senate Bill S3692A

Establishes a farm savings account program

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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

  • 11 / Feb / 2013
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 05 / Mar / 2013
    • REPORTED AND COMMITTED TO FINANCE
  • 08 / Jan / 2014
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 03 / Mar / 2014
    • AMEND AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 03 / Mar / 2014
    • PRINT NUMBER 3692A
  • 29 / Apr / 2014
    • REPORTED AND COMMITTED TO FINANCE

Summary

Establishes a farm savings account program.

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Bill Details

See Assembly Version of this Bill:
A5583A
Versions:
S3692
S3692A
Legislative Cycle:
2013-2014
Current Committee:
Senate Finance
Law Section:
Tax Law
Laws Affected:
Add §41, amd §§612, 209 & 601, Tax L

Votes

8
0
8
Aye
0
Nay
1
aye with reservations
0
absent
0
excused
0
abstained
show Investigations and Government Operations committee vote details

Sponsor Memo

BILL NUMBER:S3692A

TITLE OF BILL: An act to amend the tax law, in relation to farm
savings accounts

PURPOSE: To establish a farm savings accounts plan in statute that
will allow farmers to self insure part of their risk to counter-act
strong cyclical downturns in the farm economy.

SUMMARY OF PROVISIONS:

Section 1 adds a new section 41 to the Tax Law which establishes farm
savings accounts. This section outlines the definitions of farm
savings accounts. It also provides the requirements for deductions,
contributions, and distributions with regard to a variety of
contingencies for farm savings accounts.

Section 2 adds a new paragraph 40, to subsection (b) of section 612 of
the Tax Law to add a non-qualifying distribution from a farm savings
account to a person's adjusted gross income.

Section 3 amends subsection (c) of section 612 of the Tax Law by
adding a new paragraph 41, to exempt a contribution to a farm savings
account from a person's adjusted gross income.

Section 4 amends subdivision 4 of section 209 of the Tax Law, as
amended by section 2 of part FF-1 of chapter 57 of the laws of 2008,
to exempt farm savings accounts from the list of corporations liable
for taxation.

Section 5 amends section 601 of the Tax Law by adding a new subsection
(g-1) to exempt farm savings accounts from inclusion as personal
income, subject to taxation.

Section 6 provides that this act shall take effect immediately and
shall apply to taxable years commencing after the effective date.
Effective immediately, the Commissioner may make changes necessary to
the rules and regulations to provide for the timely implementation of
the provisions of this act on their effective date.

JUSTIFICATION:. Agriculture, by the nature of its business, is
extremely dependent upon weather and pricing. We have seen the impacts
of weather on farm business during Hurricane Irene and Tropical Storm
Lee, where farms lost cows and a year's worth of forage, fruit and
produce. Add to these weather events, the strong cyclical nature of
commodity pricing - especially in the dairy industry. The succession
of low milk price cycles has negatively impacted farm income over the
last ten years. A viable alternative that can help farmers offset
their losses in years of low return are farm savings accounts.

A farm savings account is a tax deferred account that offers farmers
the unique opportunity to self-insure part of their risk. Some of the
methods used by farmers to help offset losses in difficult years
include delaying the purchase of equipment and the repayment of loans.
A farm savings account will offer farmers another management tool to
help offset their costs. Farm savings accounts will encourage farmers
to place revenue gained during years of good economic times into a tax


deferred savings account. That can be drawn on during times of
depressed markets to pay for expenses and offset losses. This will
provide farmers with an investment mechanism that can help farmers
plan for their future.

LEGISLATIVE HISTORY: New Bill

FISCAL IMPLICATIONS: Minimal

EFFECTIVE DATE: This act shall take effect immediately and shall
apply to taxable years commencing after such effective date. Effective
immediately, the Commissioner of Taxation and Finance may add, amend,
or repeal any rule or regulation necessary to timely implement the
provisions of this act on its effective date.

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

                                 3692--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            February 11, 2013
                               ___________

Introduced  by Sens. RITCHIE, MAZIARZ -- read twice and ordered printed,
  and when printed to be committed to the  Committee  on  Investigations
  and  Government Operations -- recommitted to the Committee on Investi-
  gations and Government Operations in accordance with  Senate  Rule  6,
  sec.  8  --  committee  discharged, bill amended, ordered reprinted as
  amended and recommitted to said committee

AN ACT to amend the tax law, in relation to farm savings accounts

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The tax law is amended by adding a new section 41 to read
as follows:
  S 41. FARM SAVINGS ACCOUNTS. 1. DEFINITIONS. (A) QUALIFIED FARMER. FOR
PURPOSES OF THIS  SECTION,  THE  TERM  "QUALIFIED  FARMER"  MEANS,  WITH
RESPECT  TO  ANY TAXABLE YEAR, ANY INDIVIDUAL WHO, DURING SUCH YEAR, WAS
ENGAGED IN THE TRADE OR BUSINESS OF FARMING.
  (B) FARM SAVINGS ACCOUNT. FOR PURPOSES OF THIS SECTION, THE TERM "FARM
SAVINGS ACCOUNT" MEANS A TRUST CREATED OR ORGANIZED IN THE UNITED STATES
AS A FARM SAVINGS ACCOUNT EXCLUSIVELY FOR THE PURPOSE OF  MAKING  QUALI-
FIED  DISTRIBUTIONS FOR PURPOSES OF FARM SUSTAINABILITY, BUT ONLY IF THE
WRITTEN GOVERNING INSTRUMENT CREATING  THE  TRUST  MEETS  THE  FOLLOWING
REQUIREMENTS:
  (I) NO CONTRIBUTION WILL BE ACCEPTED UNLESS IT IS IN CASH.
  (II) THE TRUSTEE IS A BANK, CREDIT UNION OR OTHER APPROPRIATE INSTITU-
TION  THAT  DEMONSTRATES ADMINISTRATION OF THE TRUST IN A MANNER THAT IS
CONSISTENT WITH THE REQUIREMENTS OF THIS SECTION.
  (III) THE ASSETS OF THE TRUST WILL NOT BE COMMINGLED WITH OTHER  PROP-
ERTY EXCEPT IN A COMMON TRUST FUND OR COMMON INVESTMENT FUND.
  (IV)  THE  INTEREST  OF  AN  INDIVIDUAL  IN  THE BALANCE IN HIS OR HER
ACCOUNT IS NONFORFEITABLE.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08790-04-4

S. 3692--A                          2

  (C) QUALIFIED DISTRIBUTION. THE TERM  "QUALIFIED  DISTRIBUTION"  MEANS
ANY  AMOUNT  PAID FROM A FARM SAVINGS ACCOUNT TO THE ACCOUNT BENEFICIARY
EXCLUSIVELY FOR PURPOSES OF FARM SUSTAINABILITY.
  (D)  ACCOUNT  BENEFICIARY.  THE  TERM  "ACCOUNT BENEFICIARY" MEANS THE
INDIVIDUAL OR BUSINESS ON WHOSE BEHALF  THE  FARM  SAVINGS  ACCOUNT  WAS
ESTABLISHED.
  2. PROGRAM DESCRIPTION. (A) DEDUCTIONS ALLOWED. IN THE CASE OF A QUAL-
IFIED FARMER, THERE SHALL BE ALLOWED AS A DEDUCTION FOR THE TAXABLE YEAR
AN AMOUNT EQUAL TO THE AGGREGATE AMOUNT PAID IN CASH DURING SUCH TAXABLE
YEAR  BY  OR  ON  BEHALF OF SUCH INDIVIDUAL TO A FARM SAVINGS ACCOUNT OF
SUCH INDIVIDUAL.
  (B) CONTRIBUTION REQUIREMENT. THERE SHALL BE  NO  MINIMUM  OR  MAXIMUM
CONTRIBUTION  REQUIREMENT.  HOWEVER,  AGGREGATE  CONTRIBUTIONS  MAY  NOT
EXCEED TOTAL INCOME DERIVED FROM FARMING DURING A GIVEN TAXABLE YEAR.
  (C) TAX TREATMENT OF ACCOUNTS. A FARM SAVINGS ACCOUNT IS  EXEMPT  FROM
TAXATION  UNDER THIS CHAPTER UNLESS SUCH ACCOUNT HAS CEASED TO BE A FARM
SAVINGS ACCOUNT.
  (D) TERMINATION OF ACCOUNTS. IF  THE  ACCOUNT  BENEFICIARY  CEASES  TO
ENGAGE IN THE TRADE OR BUSINESS OF FARMING, ALL FARM SAVINGS ACCOUNTS OF
SUCH  INDIVIDUAL  SHALL CEASE TO BE SUCH ACCOUNTS AND THE BALANCE OF ALL
SUCH ACCOUNTS SHALL BE TREATED AS (I) DISTRIBUTED  TO  SUCH  INDIVIDUAL,
AND (II) NOT PAID IN A QUALIFIED DISTRIBUTION.
  (E)  TAX  TREATMENT  OF  DISTRIBUTIONS.  (I)  GENERAL. IN GENERAL, ANY
AMOUNT PAID OR DISTRIBUTED OUT  OF  A  FARM  SAVINGS  ACCOUNT  SHALL  BE
INCLUDED IN GROSS INCOME.
  (II) ADDITIONAL TAX ON NON-QUALIFIED DISTRIBUTIONS. (1) IN ADDITION TO
ANY  OTHER  TAX  IMPOSED BY THIS CHAPTER, ANY NON-QUALIFIED DISTRIBUTION
FROM A FARM SAVINGS ACCOUNT  SHALL  BE  SUBJECT  TO  A  FIFTEEN  PERCENT
SURCHARGE ON THE AMOUNT OF SUCH NON-QUALIFYING DISTRIBUTION.
  (2)  CLAUSE ONE OF THIS SUBPARAGRAPH SHALL NOT APPLY IF THE PAYMENT OR
DISTRIBUTION IS MADE AFTER THE ACCOUNT BENEFICIARY BECOMES  DISABLED  OR
DIES.
  (III) ROLLOVER CONTRIBUTIONS. FOR PURPOSES OF THIS SECTION, ANY AMOUNT
PAID OR DISTRIBUTED FROM A FARM SAVINGS ACCOUNT TO THE ACCOUNT BENEFICI-
ARY  SHALL  BE  TREATED  AS  A  QUALIFIED DISTRIBUTION TO THE EXTENT THE
AMOUNT RECEIVED IS PAID INTO A FARM SAVINGS ACCOUNT FOR THE  BENEFIT  OF
SUCH  BENEFICIARY NOT LATER THAN THE SIXTIETH DAY AFTER THE DAY ON WHICH
THE BENEFICIARY RECEIVES THE PAYMENT OR DISTRIBUTION.
  (IV) TRANSFER OF ACCOUNT INCIDENT TO DIVORCE. THE TRANSFER OF AN INDI-
VIDUAL'S INTEREST IN A FARM SAVINGS ACCOUNT TO AN INDIVIDUAL'S SPOUSE OR
FORMER SPOUSE UNDER A DIVORCE OR  SEPARATION  INSTRUMENT  SHALL  NOT  BE
CONSIDERED  A  TAXABLE  TRANSFER MADE BY SUCH INDIVIDUAL NOTWITHSTANDING
ANY OTHER PROVISION OF THIS SECTION, AND SUCH INTEREST SHALL, AFTER SUCH
TRANSFER, BE TREATED AS A FARM SAVINGS ACCOUNT  WITH  RESPECT  TO  WHICH
SUCH SPOUSE IS THE ACCOUNT BENEFICIARY.
  (V)  TREATMENT  AFTER  DEATH  OF ACCOUNT BENEFICIARY. (1) TREATMENT IF
DESIGNATED BENEFICIARY IS SPOUSE. IF THE ACCOUNT BENEFICIARY'S SURVIVING
SPOUSE ACQUIRES SUCH BENEFICIARY'S INTEREST IN A FARM SAVINGS ACCOUNT BY
REASON OF BEING THE DESIGNATED BENEFICIARY OF SUCH ACCOUNT AT THE  DEATH
OF  THE  ACCOUNT BENEFICIARY, SUCH FARM SAVINGS ACCOUNT SHALL BE TREATED
AS IF THE SPOUSE WERE THE ACCOUNT BENEFICIARY.
  (2) OTHER CASES. IF, BY REASON OF THE DEATH OF THE  ACCOUNT  BENEFICI-
ARY,  ANY  PERSON  ACQUIRES THE ACCOUNT BENEFICIARY'S INTEREST IN A FARM
SAVINGS ACCOUNT IN A CASE TO WHICH CLAUSE ONE OF THIS SUBPARAGRAPH  DOES
NOT APPLY:

S. 3692--A                          3

  (A)  SUCH  ACCOUNT  SHALL CEASE TO BE A FARM SAVINGS ACCOUNT AS OF THE
DATE OF DEATH, AND
  (B)  AN  AMOUNT  EQUAL  TO THE FAIR MARKET VALUE OF THE ASSETS IN SUCH
ACCOUNT ON SUCH DATE SHALL BE INCLUDED IN SUCH PERSON'S GROSS INCOME FOR
THE TAXABLE YEAR WHICH INCLUDES SUCH DATE IF  SUCH  PERSON  IS  NOT  THE
ESTATE  OF  SUCH  BENEFICIARY;  OR  IF SUCH PERSON IS THE ESTATE OF SUCH
BENEFICIARY, IN SUCH BENEFICIARY'S GROSS INCOME  FOR  THE  LAST  TAXABLE
YEAR OF SUCH BENEFICIARY.
  S 2. Subsection (b) of section 612 of the tax law is amended by adding
a new paragraph 40 to read as follows:
  (40)  ANY  NON-QUALIFYING  DISTRIBUTIONS  MADE  FROM  A  FARM  SAVINGS
ACCOUNT. THIS SHALL NOT INCLUDE ANY DISTRIBUTIONS THAT ARE  EXEMPT  FROM
TAXATION  AS  SPECIFIED  IN  PARAGRAPH (E) OF SUBDIVISION TWO OF SECTION
FORTY-ONE OF THIS CHAPTER.
  S 3. Subsection (c) of section 612 of the tax law is amended by adding
a new paragraph 41 to read as follows:
  (41) AN AMOUNT EQUAL TO ANY QUALIFIED CONTRIBUTION TO A  FARM  SAVINGS
ACCOUNT ESTABLISHED PURSUANT TO SECTION FORTY-ONE OF THIS CHAPTER.
  S  4.  Subdivision  4  of  section  209  of the tax law, as amended by
section 2 of part FF-1 of chapter 57 of the laws of 2008, is amended  to
read as follows:
  4.  Corporations liable to tax under sections one hundred eighty-three
to one hundred eighty-five, inclusive, corporations taxable under  arti-
cles  thirty-two  and  thirty-three  of  this chapter, any trust company
organized under a law of this state all of the stock of which  is  owned
by  not  less  than  twenty  savings banks organized under a law of this
state, bank holding companies filing a  combined  return  in  accordance
with subdivision (f) of section fourteen hundred sixty-two of this chap-
ter,  a  captive  REIT  or  a captive RIC filing a combined return under
either subdivision (f) of section fourteen hundred sixty-two or subdivi-
sion (f) of section fifteen hundred fifteen of this chapter, [and] hous-
ing companies organized and operating  pursuant  to  the  provisions  of
article  two  or  article five of the private housing finance law [and],
housing development fund companies organized pursuant to the  provisions
of  article  eleven of the private housing finance law, AND FARM SAVINGS
ACCOUNTS PROPERLY ESTABLISHED UNDER SECTION FORTY-ONE OF  THIS  CHAPTER,
shall not be subject to tax under this article.
  S  5. Section 601 of the tax law is amended by adding a new subsection
(g-1) to read as follows:
  (G-1) FARM SAVINGS ACCOUNTS. ANY FARM SAVINGS ACCOUNT PROPERLY  ESTAB-
LISHED  UNDER  SECTION FORTY-ONE OF THIS CHAPTER SHALL NOT BE SUBJECT TO
TAX UNDER THIS ARTICLE.
  S 6. This act shall take effect immediately and shall apply to taxable
years commencing after such effective date. Effective  immediately,  the
commissioner  of taxation and finance may add, amend, or repeal any rule
or regulation necessary to timely implement the provisions of  this  act
on its effective date.

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