Providing for water quality practices, including an edge-of-field practice tax credit and cover crop practice tax credit

GENERAL PROVISIONS. This bill provides for a water quality practice program (program) administered by the department of agriculture and land stewardship (DALS) in cooperation with the department of revenue (DOR). The purpose of the program is to establish new water quality practices as part of existing farming practices, including by providing for the establishment of measures that limit sediment or nutrients from being conveyed by subsurface drainage or surface water runoff or leaching and that may be part of a soil and water conservation practice and that may promote soil health. TAX CREDIT PROVISIONS. The program provides for two separate tax credits: (1) an edge-of-field practice tax credit and (2) a cover crop practice tax credit. The bill provides for the consideration and approval of applications submitted to DALS by eligible taxpayers seeking to participate in the program. A person is eligible to participate in the program if the person is eligible to claim the family farm tax credit (Code chapter 425A) and has a net worth not exceeding $2 million. The person must also agree to establish and maintain a water quality practice associated with a tax credit for at least 10 years. The amount of the tax credit cannot exceed 50 percent of the estimated or actual cost of establishing the water quality practice, whichever is less. DALS cannot approve an application, if the aggregate amount awarded for all tax credit awards exceeds $10 million in any state fiscal year (July 1 through June 30). Upon approval of a tax credit award, DALS must issue the eligible taxpayer a tax credit certificate to be included as part of the eligible taxpayer’s tax return according to DOR requirements. The bill provides limitations upon the transferability of a tax credit and the use of the tax credit to offset income. ENFORCEMENT. DALS or a commissioner of a soil and water conservation district is authorized to enter onto land where a water quality practice is established in the same manner as a commissioner may enter on the land where a soil and water conservation practice financed with state cost-share moneys is established (Code chapter 161A). If the eligible taxpayer fails to comply with any requirement of the program or the terms of the approved application, DALS may revoke the tax credit award and may rescind any tax credit certificate that has been issued. In that case, DOR must seek repayment of the tax credit award by considering the repayment amount as a past due tax amount.