax
credit
certificate,
unless
otherwise
void,
shall
22
be
accepted
by
the
department
of
revenue
as
payment
for
taxes
23
imposed
pursuant
to
chapter
422,
division
II
or
III,
subject
to
24
any
conditions
or
restrictions
placed
by
the
authority
upon
the
25
face
of
the
tax
credit
certificate.
26
d.
The
authority
shall
not
approve
an
application
or
issue
27
a
tax
credit
certificate
to
a
beginning
farmer
for
an
amount
in
28
excess
of
fifty
thousand
dollars.
29
e.
The
tax
credit
certificate
is
not
transferable
other
than
30
to
the
beginning
farmer’s
estate
or
trust
upon
the
beginning
31
farmer’s
death.
32
9.
a.
A
beginning
farmer
who
terminates
the
agricultural
33
assets
transfer
agreement
must
immediately
notify
the
authority
34
of
the
termination.
Upon
termination
of
an
agreement,
the
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authority
shall
not
issue
a
tax
credit
certificate
for
the
1
agricultural
expansion
tax
credit
to
the
beginning
farmer
for
2
a
subsequent
tax
year.
3
b.
If
the
authority
determines
that
the
beginning
farmer
4
is
not
at
fault
for
the
termination,
any
prior
tax
credit
5
allowed
as
provided
in
this
section
shall
continue
until
its
6
expiration.
7
c.
If
the
authority
determines
that
the
beginning
farmer
is
8
at
fault
for
the
termination,
any
prior
agricultural
expansion
9
tax
credit
allowed
under
this
section
is
disallowed,
and
the
10
amount
of
the
tax
credit
shall
be
immediately
due
and
payable
11
to
the
department
of
revenue.
If
the
beginning
farmer
does
12
not
immediately
notify
the
authority
of
the
termination,
the
13
beginning
farmer
shall
be
conclusively
deemed
at
fault
for
the
14
termination.
15
10.
An
individual
who
is
a
beginning
farmer
may
claim
16
the
agricultural
expansion
tax
credit
allowed
a
partnership,
17
limited
liability
company,
S
corporation,
estate,
or
trust
18
electing
to
have
the
income
taxed
directly
to
the
individual.
19
The
amount
claimed
by
the
individual
shall
be
based
upon
the
20
pro
rata
share
of
the
individual’s
earnings
of
a
partnership,
21
limited
liability
company,
S
corporation,
estate,
or
trust.
22
11.
The
authority
shall
adopt
rules
to
administer
this
23
section.
The
rules
may
provide
for
the
following:
24
a.
Allowed
methods
for
a
beginning
farmer
to
acquire
or
25
transfer
property
eligible
for
the
agricultural
expansion
tax
26
credit.
27
b.
The
review
and
approval
of
tax
certificates
required
for
28
the
agricultural
expansion
tax
credit.
The
authority
shall
29
cooperate
with
the
department
of
revenue
in
implementing
this
30
paragraph
“b”
.
31
Sec.
6.
NEW
SECTION
.
175.37B
Amount
of
tax
credit
32
certificates
available
——
agricultural
assets
transfer
tax
credit
33
and
agricultural
expansion
tax
credit.
34
The
amount
of
tax
credit
certificates
that
may
be
issued
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by
the
authority
under
sections
175.37
and
175.37A
shall
not
1
in
the
aggregate
exceed
twelve
million
dollars
in
any
fiscal
2
year.
Each
year,
the
authority
shall
allocate
a
percentage
3
of
certificates
to
support
tax
credits
to
be
issued
under
4
sections
175.37
and
175.37A.
However,
the
authority
may
adjust
5
the
allocation
during
the
year
as
it
deems
necessary.
The
6
authority
shall
issue
tax
certificates
allocated
under
each
7
section
on
a
first-come,
first-served
basis.
8
Sec.
7.
Section
422.11M,
Code
2013,
is
amended
to
read
as
9
follows:
10
422.11M
Agricultural
assets
transferred
to
beginning
11
Beginning
farmers
——
agricultural
assets
transfer
and
expansion
12
of
operations
.
13
The
taxes
imposed
under
this
division
,
less
the
credits
14
allowed
under
section
422.12
,
shall
be
reduced
by
an
the
15
following:
16
1.
An
agricultural
assets
transfer
tax
credit
as
allowed
17
under
section
175.37
.
18
2.
An
agricultural
expansion
tax
credit
as
allowed
under
19
section
175.37A.
20
Sec.
8.
Section
422.33,
subsection
21,
Code
2013,
is
amended
21
to
read
as
follows:
22
21.
The
taxes
imposed
under
this
division
shall
be
reduced
23
by
an
the
following:
24
a.
An
agricultural
assets
transfer
tax
credit
as
allowed
25
under
section
175.37
.
26
b.
An
agricultural
expansion
tax
credit
as
allowed
under
27
section
175.37A.
28
Sec.
9.
EFFECTIVE
UPON
ENACTMENT.
This
Act,
being
deemed
of
29
immediate
importance,
takes
effect
upon
enactment.
30
Sec.
10.
APPLICABILITY.
This
Act
applies
retroactively
to
31
January
1,
2013,
for
tax
years
beginning
on
or
after
that
date.
32
EXPLANATION
33
BACKGROUND
AGRICULTURAL
ASSETS
TRANSFER
TAX
CREDIT.
In
34
2006,
the
general
assembly
enacted
S.F.
2268
(2006
Iowa
Acts,
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ch.
1161)
that
provides
a
tax
credit
for
owners
of
agricultural
1
assets
(agricultural
land,
depreciable
agricultural
property,
2
crops,
or
livestock)
who
help
beginning
farmers
acquire
3
those
agricultural
assets
by
lease
or
rental
arrangements.
4
The
program
is
administered
by
the
agricultural
development
5
authority
(authority)
established
within
the
department
of
6
agriculture
and
land
stewardship.
A
beginning
farmer
is
an
7
individual,
partnership,
family
farm
corporation,
or
family
8
farm
limited
liability
company
as
provided
under
Code
chapter
9
9H
(Iowa’s
corporate
farming
law),
with
a
low
or
moderate
net
10
worth
who
engages
in
farming
or
wishes
to
engage
in
farming.
11
The
owner
who
executes
an
agricultural
assets
transfer
12
agreement
approved
by
the
authority
may
claim
a
tax
credit
13
against
individual
or
corporate
income
tax
liability
after
14
receiving
a
certificate
issued
by
the
authority.
Generally,
15
the
lessor
must
be
a
person
who
may
acquire
or
otherwise
16
obtain
or
lease
agricultural
land
under
Code
chapter
9H
or
9I
17
(restricting
corporate
and
foreign
ownership
of
agricultural
18
land).
The
bill
provides
a
number
of
restrictions
upon
the
19
authority
in
approving
applications
and
issuing
certificates.
20
The
owner
cannot
be
at
fault
for
terminating
a
prior
agreement,
21
be
involved
in
legal
proceedings
regarding
environmental
22
violations,
or
agree
to
provide
more
agricultural
assets
than
23
the
beginning
farmer
can
be
expected
to
adequately
manage.
24
The
agricultural
assets
cannot
be
leased
or
rented
at
a
rate
25
substantially
different
from
similar
market
arrangements.
The
26
agreement
may
be
terminated,
but
if
the
termination
is
the
27
fault
of
the
owner,
any
tax
credits
must
be
repaid
and
no
28
further
tax
credit
certificates
can
be
issued
to
the
taxpayer.
29
The
tax
credit
equals
5
percent
of
the
amount
paid
to
the
30
taxpayer
under
the
agreement,
except
in
the
case
of
a
landlord
31
who
shares
in
the
costs
associated
with
production.
In
that
32
case,
the
tax
credit
equals
15
percent
of
the
amount
paid
to
33
the
taxpayer
from
crops
or
animals
sold.
34
In
2009,
the
general
assembly
enacted
S.F.
483
(2009
Iowa
35
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Acts,
ch.
135),
which
capped
the
amount
of
tax
credits
to
be
an
1
amount
not
to
exceed
$6
million
per
year
with
the
requirement
2
that
the
certificates
must
be
issued
on
a
first-come,
3
first-served
basis.
4
BILL
——
CHANGES
TO
THE
AGRICULTURAL
ASSETS
TRANSFER
TAX
5
CREDIT.
The
bill
increases
the
amount
of
the
tax
credit
from
6
5
to
7
percent
of
the
amount
paid
to
the
taxpayer
except
in
7
the
case
of
a
cost-share
arrangement
which
is
increased
from
8
15
to
17
percent.
The
lessee
cannot
be
issued
a
tax
credit
9
certificate
equaling
more
than
$50,000.
10
BILL
——
AGRICULTURAL
EXPANSION
TAX
CREDIT.
The
bill
11
enacts
new
Code
section
175.37A
to
provide
an
agricultural
12
expansion
tax
credit.
The
tax
credit
is
also
allowed
against
13
individual
or
corporate
income
tax
liability.
Its
purpose
14
is
to
facilitate
the
expansion
of
agricultural
production
by
15
qualifying
beginning
farmers.
In
order
to
qualify
for
this
tax
16
credit,
a
beginning
farmer
must
be
a
party
to
an
agricultural
17
assets
transfer
agreement,
regardless
of
whether
the
owner
who
18
is
the
other
party
to
the
agreement
claims
the
agricultural
19
assets
transfer
tax
credit.
20
The
new
tax
credit
applies
to
costs
incurred
by
the
21
beginning
farmer
that
are
attributable
to
the
expansion
of
an
22
agricultural
operation
on
land
leased
by
the
beginning
farmer
23
pursuant
to
the
agreement.
The
amount
of
the
tax
credit
is
7
24
percent
of
the
total
amount
of
costs
incurred
by
the
beginning
25
farmer
for
the
acquisition
of
certain
property
that
is
used
on
26
the
leased
land
as
part
of
crop
or
livestock
production.
The
27
bill
establishes
a
minimum
investment
threshold
of
$5,000
and
28
requires
the
property
to
be
either
farm
machinery
or
equipment
29
or
livestock
(referred
to
as
animals),
so
long
as
the
number
30
of
animals
increases
from
the
prior
tax
year.
The
tax
credit
31
applies
to
the
reasonable
market
value
of
the
property
which
is
32
presumed
to
be
its
purchase
price.
33
The
authority
is
required
to
issue
a
tax
credit
certificate
34
to
the
beginning
farmer
to
be
attached
to
the
beginning
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farmer’s
tax
return.
The
authority
cannot
issue
a
tax
credit
1
certificate
equaling
more
than
$50,000
in
any
tax
year.
A
2
beginning
farmer
is
entitled
to
limited
carryforward
but
not
a
3
carryback.
The
beginning
farmer
cannot
transfer
the
tax
credit
4
or
tax
credit
certificate,
except
to
an
estate
or
trust
upon
5
the
farmer’s
death.
6
The
authority
is
required
to
adopt
rules
to
administer
the
7
program
and
may
allow
methods
for
a
beginning
farmer
to
acquire
8
or
dispose
of
the
qualified
property
and
to
review
and
approve
9
applications
for
tax
credit
certificates.
10
The
bill
allows
up
to
$12
million
in
tax
credit
certificates
11
for
both
the
current
agricultural
assets
transfer
tax
credit
12
and
the
new
agricultural
expansion
tax
credit
to
be
issued
13
by
the
authority
each
year.
Each
year,
the
authority
must
14
allocate
a
percentage
of
certificates
to
support
tax
credits
15
to
be
issued
for
each
program,
but
may
adjust
the
allocation
16
during
the
year
as
it
deems
necessary.
The
authority
must
17
still
issue
tax
certificates
allocated
under
each
program
on
a
18
first-come,
first-served
basis.
19
The
bill
takes
effect
upon
enactment
and
applies
20
retroactively
to
January
1,
2013,
for
tax
years
beginning
on
21
or
after
that
date.
22
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