Providing for a specialty food beginning farmer tax credit, and providing for fees

BACKGROUND. This bill amends provisions in Code chapter providing for a number of development programs administered by the Iowa finance authority (IFA). Subchapter VIII provides for agricultural development programs under the supervision of the agricultural development division and agricultural development board. A number of the agricultural development programs support beginning farmers with low or moderate net worth to acquire agricultural land for farming. The beginning farmer tax credit program creates a tax credit against the tax liability of the owner of agricultural land entering into a lease with a beginning farmer for agricultural land, equipment, and commodities such as crops or livestock. The taxpayer may be either an individual or a business entity that can hold agricultural land under Code chapter 9H, Iowa’s corporate farming law. A taxpayer participating in the program is issued a tax credit certificate. The amount of the tax credit is calculated differently based on the type of rent payment arrangement described in the agreement and a taxpayer is not eligible to claim a tax credit of more than $50,000 in a tax year. The agricultural development board is required to review applications subject to IFA’s approval. A fee is imposed for processing applications. A taxpayer is issued a tax credit certificate by the department of revenue (DOR) which may be redeemed by the taxpayer. The tax credit may be carried forward but not carried back and is not refundable. Tax credits are awarded to all taxpayers whose applications have been approved during a calendar year so long as the amount of all awards does not exceed the $12 million aggregate award limitation. BILL’S PROVISIONS. The bill establishes a specialty food beginning farmer tax credit program based on the current beginning farmer tax credit program. In this case, the tax credit may be claimed by a beginning farmer engaged in a specialty food farming operation rather than a landlord. The specialty beginning farmer must be engaged in producing a food commodity and may be engaged in processing that food commodity into a food product. The food commodity includes food animals used for meat or poultry or associated items such as milk or eggs. It may also include fruit, vegetables, nuts, or honey. Like the beginning farmer tax credit program, this program is administered by the authority and the department. The bill provides similar eligibility requirements applied to a beginning farmer engaged in specialty production or processing. IFA is required to establish application requirements, including the establishment of fees. The amount of the tax credit equals percent of the purchase price of the agricultural land, percent of the purchase price of equipment or machinery, and percent of payments made to an accredited educational institution that prepares a beginning farmer for managing a specialty farm operation or related food processing operation. The amount of the tax credit cannot exceed $50,000 per any 12-month period and the total amount that may be awarded for all claims cannot exceed $6 million in any 12-month period. The $12 million used to support the beginning farmer tax credit program is reduced by half so that the programs share half of the current total. IFA must award each eligible taxpayer the full amount of the eligible taxpayer’s tax credit without proration until the maximum amount is reached. The eligible taxpayer is issued a tax certificate which may be transferred to a new holder under certain conditions. The eligible taxpayer, but not a transferee, may claim the tax credit as a refund.