senate Bill S6598A

Amended

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

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 01 / Mar / 2012
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 16 / May / 2012
    • AMEND AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 16 / May / 2012
    • PRINT NUMBER 6598A
  • 31 / May / 2012
    • REPORTED AND COMMITTED TO FINANCE
  • 05 / Jun / 2012
    • AMEND AND RECOMMIT TO FINANCE
  • 05 / Jun / 2012
    • PRINT NUMBER 6598B

Summary

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

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Bill Details

See Assembly Version of this Bill:
A9425A
Versions:
S6598
S6598A
S6598B
Legislative Cycle:
2011-2012
Current Committee:
Senate Finance
Law Section:
Tax Law
Laws Affected:
Amd ยงยง208, 210, 606 & 615, Tax L

Votes

5
0
5
Aye
0
Nay
2
aye with reservations
0
absent
1
excused
0
abstained
show Investigations and Government Operations committee vote details
aye wr (2)
excused (1)

Sponsor 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.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

    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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD13593-05-2

S. 6598--A                          2                         A. 9425--A

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.

S. 6598--A                          3                         A. 9425--A

  (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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