Providing for a beginning farmer tax credit program, providing for fees, and including effective date and retroactive applicability provisions

Presentado por el comité Ways and Means (successor To Ssb 1181) del Senado

Temas:Agriculture Taxes Livestock & confinements Tax credits & incentives

La misma legislación: HSB 173, SSB 1181, SF 444, HF 647, HF 768

Escriba a sus legisladores sobre estoQué cambió antes de aprobarse

Página oficial del proyecto Declaraciones de cabilderos Una página para imprimir

Dónde está ahora

Hecho: Presentado4 de marzo de 2019
Hecho: Subcomité11 de marzo de 2019
Hecho: Comité del Senado4 de marzo de 2019
Hecho: Lo aprueba el Senado25 de abril de 201949–0
Se saltó: Comité de la CámaraSe saltó
Hecho: Lo aprueba la Cámara24 de abril de 2019
Hecho: A gobernador(a)2 de mayo de 2019
Hecho: Firmado como ley21 de mayo de 2019

HF 768 se hizo ley → La misma legislación se aprobó como HF 768, así que esta versión se dejó de lado. Ir a HF 768 ¿Qué es el embudo (funnel)?

Qué contiene

La explicación oficial está en inglés; todavía no hay resumen en palabras sencillas.

IOWA FINANCE AUTHORITY. This bill amends provisions in several Code chapters, including Code chapter 16, which governs the Iowa finance authority (IFA). IFA is under the jurisdiction of a board of directors. The Code chapter also provides for several other boards, including the agricultural development board, which oversees programs associated with beginning farmers. The bill provides that the agricultural development board is to designate one of its members to serve on IFA’s board of directors.

Lea la explicación completa

TAXPAYERS AND FARMERS QUALIFYING TO PARTICIPATE IN THE BEGINNING FARMER TAX PROGRAM. The bill creates a beginning farmer tax credit program, which replaces the agricultural assets transfer tax credit, under IFA’s jurisdiction. Under the program, an eligible taxpayer (taxpayer) who holds agricultural assets (agricultural land, depreciable agricultural property, crops, or livestock) and who assists a qualified beginning farmer (farmer) acquire agricultural assets by a form of specified legal arrangement is entitled to claim a tax credit against the taxpayer’s individual or corporate income tax liability., as an individual, partnership, family farm corporation, or family farm limited liability company). The taxpayer must not have been at fault for terminating a prior agreement in which the taxpayer was able to claim a tax credit. The taxpayer must enter into an agricultural lease agreement (agreement) with the farmer who must be an individual, partnership, family farm corporation, or family farm limited liability company. In addition, the farmer must be a resident of this state; have sufficient education, training, or experience in farming; have access to adequate working capital and production items; must materially and substantially participate in farming; and not own more than a percent ownership interest in an agricultural asset included in the agreement. BEGINNING FARMER TAX CREDIT. The tax credit is calculated based on the type of rent payment arrangement agreed to by the parties, which is either on a cash basis in which a fixed payment is made or a commodity share basis in which the taxpayer takes a percentage of the crop or livestock produced., crop yield). For an agreement which includes a rent payable on a cash basis, the tax credit amount equals percent of the gross amount paid to the taxpayer under the agreement. For an agreement which includes rent payable on a commodity share basis, the tax credit amount equals percent of the amount paid to the eligible taxpayer from crops or livestock sold under the agreement. In the case of a flexible arrangement in which some risk is shared between the parties, the tax credit amount equals percent of the amount paid to the taxpayer as a percentage of the gross value of the commodity. A tax credit cannot exceed $50,000 in any tax year. APPLICATIONS AND CERTIFICATES. The agricultural development board is required to review and IFA is required to approve applications for the tax credit. As part of this process, IFA must calculate the amount of the tax credit that may be awarded to that applicant. IFA must approve all applications on a first-come, first-served basis and issue tax credit certificates to approved taxpayers. IFA is allowed to issue up to $12 million in tax credit certificates each tax year, an increase from $6 million under the agricultural assets transfer tax credit. APPLICABILITY OF PRIOR TAX CREDITS.81 may continue to be carried forward. BACKGROUND. The agricultural assets transfer tax credit was first established in 2006 (2006 Iowa Acts, chapter 1161) and has been subsequently amended. Another form of a tax credit assisting beginning farmers, referred to as the custom farming contract tax credit, was established in 2013 (2013 Iowa Acts, chapter 125). Both tax credits were under the beginning farmer tax credit program and administered by the agricultural development board (board) acting as the agricultural development authority and subject to a limit of $12 million. The program was transferred to IFA (2013 Iowa Acts, chapter 100, and 2014 Iowa Acts, chapter 1080). Amendments to the agricultural assets transfer tax credit and the custom farming contract tax credit were repealed on December 31, 2017 (2013 Iowa Acts, chapter 125), except for a provision which extended the tax credit carryover from to years. The funding limit was restored to its present $6 million limit. EFFECTIVE AND RETROACTIVE APPLICABILITY. The bill takes effect upon enactment and applies retroactively to January 1, 2019, to tax years beginning on or after that date.

Cambiado después por las enmiendas S-3228, H-1275; vea Enmiendas.

Texto completo del proyecto (en inglés) · Qué cambió antes de aprobarse¹

Nota fiscal

Resumen con IA This bill replaces the Agricultural Assets Transfer Tax Credit with a new Beginning Farmer Tax Credit that increases the annual tax credit cap from $6.0 million to approximately $12.0 million. The change is projected to decrease net General Fund revenue by $0.4 million in fiscal year 2020, $1.4 million in fiscal year 2021, $2.5 million in fiscal year 2022, $3.0 million in fiscal year 2023, $3.3 million in fiscal year 2024, $3.4 million in fiscal year 2025, $3.6 million in fiscal year 2026, and $3.8 million in fiscal year 2027 and after. Additionally, revenue for schools from the local option income surtax is projected to decrease by $0.1 million per year beginning in fiscal year 2022. (en inglés)²

Lea la nota fiscal (en inglés)

Description

House File 768 creates a Beginning Farmer Tax Credit. The new tax credit replaces the existing Agricultural Assets Transfer Tax Credit. The new tax credit raises the annual aggregate tax credit cap from the current $6.0 million to approximately $12.0 million. Like the previous version of the credit, the new tax credit is not transferable or refundable, but any unused tax credits may be carried forward for up to 10 tax years. The changes are effective for tax years beginning on or after January 1, 2019.

Background

The current Agricultural Assets Transfer Tax Credit is allowed for an owner of agricultural assets that are the subject of a lease or rental agreement with a qualified beginning farmer. The term of the agreement may be for two to five years. The tax credit is equal to 5.0% of the lease or rental agreement income if the agreement is on a cash payment basis, or 15.0% if the agreement is on a commodity share basis. The current tax credit has a $6.0 million annual aggregate award cap that continues without sunset under current law. At the end of calendar year (CY) 2018, agreements with a total tax credit value of $7.9 million were in place and under current law will consume some of the annual $6.0 million cap available for the next several fiscal years. In addition, a total of $3.9 million in agreements has been approved for the tax credit in CY 2019.

Administration of this tax credit is the responsibility of the Iowa Finance Authority (IFA). Over three years (FY 2015 through FY 2017), IFA expenses to process and monitor 1,604 applications totaled $652,000, or $406 per application. The Bill establishes maximum application fees that IFA may charge. Through January 1, 2022, the maximum fee is $300 to $500 per application. After that date, the total amount of fees IFA may charge applicants is limited to no more than the cost to administer the program.

Assumptions

The tax credit cap will be administered as a calendar year cap (January 1 through December 31).
The $7.9 million in agreements that exist as of the end of CY 2018 will not be included as part of the new $12.0 million tax credit cap. A CY 2018 or earlier agreement will remain in force and will earn tax credits when each year of the agreement is completed.
The $3.9 million in CY 2019 agreements will be issued as part of the $12.0 million CY 2019 credit cap. For all future agreements, the term is assumed to be three years.
It is assumed that under the new tax credit, the estimated tax credit award for all years of each agreement will be applied to the $12.0 million cap for that approval year. This is a change from the existing tax credit, where each year of an agreement was applied to the tax credit cap for the calendar year in which each of the years of the agreement fell.
Under existing law, the full $6.0 million annual cap is assumed to be awarded. Due to contract cancellations after agreements are approved, only 90.0% of the projected tax credit award increase is assumed to result in increased issuance of tax credits.
Due to insufficient tax liability, only 70.0% of awarded tax credits will be redeemed. As nonrefundable credits, the tax credits are assumed to be redeemed over the seven years following the year of the award. The assumed redemption schedule is as follows:
Year 1 (initial year of award) = 0.0%
Year 2 = 30.0%
Year 3 = 15.0%
Year 4 through year 8 = 5.0%
As nonrefundable credits, credit redemptions impact the calculation of the local option income surtax for schools. The surtax rate is assumed to be 2.9%.

Fiscal Impact

Replacing the existing Agricultural Asset Transfer Tax Credit with the Beginning Farmer Tax Credit is projected to decrease net General Fund revenue by the following amounts:

FY 2020 = $0.4 million
FY 2021 = $1.4 million
FY 2022 = $2.5 million
FY 2023 = $3.0 million
FY 2024 = $3.3 million
FY 2025 = $3.4 million
FY 2026 = $3.6 million
FY 2027 and after = $3.8 million

In addition, the amount of revenue raised by the local option income surtax for schools will be reduced by a projected $0.1 million per year, beginning FY 2022.