Bill Text: IA SF291 | 2021-2022 | 89th General Assembly | Introduced
Bill Title: A bill for an act relating to the beginning farmer tax credit program, by modifying participation and lease agreement requirements and tax credit amounts, and including effective date provisions.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2021-02-16 - Subcommittee: Dawson, Goodwin, and T. Taylor. S.J. 358. [SF291 Detail]
Download: Iowa-2021-SF291-Introduced.html
Senate
File
291
-
Introduced
SENATE
FILE
291
BY
KINNEY
A
BILL
FOR
An
Act
relating
to
the
beginning
farmer
tax
credit
program,
by
1
modifying
participation
and
lease
agreement
requirements
and
2
tax
credit
amounts,
and
including
effective
date
provisions.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
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Section
1.
Section
16.58,
subsections
1,
2,
and
3,
Code
1
2021,
are
amended
to
read
as
follows:
2
1.
“Agricultural
assets”
asset”
means
agricultural
land
3
with
or
without
an
agricultural
improvement
,
depreciable
4
agricultural
property,
crops,
or
livestock.
5
2.
“Agricultural
improvements”
improvement”
means
any
6
improvements,
including
buildings,
structures,
or
fixtures
7
suitable
for
use
in
farming
which
are
,
if
located
on
any
size
8
parcel
of
agricultural
land.
9
3.
“Agricultural
land”
means
land
suitable
for
use
in
10
farming
,
any
portion
of
which
may
include
an
agricultural
11
improvement
.
12
Sec.
2.
Section
16.79A,
subsection
1,
Code
2021,
is
amended
13
to
read
as
follows:
14
1.
a.
A
beginning
farmer
tax
credit
is
allowed
only
for
15
agricultural
assets
that
are
subject
to
an
agricultural
lease
16
agreement
entered
into
by
an
eligible
taxpayer
and
a
qualifying
17
beginning
farmer
participating
in
the
beginning
farmer
tax
18
credit
program
established
pursuant
to
section
16.78
.
19
b.
The
tax
credit
is
allowed
regardless
of
whether
the
20
principle
agricultural
asset
is
soil,
pasture,
or
a
building
or
21
other
structure
used
in
farming.
22
Sec.
3.
Section
16.79A,
subsection
3,
paragraph
c,
Code
23
2021,
is
amended
to
read
as
follows:
24
c.
The
agreement
must
be
for
at
least
two
years,
but
not
25
more
than
five
years.
The
agreement
may
be
renewed
any
number
26
of
times
by
the
eligible
taxpayer
and
qualified
beginning
27
farmer
for
a
term
of
at
least
two
years,
but
not
more
than
five
28
years.
However,
an
eligible
taxpayer
shall
not
participate
in
29
the
program
for
more
than
fifteen
years.
30
Sec.
4.
Section
16.81,
subsection
4,
Code
2021,
is
amended
31
by
striking
the
subsection.
32
Sec.
5.
Section
16.81,
subsection
6,
Code
2021,
is
amended
33
to
read
as
follows:
34
6.
The
authority
shall
approve
all
beginning
farmer
tax
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credit
applications
that
meet
the
requirements
of
this
subpart
1
and
make
tax
credit
awards
on
a
first-come,
first-served
2
basis,
subject
to
the
limitations
in
section
16.82A
.
The
3
authority
shall
not
disapprove
an
application
or
fail
to
4
award
a
tax
credit
to
an
eligible
taxpayer
merely
because
the
5
eligible
taxpayer
had
entered
into
a
different
agreement
with
6
a
qualified
beginning
farmer
and
the
authority
approved
an
7
application
to
make
a
tax
credit
award
to
the
eligible
taxpayer
8
for
the
same
or
different
tax
year.
9
Sec.
6.
Section
16.82,
subsection
5,
Code
2021,
is
amended
10
to
read
as
follows:
11
5.
The
amount
of
tax
credits
that
may
be
awarded
to
an
12
eligible
taxpayer
for
any
one
year
under
all
agreements
an
13
agreement
shall
not
exceed
fifty
thousand
dollars.
14
Sec.
7.
BEGINNING
FARMER
TAX
CREDIT
PROGRAM
——
FORMER
15
PERIOD
OF
PARTICIPATION
EXTENDED.
An
eligible
taxpayer
first
16
participating
in
the
beginning
farmer
tax
credit
program
on
or
17
after
January
1,
2019,
as
provided
in
2019
Iowa
Acts,
chapter
18
161,
for
a
tax
year
beginning
on
or
after
that
date,
may
19
participate
in
the
program
for
not
more
than
fifteen
years
in
20
the
same
manner
as
provided
in
section
16.79A,
as
amended
by
21
this
Act.
22
Sec.
8.
EFFECTIVE
DATE.
This
Act
takes
effect
January
1,
23
2022.
24
EXPLANATION
25
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
26
the
explanation’s
substance
by
the
members
of
the
general
assembly.
27
GENERAL.
This
bill
provides
for
the
participation
of
an
28
eligible
taxpayer
(taxpayer)
and
qualified
beginning
farmer
29
(beginning
farmer)
in
the
beginning
farmer
tax
credit
program
30
(program)
(Code
section
16.81(4)).
Under
the
program,
a
tax
31
credit
is
awarded
to
a
taxpayer
who
transfers
agricultural
32
assets
to
a
beginning
farmer
by
agricultural
lease
agreement
33
(agreement).
The
transferred
agricultural
assets
include
34
agricultural
land
and
improvements,
as
well
as
depreciable
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agricultural
property.
The
agreement
must
be
approved
by
the
1
Iowa
finance
authority
(authority)
(Code
section
16.79A)
who
2
issues
a
tax
credit
certificate
to
the
taxpayer
on
an
annual
3
basis
for
the
period
of
the
agreement
(Code
section
16.81).
4
LEASE
OF
AGRICULTURAL
LAND
WHICH
INCLUDES
IMPROVEMENTS
5
(BUILDINGS).
The
bill
provides
that
the
agreement
may
provide
6
for
lease
of
any
size
parcel
of
agricultural
land
and
an
7
improvement
such
as
a
building
(amended
Code
section
16.58(1),
8
(2),
and
(3)).
The
principal
agricultural
asset
transferred
9
in
the
agreement
may
be
agricultural
land
or
that
part
of
the
10
agricultural
land
which
is
a
building
or
other
structure
used
11
in
farming
(amended
Code
section
16.79A(1)).
12
PARTICIPATION
IN
THE
PROGRAM
——
FROM
10
TO
15
YEARS.
13
The
bill
increases
from
10
to
15
the
number
of
years
that
14
a
taxpayer
may
participate
in
the
program
(amended
Code
15
section
16.79A(3)).
The
extended
years
of
participation
16
apply
retroactively
to
a
taxpayer
previously
approved
by
the
17
authority
to
participate
in
the
program.
18
PARTICIPATION
IN
THE
PROGRAM
——
TAX
CREDIT
CERTIFICATES
19
AND
AWARDS.
The
bill
provides
that
a
taxpayer
may
claim
20
multiple
tax
credits
under
the
program
(amended
Code
sections
21
16.79A(3)
and
16.81(6))
so
long
as
each
tax
credit
is
based
22
on
an
agreement
approved
by
the
authority
(amended
Code
23
section
16.81(6)).
It
also
provides
that
the
current
$50,000
24
limitation
on
tax
credits
that
can
be
claimed
by
a
taxpayer
25
applies
to
each
rather
than
all
such
agreements
(amended
Code
26
section
16.82(5)).
27
BACKGROUND.
Generally,
in
order
to
qualify
as
a
beginning
28
farmer,
a
person
must
have
a
low
or
moderate
net
worth,
be
able
29
to
successfully
engage
in
farming,
and
promise
to
materially
30
participate
in
the
farming
operation
(Code
sections
16.58(6)
31
and
(10),
and
16.79(2)).
The
amount
of
the
tax
credit
depends
32
upon
the
type
of
payment
arrangement
provided
in
the
agreement,
33
including
a
fixed
amount
(5
percent
of
cash
rent
payment)
or
34
some
form
or
risk-sharing
between
the
parties
(15
percent
of
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the
market
price
of
the
commodity
produced
on
the
leasehold).
1
A
taxpayer
may
claim
the
tax
credit
in
the
applicable
tax
year
2
up
to
the
taxpayer’s
liability.
Any
amount
of
the
unused
tax
3
credit
may
be
applied
to
reduce
the
taxpayer’s
liability
for
4
each
of
the
following
10
years
until
depleted,
whichever
comes
5
first;
and
cannot
be
refunded
(Code
section
16.82(7)).
6
EFFECTIVE
DATE.
The
bill
takes
effect
on
January
1,
2022.
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