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House File 242 - IntroducedA Bill ForAn Act 1relating to agricultural lease agreements entered
2into by eligible taxpayers and qualified beginning farmers
3participating in the beginning farmer tax credit program,
4by allowing an eligible taxpayer’s unused tax credit to be
5transferred to the qualified beginning farmer, and including
6effective date provisions.
7BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 16.77, Code 2021, is amended by adding
2the following new subsection:
3 NEW SUBSECTION. 3A. “Eligible qualified beginning farmer”
4means a qualified beginning farmer participating in the
5beginning farmer tax credit program who is transferred a tax
6credit by an eligible taxpayer as provided in an agricultural
7lease agreement entered into by the eligible taxpayer and
8qualified beginning farmer.
9 Sec. 2. Section 16.79A, Code 2021, is amended by adding the
10following new subsection:
11 NEW SUBSECTION. 3A. The agricultural lease agreement may
12provide that each tax credit claimed by the eligible taxpayer
13in excess of the taxpayer’s tax liability for the tax year in
14which it is claimed be transferred to the eligible qualified
15beginning farmer who is also party to the agricultural lease
16agreement as provided in section 16.82A.
17 Sec. 3. Section 16.82, subsections 7, 8, and 9, Code 2021,
18are amended to read as follows:
197. a. A tax credit in excess of the eligible taxpayer’s
20tax liability for the tax year in which it is claimed is not
21refundable but may be credited to the tax liability of the
22eligible taxpayer for the following ten tax years or until
23depleted, whichever is earlier. A tax credit shall not be
24carried back to a tax year prior to the first tax year in which
25the eligible taxpayer redeems may claim the tax credit.
26b. In lieu of crediting a tax credit to the tax liability
27of an eligible taxpayer in a following year as provided in
28paragraph “a”, the eligible taxpayer may transfer the tax
29credit to the eligible qualified beginning farmer who is the
30other party to the agricultural lease agreement. The tax
31credit transferred to an eligible qualified beginning farmer
32is refundable. The tax credit shall not be carried back to
33a tax year prior to the first tax year in which the eligible
34qualified beginning farmer first may claim the tax credit.
358. a. (1) To claim a tax credit under this section,
-1-1an eligible taxpayer shall include one or more tax credit
2certificates issued by the authority with the eligible
3taxpayer’s tax return pursuant to rules adopted by the
4department.
5(2) To claim a tax credit transferred to an eligible
6qualified beginning farmer under this section, the eligible
7qualified beginning taxpayer must include a tax credit
8certificate issued by the authority with the eligible qualified
9beginning farmer’s tax return.
10b. (1) A tax credit that may be claimed by an eligible
11taxpayer shall not be transferable transferred to any other
12person other than anyone except the following:
13(a) An eligible qualified beginning farmer if the transfer
14of a refundable tax credit is provided in the agricultural
15lease agreement entered into by an eligible taxpayer and
16eligible qualified beginning farmer as provided in section
1716.79A.
18(b) Aneligible taxpayer’s estate or trust upon the eligible
19taxpayer’s death pursuant to rules adopted by the department.
20(2) A tax credit that may be claimed by an eligible
21qualified beginning farmer shall not be transferred to anyone
22except the eligible qualified beginning farmer’s estate or
23trust upon the eligible qualified beginning farmer’s death.
24c. The department shall adopt rules required to administer
25and enforce this subsection.
269. If an agreement is terminated by the eligible taxpayer,
27all of the following shall apply:
28a. Any tax credit properly claimed by the eligible taxpayer
29prior to the date of termination or for the year during which
30the termination occurred shall be allowed except as provided in
31paragraph “b”, but no additional tax credits may be issued or
32claimed under the program for that agreement. If a tax credit
33may be claimed by an eligible taxpayer, any unused tax credit
34shall be transferred to an eligible qualified beginning farmer
35in accordance with the terms of an agricultural lease agreement
-2-1entered into by the parties and approved by the authority.
2 The eligible taxpayer may apply for and be awarded another
3beginning farmer tax credit under a new agreement for the same
4agricultural assets as provided in this section.
5b. If the authority determines that the eligible taxpayer
6is at fault for the termination, any beginning farmer tax
7credit that is claimed by the eligible taxpayer for the year
8during which the termination occurred shall be disallowed and
9the amount shall be considered a tax payment due. If the tax
10credit is disallowed, any tax credit that would otherwise be
11transferred to an eligible qualified beginning farmer shall be
12terminated.
13c. If an eligible taxpayer does not notify the authority of
14the termination that an agricultural lease agreement has been
15terminated within thirty days of the date of the termination
16in the manner and form prescribed by the authority, the
17eligible taxpayer shall be conclusively deemed at fault for the
18termination.
19 Sec. 4. Section 16.82A, subsection 1, paragraph c, Code
202021, is amended by striking the paragraph.
21 Sec. 5. Section 16.82A, Code 2021, is amended by adding the
22following new subsections:
23 NEW SUBSECTION. 1A. If an agricultural lease agreement
24entered into by an eligible taxpayer and eligible qualified
25beginning farmer so provides and is approved, the authority
26shall make a tax credit award to the eligible qualified
27beginning farmer each year. The tax credit award shall equal
28the unused amount of the tax credit claimed by the eligible
29taxpayer in the prior year.
30 NEW SUBSECTION. 1B. If, after a tax credit award is made,
31the eligible taxpayer or eligible qualified beginning farmer no
32longer meets the requirements of the agreement or the program,
33the authority may revoke the tax credit awarded to the eligible
34taxpayer or an eligible qualified beginning farmer and may
35rescind any tax credit certificate that has been issued to
-3-1either party.
2 NEW SUBSECTION. 4. a. The authority shall issue a tax
3credit certificate on an annual basis to an eligible qualified
4beginning farmer for the amount transferred by an eligible
5taxpayer if so required by an agricultural lease agreement
6approved by the authority pursuant to section 16.82. The
7authority may require that the eligible taxpayer submit a
8copy of the eligible taxpayer’s tax return for that year in
9order to calculate the amount of the tax credit transferred
10to the eligible qualified beginning farmer. The tax credit
11certificate shall contain all information required by the
12department.
13b. The tax credit certificate, unless rescinded by the
14authority, shall be accepted by the department as payment
15of a refund or as payment for taxes pursuant to chapter
16422, subchapters II and III. A tax credit certificate shall
17be subject to any conditions or restrictions placed by the
18authority upon the face of the tax credit certificate and
19subject to the limitations of the program.
20 Sec. 6. EFFECTIVE DATE. This Act takes effect January 1,
212022.
22EXPLANATION
23The inclusion of this explanation does not constitute agreement with
24the explanation’s substance by the members of the general assembly.
25GENERAL. This bill amends provisions in Code chapter
2616, subchapter VIII, part 5, which establishes the beginning
27farmer tax credit program (program). The program applies to
28an eligible taxpayer (taxpayer) and qualified beginning farmer
29(beginning farmer) who have entered into an agricultural lease
30agreement (agreement). Under the bill, an agreement may allow
31the taxpayer to transfer unused taxpayer’s tax credits to
32the beginning farmer for the number of years in which their
33agreement is effective. The authority is required to issue
34a tax credit certificate to the beginning farmer in order to
35claim the tax credit which may be applied against the beginning
-4-1farmer’s tax liability or may be paid to the beginning farmer
2in the form of a refund.
3CURRENT PROGRAM REQUIREMENTS. Under the program, an
4agreement must be for at least two but not more than five
5years, and may be renewed for at least two but not more than
6five years. It must involve agricultural land, including
7buildings, or equipment used as part of a farming operation.
8Generally, in order to qualify as a beginning farmer, a person
9must have a low or moderate net worth, be able to successfully
10engage in farming, and promise to materially participate in
11the farming operation (Code sections 16.58(6), 16.58(10),
12and 16.79(2)). The authority must approve an application to
13participate in the program (Code section 16.81(6)).
14CURRENT TAX CREDIT. Once the authority approves an
15application, it must calculate the total tax credit award due
16to the taxpayer for all years under the approved agreement
17(Code section 16.82A) and issue a tax credit certificate to
18the taxpayer each year that a tax credit may be claimed (Code
19section 16.81(4)). The total amount of the tax credit divided
20over the duration of the agreement depends upon the type of
21rent arrangement entered into by the parties which may be based
22on a fixed amount or a share of the commodity produced on the
23leasehold. For each applicable year, the taxpayer may claim
24the tax credit up to the taxpayer’s tax liability for that
25year. The unused amount remaining may be applied to reduce
26the taxpayer’s liability for the following or subsequent years
27up to a total of 10 years or until the remaining amount has
28been used up, whichever occurs first. The tax credit cannot be
29carried back to a prior year or refunded. In addition, the tax
30credit cannot be transferred to another person other than to
31the taxpayer’s estate or trust upon the taxpayer’s death (Code
32section 16.82(8)(b)).
33EFFECTIVE DATE. The bill takes effect January 1, 2022.
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2into by eligible taxpayers and qualified beginning farmers
3participating in the beginning farmer tax credit program,
4by allowing an eligible taxpayer’s unused tax credit to be
5transferred to the qualified beginning farmer, and including
6effective date provisions.
7BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 16.77, Code 2021, is amended by adding
2the following new subsection:
3 NEW SUBSECTION. 3A. “Eligible qualified beginning farmer”
4means a qualified beginning farmer participating in the
5beginning farmer tax credit program who is transferred a tax
6credit by an eligible taxpayer as provided in an agricultural
7lease agreement entered into by the eligible taxpayer and
8qualified beginning farmer.
9 Sec. 2. Section 16.79A, Code 2021, is amended by adding the
10following new subsection:
11 NEW SUBSECTION. 3A. The agricultural lease agreement may
12provide that each tax credit claimed by the eligible taxpayer
13in excess of the taxpayer’s tax liability for the tax year in
14which it is claimed be transferred to the eligible qualified
15beginning farmer who is also party to the agricultural lease
16agreement as provided in section 16.82A.
17 Sec. 3. Section 16.82, subsections 7, 8, and 9, Code 2021,
18are amended to read as follows:
197. a. A tax credit in excess of the eligible taxpayer’s
20tax liability for the tax year in which it is claimed is not
21refundable but may be credited to the tax liability of the
22eligible taxpayer for the following ten tax years or until
23depleted, whichever is earlier. A tax credit shall not be
24carried back to a tax year prior to the first tax year in which
25the eligible taxpayer redeems may claim the tax credit.
26b. In lieu of crediting a tax credit to the tax liability
27of an eligible taxpayer in a following year as provided in
28paragraph “a”, the eligible taxpayer may transfer the tax
29credit to the eligible qualified beginning farmer who is the
30other party to the agricultural lease agreement. The tax
31credit transferred to an eligible qualified beginning farmer
32is refundable. The tax credit shall not be carried back to
33a tax year prior to the first tax year in which the eligible
34qualified beginning farmer first may claim the tax credit.
358. a. (1) To claim a tax credit under this section,
-1-1an eligible taxpayer shall include one or more tax credit
2certificates issued by the authority with the eligible
3taxpayer’s tax return pursuant to rules adopted by the
4department.
5(2) To claim a tax credit transferred to an eligible
6qualified beginning farmer under this section, the eligible
7qualified beginning taxpayer must include a tax credit
8certificate issued by the authority with the eligible qualified
9beginning farmer’s tax return.
10b. (1) A tax credit that may be claimed by an eligible
11taxpayer shall not be transferable transferred to any other
12person other than anyone except the following:
13(a) An eligible qualified beginning farmer if the transfer
14of a refundable tax credit is provided in the agricultural
15lease agreement entered into by an eligible taxpayer and
16eligible qualified beginning farmer as provided in section
1716.79A.
18(b) Aneligible taxpayer’s estate or trust upon the eligible
19taxpayer’s death pursuant to rules adopted by the department.
20(2) A tax credit that may be claimed by an eligible
21qualified beginning farmer shall not be transferred to anyone
22except the eligible qualified beginning farmer’s estate or
23trust upon the eligible qualified beginning farmer’s death.
24c. The department shall adopt rules required to administer
25and enforce this subsection.
269. If an agreement is terminated by the eligible taxpayer,
27all of the following shall apply:
28a. Any tax credit properly claimed by the eligible taxpayer
29prior to the date of termination or for the year during which
30the termination occurred shall be allowed except as provided in
31paragraph “b”, but no additional tax credits may be issued or
32claimed under the program for that agreement. If a tax credit
33may be claimed by an eligible taxpayer, any unused tax credit
34shall be transferred to an eligible qualified beginning farmer
35in accordance with the terms of an agricultural lease agreement
-2-1entered into by the parties and approved by the authority.
2 The eligible taxpayer may apply for and be awarded another
3beginning farmer tax credit under a new agreement for the same
4agricultural assets as provided in this section.
5b. If the authority determines that the eligible taxpayer
6is at fault for the termination, any beginning farmer tax
7credit that is claimed by the eligible taxpayer for the year
8during which the termination occurred shall be disallowed and
9the amount shall be considered a tax payment due. If the tax
10credit is disallowed, any tax credit that would otherwise be
11transferred to an eligible qualified beginning farmer shall be
12terminated.
13c. If an eligible taxpayer does not notify the authority of
14the termination that an agricultural lease agreement has been
15terminated within thirty days of the date of the termination
16in the manner and form prescribed by the authority, the
17eligible taxpayer shall be conclusively deemed at fault for the
18termination.
19 Sec. 4. Section 16.82A, subsection 1, paragraph c, Code
202021, is amended by striking the paragraph.
21 Sec. 5. Section 16.82A, Code 2021, is amended by adding the
22following new subsections:
23 NEW SUBSECTION. 1A. If an agricultural lease agreement
24entered into by an eligible taxpayer and eligible qualified
25beginning farmer so provides and is approved, the authority
26shall make a tax credit award to the eligible qualified
27beginning farmer each year. The tax credit award shall equal
28the unused amount of the tax credit claimed by the eligible
29taxpayer in the prior year.
30 NEW SUBSECTION. 1B. If, after a tax credit award is made,
31the eligible taxpayer or eligible qualified beginning farmer no
32longer meets the requirements of the agreement or the program,
33the authority may revoke the tax credit awarded to the eligible
34taxpayer or an eligible qualified beginning farmer and may
35rescind any tax credit certificate that has been issued to
-3-1either party.
2 NEW SUBSECTION. 4. a. The authority shall issue a tax
3credit certificate on an annual basis to an eligible qualified
4beginning farmer for the amount transferred by an eligible
5taxpayer if so required by an agricultural lease agreement
6approved by the authority pursuant to section 16.82. The
7authority may require that the eligible taxpayer submit a
8copy of the eligible taxpayer’s tax return for that year in
9order to calculate the amount of the tax credit transferred
10to the eligible qualified beginning farmer. The tax credit
11certificate shall contain all information required by the
12department.
13b. The tax credit certificate, unless rescinded by the
14authority, shall be accepted by the department as payment
15of a refund or as payment for taxes pursuant to chapter
16422, subchapters II and III. A tax credit certificate shall
17be subject to any conditions or restrictions placed by the
18authority upon the face of the tax credit certificate and
19subject to the limitations of the program.
20 Sec. 6. EFFECTIVE DATE. This Act takes effect January 1,
212022.
22EXPLANATION
23The inclusion of this explanation does not constitute agreement with
24the explanation’s substance by the members of the general assembly.
25GENERAL. This bill amends provisions in Code chapter
2616, subchapter VIII, part 5, which establishes the beginning
27farmer tax credit program (program). The program applies to
28an eligible taxpayer (taxpayer) and qualified beginning farmer
29(beginning farmer) who have entered into an agricultural lease
30agreement (agreement). Under the bill, an agreement may allow
31the taxpayer to transfer unused taxpayer’s tax credits to
32the beginning farmer for the number of years in which their
33agreement is effective. The authority is required to issue
34a tax credit certificate to the beginning farmer in order to
35claim the tax credit which may be applied against the beginning
-4-1farmer’s tax liability or may be paid to the beginning farmer
2in the form of a refund.
3CURRENT PROGRAM REQUIREMENTS. Under the program, an
4agreement must be for at least two but not more than five
5years, and may be renewed for at least two but not more than
6five years. It must involve agricultural land, including
7buildings, or equipment used as part of a farming operation.
8Generally, in order to qualify as a beginning farmer, a person
9must have a low or moderate net worth, be able to successfully
10engage in farming, and promise to materially participate in
11the farming operation (Code sections 16.58(6), 16.58(10),
12and 16.79(2)). The authority must approve an application to
13participate in the program (Code section 16.81(6)).
14CURRENT TAX CREDIT. Once the authority approves an
15application, it must calculate the total tax credit award due
16to the taxpayer for all years under the approved agreement
17(Code section 16.82A) and issue a tax credit certificate to
18the taxpayer each year that a tax credit may be claimed (Code
19section 16.81(4)). The total amount of the tax credit divided
20over the duration of the agreement depends upon the type of
21rent arrangement entered into by the parties which may be based
22on a fixed amount or a share of the commodity produced on the
23leasehold. For each applicable year, the taxpayer may claim
24the tax credit up to the taxpayer’s tax liability for that
25year. The unused amount remaining may be applied to reduce
26the taxpayer’s liability for the following or subsequent years
27up to a total of 10 years or until the remaining amount has
28been used up, whichever occurs first. The tax credit cannot be
29carried back to a prior year or refunded. In addition, the tax
30credit cannot be transferred to another person other than to
31the taxpayer’s estate or trust upon the taxpayer’s death (Code
32section 16.82(8)(b)).
33EFFECTIVE DATE. The bill takes effect January 1, 2022.
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