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House File 495 - IntroducedA Bill ForAn Act 1extending the beginning farmer tax credit program and
2appropriations used to support the program, including the
3agricultural assets transfer tax credit and the custom
4farming contract tax credit.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2AGRICULTURAL ASSETS TRANSFER TAX CREDIT — REPEAL — EXTENSION
3 Section 1. 2014 Iowa Acts, chapter 1080, section 125, is
4amended to read as follows:
5SEC. 125. EFFECTIVE DATES.
61. a. Except as provided in subsection 2, this This
7 division of this Act takes effect January 1, 2018 2023.
8b. 2. The section of this division of this Act which enacts
9the agricultural assets transfer tax credit as codified in
10section 16.80 takes effect instantly upon the repeal of the
11agricultural assets transfer tax credit previously codified in
12section 16.80 and enacted in another division of this Act.
132. The section of this division of this Act which requires
14the Iowa finance authority to propose legislation for
15consideration by the general assembly takes effect July 1,
162016.
17 Sec. 2. REPEAL. 2014 Iowa Acts, chapter 1080, section 124,
18is repealed.
19DIVISION II
20FORMER, CURRENT, AND FUTURE VERSIONS OF THE AGRICULTURAL ASSETS
21TRANSFER TAX CREDIT — TEN-YEAR CARRYFORWARD
22 Sec. 3. 2014 Iowa Acts, chapter 1112, section 1, subsection
233, is amended to read as follows:
243. The carryforward provisions of this section shall
25continue to be effective until no longer applicable, including
26by application to tax years beginning on or after January 1,
272018 2023.
28 Sec. 4. 2014 Iowa Acts, chapter 1112, section 5, subsection
294, is amended to read as follows:
304. The carryforward provisions of this section shall
31continue to be effective until no longer applicable, including
32by application to tax years beginning on or after January 1,
332018 2023.
34 Sec. 5. 2014 Iowa Acts, chapter 1112, section 9, subsections
352 and 3, are amended to read as follows:
-1- 12. For any tax year commencing in calendar years 2015
2through 2017 2022, a tax credit that is first issued, awarded,
3or allowed and claimed under section 16.80, as that section
4applies when the tax credit is first claimed, and in excess of
5the taxpayer’s liability, may be credited to the tax liability
6of that taxpayer for ten tax years following the tax year that
7the taxpayer first claims the tax credit, or until depleted,
8whichever is earlier.
93. The carryforward provisions of this section shall
10continue to be effective until no longer applicable, including
11by application to tax years beginning on or after January 1,
122018 2023.
13 Sec. 6. 2014 Iowa Acts, chapter 1112, section 15, is amended
14to read as follows:
15SEC. 15. EFFECTIVE DATE CONDITION. This division of
16this Act takes effect January 1, 2018, only if 2014 Iowa Acts,
17Senate File 2328, is enacted 2023.
18 Sec. 7. 2014 Iowa Acts, chapter 1112, section 16, is amended
19to read as follows:
20SEC. 16. APPLICABILITY. This division of this Act applies
21to tax years beginning on or after January 1, 2018 2023.
22 Sec. 8. 2014 Iowa Acts, chapter 1112, section 18, subsection
234, is amended to read as follows:
244. The carryforward provisions of this section shall
25continue to be effective until no longer applicable, including
26by application to tax years beginning on or after January 1,
272018 2023.
28 Sec. 9. 2014 Iowa Acts, chapter 1112, section 22,
29subsections 2 and 3, are amended to read as follows:
302. For any tax year commencing in calendar years 2015
31through 2017 2022, a tax credit that is first issued, awarded,
32or allowed and claimed under section 16.81, as that section
33applies when the tax credit is first claimed, and in excess of
34the taxpayer’s liability, may be credited to the tax liability
35of that taxpayer for ten tax years following the tax year
-2-1for which the taxpayer first claims the tax credit, or until
2depleted, whichever is earlier.
33. The carryforward provisions of this section shall
4continue to be effective until no longer applicable, including
5by application to tax years beginning on or after January 1,
62018 2023.
7EXPLANATION
8The inclusion of this explanation does not constitute agreement with
9the explanation’s substance by the members of the general assembly.
10GENERAL. This bill extends the beginning farmer tax credit
11program established in 2013 which allows taxpayers holding
12agricultural land used for farming to claim two types of income
13tax credits: (1) the agricultural assets transfer tax credit
14and (2) the custom farming contract tax credit. The program
15is due to expire on January 1, 2018, and the bill extends that
16date five years to January 1, 2023. On that same date, a
17former version of the agricultural assets transfer tax credit
18as it existed immediately prior to 2013 is restored with one
19exception. The former version would incorporate a change made
20in the 2013 legislation which increased the carryforward period
21from five to 10 years. When the program is eliminated and the
22former version of the agricultural assets transfer tax credit
23is restored, the available standing appropriation used to
24support the agricultural assets transfer tax credit is restored
25to the pre-2013 amount of $6 million, a reduction from $12
26million currently available to support both tax credits.
27BACKGROUND — PROGRAM. A taxpayer who holds agricultural
28land which may include other assets (such as depreciable
29agricultural property, crops, or livestock), and who executes
30an agreement with a beginning farmer is entitled to claim a
31tax credit against individual or corporate tax liability (Code
32section 16.80). The agricultural assets transfer tax credit
33is available to a taxpayer who assists a beginning farmer in
34acquiring agricultural assets (land by lease or equipment by
35rental agreement). The custom farming contract tax credit
-3-1is available to a taxpayer who enters into a contract with
2a beginning farmer to perform custom work on agricultural
3land held by the taxpayer (Code section 16.81). Generally,
4$8 million of the appropriated $12 million is allocated to
5support the agricultural assets transfer tax credit and the
6remaining $4 million is allocated to support the custom farming
7contract tax credit (Code section 16.82). For the agricultural
8assets transfer tax credit, the tax credit percentages for cash
9rent and crop share agreements are 7 percent and 17 percent,
10respectively, with an additional 1 percent bonus provided for
11the first year of the agreement if the beginning farmer is
12a veteran. Once the former agricultural assets transfer tax
13credit is restored, the tax credit percentages are reduced to 5
14and 15 percent, respectively, and without a veteran bonus. For
15a custom farming contract tax credit, the tax credit percentage
16equals 7 percent of the value of the contract on a tax credit
17with an additional 1 percent bonus provided if the beginning
18farmer is a veteran. A taxpayer cannot claim a tax credit in
19excess of $50,000 under either program. The restored version
20of the agricultural assets transfer tax credit does not limit
21the amount that a taxpayer may claim.
22BACKGROUND — ADMINISTRATION. In 2013 and 2014, supervision
23of the program was transferred from the Iowa agricultural
24development authority to the Iowa finance authority and the
25relevant statutory provisions were transferred from Code
26chapter 175 to Code chapter 16 (2013 Iowa Acts, ch.100, and
272014 Iowa Acts, ch.1080).
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2appropriations used to support the program, including the
3agricultural assets transfer tax credit and the custom
4farming contract tax credit.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2AGRICULTURAL ASSETS TRANSFER TAX CREDIT — REPEAL — EXTENSION
3 Section 1. 2014 Iowa Acts, chapter 1080, section 125, is
4amended to read as follows:
5SEC. 125. EFFECTIVE DATES.
61. a. Except as provided in subsection 2, this This
7 division of this Act takes effect January 1, 2018 2023.
8b. 2. The section of this division of this Act which enacts
9the agricultural assets transfer tax credit as codified in
10section 16.80 takes effect instantly upon the repeal of the
11agricultural assets transfer tax credit previously codified in
12section 16.80 and enacted in another division of this Act.
132. The section of this division of this Act which requires
14the Iowa finance authority to propose legislation for
15consideration by the general assembly takes effect July 1,
162016.
17 Sec. 2. REPEAL. 2014 Iowa Acts, chapter 1080, section 124,
18is repealed.
19DIVISION II
20FORMER, CURRENT, AND FUTURE VERSIONS OF THE AGRICULTURAL ASSETS
21TRANSFER TAX CREDIT — TEN-YEAR CARRYFORWARD
22 Sec. 3. 2014 Iowa Acts, chapter 1112, section 1, subsection
233, is amended to read as follows:
243. The carryforward provisions of this section shall
25continue to be effective until no longer applicable, including
26by application to tax years beginning on or after January 1,
272018 2023.
28 Sec. 4. 2014 Iowa Acts, chapter 1112, section 5, subsection
294, is amended to read as follows:
304. The carryforward provisions of this section shall
31continue to be effective until no longer applicable, including
32by application to tax years beginning on or after January 1,
332018 2023.
34 Sec. 5. 2014 Iowa Acts, chapter 1112, section 9, subsections
352 and 3, are amended to read as follows:
-1- 12. For any tax year commencing in calendar years 2015
2through 2017 2022, a tax credit that is first issued, awarded,
3or allowed and claimed under section 16.80, as that section
4applies when the tax credit is first claimed, and in excess of
5the taxpayer’s liability, may be credited to the tax liability
6of that taxpayer for ten tax years following the tax year that
7the taxpayer first claims the tax credit, or until depleted,
8whichever is earlier.
93. The carryforward provisions of this section shall
10continue to be effective until no longer applicable, including
11by application to tax years beginning on or after January 1,
122018 2023.
13 Sec. 6. 2014 Iowa Acts, chapter 1112, section 15, is amended
14to read as follows:
15SEC. 15. EFFECTIVE DATE CONDITION. This division of
16this Act takes effect January 1, 2018, only if 2014 Iowa Acts,
17Senate File 2328, is enacted 2023.
18 Sec. 7. 2014 Iowa Acts, chapter 1112, section 16, is amended
19to read as follows:
20SEC. 16. APPLICABILITY. This division of this Act applies
21to tax years beginning on or after January 1, 2018 2023.
22 Sec. 8. 2014 Iowa Acts, chapter 1112, section 18, subsection
234, is amended to read as follows:
244. The carryforward provisions of this section shall
25continue to be effective until no longer applicable, including
26by application to tax years beginning on or after January 1,
272018 2023.
28 Sec. 9. 2014 Iowa Acts, chapter 1112, section 22,
29subsections 2 and 3, are amended to read as follows:
302. For any tax year commencing in calendar years 2015
31through 2017 2022, a tax credit that is first issued, awarded,
32or allowed and claimed under section 16.81, as that section
33applies when the tax credit is first claimed, and in excess of
34the taxpayer’s liability, may be credited to the tax liability
35of that taxpayer for ten tax years following the tax year
-2-1for which the taxpayer first claims the tax credit, or until
2depleted, whichever is earlier.
33. The carryforward provisions of this section shall
4continue to be effective until no longer applicable, including
5by application to tax years beginning on or after January 1,
62018 2023.
7EXPLANATION
8The inclusion of this explanation does not constitute agreement with
9the explanation’s substance by the members of the general assembly.
10GENERAL. This bill extends the beginning farmer tax credit
11program established in 2013 which allows taxpayers holding
12agricultural land used for farming to claim two types of income
13tax credits: (1) the agricultural assets transfer tax credit
14and (2) the custom farming contract tax credit. The program
15is due to expire on January 1, 2018, and the bill extends that
16date five years to January 1, 2023. On that same date, a
17former version of the agricultural assets transfer tax credit
18as it existed immediately prior to 2013 is restored with one
19exception. The former version would incorporate a change made
20in the 2013 legislation which increased the carryforward period
21from five to 10 years. When the program is eliminated and the
22former version of the agricultural assets transfer tax credit
23is restored, the available standing appropriation used to
24support the agricultural assets transfer tax credit is restored
25to the pre-2013 amount of $6 million, a reduction from $12
26million currently available to support both tax credits.
27BACKGROUND — PROGRAM. A taxpayer who holds agricultural
28land which may include other assets (such as depreciable
29agricultural property, crops, or livestock), and who executes
30an agreement with a beginning farmer is entitled to claim a
31tax credit against individual or corporate tax liability (Code
32section 16.80). The agricultural assets transfer tax credit
33is available to a taxpayer who assists a beginning farmer in
34acquiring agricultural assets (land by lease or equipment by
35rental agreement). The custom farming contract tax credit
-3-1is available to a taxpayer who enters into a contract with
2a beginning farmer to perform custom work on agricultural
3land held by the taxpayer (Code section 16.81). Generally,
4$8 million of the appropriated $12 million is allocated to
5support the agricultural assets transfer tax credit and the
6remaining $4 million is allocated to support the custom farming
7contract tax credit (Code section 16.82). For the agricultural
8assets transfer tax credit, the tax credit percentages for cash
9rent and crop share agreements are 7 percent and 17 percent,
10respectively, with an additional 1 percent bonus provided for
11the first year of the agreement if the beginning farmer is
12a veteran. Once the former agricultural assets transfer tax
13credit is restored, the tax credit percentages are reduced to 5
14and 15 percent, respectively, and without a veteran bonus. For
15a custom farming contract tax credit, the tax credit percentage
16equals 7 percent of the value of the contract on a tax credit
17with an additional 1 percent bonus provided if the beginning
18farmer is a veteran. A taxpayer cannot claim a tax credit in
19excess of $50,000 under either program. The restored version
20of the agricultural assets transfer tax credit does not limit
21the amount that a taxpayer may claim.
22BACKGROUND — ADMINISTRATION. In 2013 and 2014, supervision
23of the program was transferred from the Iowa agricultural
24development authority to the Iowa finance authority and the
25relevant statutory provisions were transferred from Code
26chapter 175 to Code chapter 16 (2013 Iowa Acts, ch.100, and
272014 Iowa Acts, ch.1080).
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