This bill has been amended

Bill S6598A-2011

Establishes business franchise and personal income tax credits for expenses of soil improvement projects on farmlands

Establishes business franchise and personal income tax credits for expenses of soil improvement projects on farmlands.

Details

Actions

  • Jun 5, 2012: PRINT NUMBER 6598A
  • Jun 5, 2012: AMEND AND RECOMMIT TO FINANCE
  • May 31, 2012: REPORTED AND COMMITTED TO FINANCE
  • May 16, 2012: PRINT NUMBER 6598A
  • May 16, 2012: AMEND AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • Mar 1, 2012: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

Votes

VOTE: COMMITTEE VOTE: - Investigations and Government Operations - May 31, 2012
Ayes (5): Marcellino, Alesi, Golden, Nozzolio, Zeldin
Ayes W/R (2): Squadron, Peralta
Excused (1): Diaz

Memo

BILL NUMBER:S6598A

TITLE OF BILL: An act to amend the tax law, in relation to establishing a business franchise and personal income tax credit for soil improvement projects upon farmlands

PURPOSE: This bill provides business franchise and personal income tax credits for expenses of soil improvement projects on farmlands.

SUMMARY OF PROVISIONS: Sections 1 and 5 adds a new subparagraph 5 to section 208, and section 612 (b) of the tax law is amended to provide that any soil improvement credit must be deducted from the taxpayer's total net income, or total gross income, on their federal income tax return.

Section 2 through 4 amends the tax law to provide for the allowance of a soil improvement credit after January 1, 2012 of 25% of eligible expenditures, up to $50,000, to farmland entitled to an agricultural assessment under article twenty-five-AA of the agriculture and markets law during that taxable year.

Eligible expenditures include architectural, archeological, geological and engineering services, the cost of developing plans and specifications, consultation and legal services fees, and expenditures defined in section 175(c) (1) of the internal revenue code. Soil improvement projects are defined as the restoration of farmland for the production of agricultural perennial crops, including crops intended for energy production purposes, provided the land has not been used in agricultural production for at least two years prior to the completion of the soil improvement project. The credit would be refundable.

REVIEW OF EXISTING LAW: Current law does not contain any tax credits specifically intended to encourage landowners to make soil improvements necessary to restore land for the production of agricultural perennial crops, including those intended for energy production purposes. In addition, current law does not contain any tax credits specifically intended to encourage landowners to make necessary farmland improvements. However, a taxpayer may be entitled to a deduction for some of those expenses, if the taxpayer is using the property for business purposes.

JUSTIFICATION: This proposal will provide a one-time State personal income tax credit, up to $ 50,000, for 25 percent of the capital costs for specified land improvements designed to restore farmland to active production of perennial crops, including those intended for energy production, beginning in the 2012 tax year.

Much more extensive planting of perennial energy crops is necessary to balance the opportunity that will be presented by next-generation renewable energy production. New York State lands could be brought into production for such purposes without impinging on either the

State's livestock industry or its food supply. In addition, investments in cellulosic ethanol and other advanced green energy technologies will go to other states if New York does not move to encourage feedstock production. Failure to bring idle open land back into production denies the potential for economic development while continuing to promote the land's use for warehouses, shopping centers, and low-density housing developments.

There are several million acres of open "farmland" in New York State that are owned by non-farmers or not actively farmed by farmer owners. Demographic trends suggest that the non-farmer owned area will continue to grow at the expense of owner-operated farms. Some of the land owned by non-farmers is currently rented to farmers, but an even larger share is found in the tens of thousands of parcels of "exfarmland" which lie virtually neglected from a land management perspective, gradually growing up to second-growth forest. An effective policy to deal with the loss of New York's agricultural base must include incentives to keep in or return to production, under sound long-term management practices, farmland that is not farmer-owned.

The State Constitution charges the people of New York State with encouraging the development and improvement of agricultural lands for the production of food and other agricultural products, as well as providing for the conservation of state soil and water resources. Agricultural production has become an increasingly competitive industry, which accounts for farms going out of business and land out of production. A limited amount of funds are available for long term agricultural land retention strategies such as purchase of development rights. At the same time, many farmers are seeking land to supplement their current land base. Due to competing interests for the land, depressed farm incomes, and costs of improving the land to an acceptable level of productivity, farmers are experiencing difficulty in acquiring additional lands for their operations. This legislation will provide tax incentives to maintain existing farmland and restore other land to agricultural biomass production. This, in turn, will help protect the long-term agricultural base, preserve the open space benefits, protect water quality and provide economic development opportunities to economically depressed regions of the state.

LEGISLATIVE HISTORY: This is a new bill.

FISCAL IMPLICATIONS: None to the State.

EFFECTIVE DATE: Effective immediately.


Text

STATE OF NEW YORK ________________________________________________________________________ S. 6598--A A. 9425--A S E N A T E - A S S E M B L Y March 1, 2012 ___________
IN SENATE -- Introduced by Sens. YOUNG, O'MARA, RITCHIE, VALESKY -- (at request of the Legislative Commission on Rural Resources) -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee IN ASSEMBLY -- Introduced by M. of A. GUNTHER -- Multi-Sponsored by -- M. of A. BURLING, LIFTON, PALMESANO -- read once and referred to the Committee on Ways and Means -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the tax law, in relation to establishing a business franchise and personal income tax credit for soil improvement projects upon farmlands THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subparagraphs 3 and 4 of paragraph (a) of subdivision 8-B of section 208 of the tax law, as amended by chapter 170 of the laws of 1994, are amended, and a new subparagraph 5 is added to read as follows: (3) increased by the net operating loss deduction otherwise allowed under paragraph (f) of subdivision nine of this section, [and] (4) reduced, for taxable years beginning after nineteen hundred nine- ty-three, by the alternative net operating loss deduction, as defined in paragraph (d) of this subdivision[.], AND (5) IN THE EVENT THE TAXPAYER CLAIMS THE SOIL IMPROVEMENT CREDIT FOR FARMLANDS ESTABLISHED PURSUANT TO SUBDIVISION FORTY-FIVE OF SECTION TWO HUNDRED TEN OF THIS ARTICLE, INCREASED BY THE AMOUNT OF ANY EXPENDITURES DEFINED IN INTERNAL REVENUE CODE SECTION 175(C)(1) THAT THE TAXPAYER DEDUCTED FROM ITS TOTAL NET INCOME ON ITS FEDERAL TAX RETURN FOR THE TAX YEAR. S 2. Section 210 of the tax law is amended by adding a new subdivision 45 to read as follows: 45. SOIL IMPROVEMENT CREDIT FOR FARMLANDS. (A) ALLOWANCE OF CREDIT. FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND
TWELVE, A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE IN AN AMOUNT EQUAL TO TWENTY-FIVE PERCENT OF THE TAXPAYER'S ELIGIBLE EXPENDITURES DURING THE TAX YEAR FOR A SOIL IMPROVEMENT PROJECT. PROVIDED, HOWEVER, THAT THE CREDIT GRANTED FOR ANY SOIL IMPROVEMENT PROJECT PURSUANT TO THIS SUBDIVISION SHALL NOT EXCEED FIFTY THOUSAND DOLLARS. (B) DEFINITIONS. FOR THE PURPOSES OF THIS SUBDIVISION, THE FOLLOWING DEFINITIONS SHALL APPLY: (1) "ELIGIBLE EXPENDITURES" SHALL MEAN FEES FOR ARCHITECTURAL, ARCHEO- LOGICAL, GEOLOGICAL AND ENGINEERING SERVICES; THE COSTS OF DEVELOPING PLANS AND SPECIFICATION; FEES FOR CONSULTANT AND LEGAL SERVICES; AND ANY EXPENDITURE DEFINED IN INTERNAL REVENUE CODE SECTION 175(C)(1), INCLUD- ING EXPENDITURES RELATED TO THE APPLICATION OF LIME AND FERTILIZER, IMPROVEMENT OF DRAINAGE IN THE CASE OF OPEN AREAS THAT HAVE BEEN USED FOR AGRICULTURAL PURPOSES AT ANY TIME IN THE PAST, AND EXPENDITURES RELATED TO THE DECONSTRUCTION AND REMOVAL OF FENCES, STREAM CROSSINGS AND NECESSARY RIPARIAN BUFFERS AS REQUIRED BY THE SOIL IMPROVEMENT PROJECT. (2) "FARMLAND" SHALL MEAN LAND WHICH, DURING THE TAXABLE YEAR IN WHICH THE CREDIT IS CLAIMED PURSUANT TO THIS SUBDIVISION, IS ELIGIBLE FOR AN AGRICULTURAL ASSESSMENT PURSUANT TO ARTICLE TWENTY-FIVE-AA OF THE AGRI- CULTURE AND MARKETS LAW. (3) "SOIL IMPROVEMENT PROJECT" SHALL MEAN THE RESTORATION OF FARMLAND FOR THE PRODUCTION OF AGRICULTURAL PERENNIAL CROPS, INCLUDING THOSE CROPS INTENDED FOR ENERGY PRODUCTION PURPOSES, BY IMPROVING SUCH LAND WHICH HAS NOT BEEN USED IN AGRICULTURAL PRODUCTION FOR TWO OR MORE YEARS PRIOR TO THE COMPLETION OF SUCH RESTORATION. (C) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF THIS SECTION. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT OF CRED- IT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR WILL BE TREATED AS AN OVER- PAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT- Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST WILL BE PAID THERE- ON. S 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law is amended by adding a new clause (xxxiv) to read as follows: (XXXIV) SOIL IMPROVEMENT AMOUNT OF CREDIT FOR ELIGIBLE CREDIT FOR FARMLANDS UNDER EXPENDITURES FOR A SOIL IMPROVEMENT SUBSECTION (UU) PROJECT UNDER SUBDIVISION FORTY-FIVE OF SECTION TWO HUNDRED TEN S 4. Section 606 of the tax law is amended by adding a new subsection (uu) to read as follows: (UU) SOIL IMPROVEMENT CREDIT FOR FARMLANDS. (1) ALLOWANCE OF CREDIT. FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND TWELVE, A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE IN AN AMOUNT EQUAL TO TWENTY-FIVE PERCENT OF THE TAXPAYER'S ELIGIBLE EXPENDITURES DURING THE TAX YEAR FOR A SOIL IMPROVEMENT PROJECT. PROVIDED, HOWEVER, THAT THE CREDIT GRANTED FOR ANY SOIL IMPROVEMENT PROJECT PURSUANT TO THIS SUBSECTION SHALL NOT EXCEED FIFTY THOUSAND DOLLARS.
(2) DEFINITIONS. FOR THE PURPOSES OF THIS SUBSECTION, THE FOLLOWING DEFINITIONS SHALL APPLY: (A) "ELIGIBLE EXPENDITURES" SHALL MEAN FEES FOR ARCHITECTURAL, ARCHEO- LOGICAL, GEOLOGICAL AND ENGINEERING SERVICES; THE COSTS OF DEVELOPING PLANS AND SPECIFICATIONS; FEES FOR CONSULTANT AND LEGAL SERVICES; AND ANY EXPENDITURE DEFINED IN INTERNAL REVENUE CODE SECTION 175(C)(1), INCLUDING EXPENDITURES RELATED TO THE APPLICATION OF LIME AND FERTILIZ- ER, IMPROVEMENT OF DRAINAGE IN THE CASE OF OPEN AREAS THAT HAVE BEEN USED FOR AGRICULTURAL PURPOSES AT ANY TIME IN THE PAST, AND EXPENDITURES RELATED TO THE DECONSTRUCTION AND REMOVAL OF FENCES, STREAM CROSSINGS AND NECESSARY RIPARIAN BUFFERS AS REQUIRED BY THE SOIL IMPROVEMENT PROJECT. (B) "FARMLAND" SHALL MEAN LAND WHICH, DURING THE TAXABLE YEAR IN WHICH THE CREDIT IS CLAIMED PURSUANT TO THIS SUBSECTION, IS ELIGIBLE FOR AN AGRICULTURAL ASSESSMENT PURSUANT TO ARTICLE TWENTY-FIVE-AA OF THE AGRI- CULTURE AND MARKETS LAW. (C) "SOIL IMPROVEMENT PROJECT" SHALL MEAN THE RESTORATION OF FARMLAND FOR THE PRODUCTION OF AGRICULTURAL PERENNIAL CROPS, INCLUDING THOSE CROPS INTENDED FOR ENERGY PRODUCTION PURPOSES, BY IMPROVING SUCH LAND WHICH HAS NOT BEEN USED IN AGRICULTURAL PRODUCTION FOR TWO OR MORE YEARS PRIOR TO THE COMPLETION OF SUCH RESTORATION. (3) APPLICATION OF CREDIT. IF THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SUBSECTION SHALL EXCEED THE TAXPAYER'S TAX FOR SUCH YEAR, THE TAXPAYER MAY RECEIVE AND THE COMPTROLLER, SUBJECT TO A CERTIFICATE OF THE COMMISSIONER, SHALL PAY AS AN OVERPAYMENT, WITHOUT INTEREST, THE AMOUNT OF SUCH EXCESS. S 5. Subsection (c) of section 615 of the tax law is amended by adding a new paragraph 9 to read as follows: (9) IN THE EVENT THE TAXPAYER CLAIMS THE SOIL IMPROVEMENT CREDIT FOR FARMLANDS ESTABLISHED PURSUANT TO SUBSECTION (UU) OF SECTION SIX HUNDRED SIX OF THIS ARTICLE, THE AMOUNT OF ANY EXPENDITURES DEFINED IN INTERNAL REVENUE CODE SECTION 175(C)(1) THAT THE TAXPAYER DEDUCTED FROM HIS OR HER FEDERAL GROSS INCOME ON HIS OR HER FEDERAL TAX RETURN FOR THE TAX YEAR. S 6. This act shall take effect immediately.

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