Senate Bill S702

2009-2010 Legislative Session

Extends partial eligibility (one-half) for the agricultural property tax credit to farmers having income from farming at least 40% of, but less than 2/3 of income

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Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to investigations and government operations
Jan 13, 2009	referred to investigations and government operations

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2009-S702 (ACTIVE) - Details

See Assembly Version of this Bill:: A3347
Current Committee:: Senate Investigations And Government Operations
Law Section:: Tax Law
Laws Affected:: Amd §§210 & 606, Tax L

2009-S702 (ACTIVE) - Summary

Extends partial eligibility (one-half) for the agricultural property tax credit to farmers having federal gross income from farming for the taxable year at least forty percent of, but less than two-thirds of, excess federal gross income; provides for retroactive application in certain cases.

2009-S702 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S702

 TITLE OF BILL :

An act to amend the tax law, in relation to partial eligibility of
farmers for the agricultural property tax credit


 PURPOSE :

The purpose of this bill is to grant a partial agricultural property
tax credit for the payment of real property school taxes for farmers
that earn at least 40 percent but not more than 2/3 of their family's
gross income from farm operations. This bill should help to stabilize
the rapid loss of farmland in the State, particularly in rapidly
developing areas such as Long Island and the Hudson Valley.

 SUMMARY OF PROVISIONS :

Section 1: Amends Tax Law section 210(22), which levies the corporate
franchise tax, to grant a partial agricultural property tax credit for
school district property taxes paid on qualified agricultural property
used by a grower to produce crops. To qualify for this partial
agricultural property tax credit, the farmer must earn at least 40
percent but no more than 2/3 of the family's federal gross income from
such land. The farmer would receive as a tax credit one-half of the

cost of the grower's school tax bill levied on qualified agricultural
property.

Section 2: Amends Tax Law section 210 (22)(g), (e), and (h) to make
technical changes to implement section 1 of this bill.

Sections 3 and 4: Amends Tax Law section 606(n), which levies the
personal income tax, to grant a partial agricultural property tax
credit for school district property taxes paid on qualified
agricultural property used by a grower to produce crops. To qualify
for this partial agricultural property tax credit, the farmer must
earn at least 40 percent but no more than 2/3 of the family's federal
gross income from such land. The grower would receive as a tax credit,
one-half of the cost of the grower's school tax bill levied on
qualified agricultural property.

Section 5: The Commissioner of Taxation & Finance is authorized to
promulgate rules necessary to implement this act.

 EXISTING LAW :

Under current law, a grower that earns at least 2/3 of their federal
gross income from the farm is eligible for a full tax credit for
school district property taxes levied, while those earning less than
2/3 of their income on the farm receive no such credit.

 JUSTIFICATION :

Current law provides that farmers that earn at least 2/3 of their
federally adjusted gross income on the farm are eligible for a full
tax credit refund on the amount of school real property taxes paid on
qualified agricultural property. The law does not contemplate or
recognize that there are a substantial number of farmers that earn a
significant amount, but less than two-thirds of their family's income
off the land. Since farm incomes have not increased as rapidly as
those in many other sectors of the economy, farmers and members of a
farmer's family have obtained part-time jobs off the farm to earn more
money or to secure health insurance benefits. For example, a grower
may have a part-time job driving a school bus in the morning and his
or her spouse may be employed as a school teacher or health care
provider to earn additional income for the family or to obtain health
insurance benefits.

By virtue of securing off farm employment, a farmer's family may earn
more than a third of their federally adjusted gross income off the
farm which makes them completely ineligible for any tax credit on the
real property taxes paid for schools. This bill would grant a partial
school tax credit on a grower's income or corporate franchise taxes if
the grower earns a substantial portion of his or her income from
farming the land.

Forty years ago, a grower, more likely than not, worked full time on
his or her 30 - 60 acre farm to earn a living. However, with advances
in cultivation practices and mechanized equipment, more and more
growers do not need to work full time to operate a same 30 - 60 acre
farm. The current law, in effect, grants tax credits to large farms
(i.e. 100 acres or more) that have full time operators, but has begun
to exclude an increasing number of part-time farmers that still
operate smaller 50 acre farms on a part-time basis. This bill
readjusts the law to reflect changes in the agricultural community
which now has a higher proportion of farmers that spend less than 100
percent of their time working on the farm. This measure should help to
retain smaller family run farm operations.

This bill would help to retain small farms, open spaces, and working
landscapes. The retention of working landscapes is particularly
important in parts of the Hudson Valley, Long Island, and other areas
of the state experiencing rapid suburban development pressures. In
these areas of the state, irreplaceable farm acreage is being lost at
an alarmingly high rate.

This bill should help to slow down the rapid loss of farmland.
Further, it should help to stabilize the escalating demands for
additional municipal services in areas that are experiencing high
suburban growth and population increases. This increasing demand for
more municipal services and school district capacity tends to lead to
higher real property tax rates which, in turn leads to the further
loss of more farmland.

 LEGISLATIVE HISTORY :

S.4017-A of 2005/2006
S.427 of 2007/2008

 FISCAL IMPLICATIONS :

To be determined.

 LOCAL FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
This act shall take effect immediately and shall apply to the taxable
year on the January 1st after such act was signed into law.

2009-S702 (ACTIVE) - Bill Text download pdf

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

                                   702

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            January 13, 2009
                               ___________

Introduced  by Sens. LARKIN, BONACIC, LAVALLE, LEIBELL, MAZIARZ, SEWARD,
  YOUNG -- read twice and  ordered  printed,  and  when  printed  to  be
  committed to the Committee on Investigations and Government Operations

AN ACT to amend the tax law, in relation to partial eligibility of farm-
  ers for the agricultural property tax credit

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

  Section 1. Paragraphs (a) and (b) of subdivision 22 of section 210  of
the tax law, paragraph (a) as amended by chapter 315 of the laws of 1998
and  paragraph  (b)  as  amended by chapter 527 of the laws of 2003, are
amended to read as follows:
  (a) General. In the case of a taxpayer which is an eligible farmer  OR
PARTIALLY  ELIGIBLE  FARMER,  or  an  eligible farmer [who] OR PARTIALLY
ELIGIBLE FARMER WHICH has paid taxes pursuant to a land contract,  there
shall  be  allowed  a  credit OR PARTIAL CREDIT for the allowable school
district property taxes. The term "allowable  school  district  property
taxes"  means the school district property taxes paid during the taxable
year on qualified agricultural property, subject to the acreage  limita-
tion  provided in paragraph (e) of this subdivision and the income limi-
tation provided in paragraph (f) of this subdivision,  WHICH  QUALIFICA-
TIONS  SHALL  ALL  APPLY  IDENTICALLY  TO ELIGIBLE FARMERS AND PARTIALLY
ELIGIBLE FARMERS.  THE PARTIAL CREDIT ALLOWED TO  A  PARTIALLY  ELIGIBLE
FARMER SHALL BE EQUAL TO ONE-HALF OF THE CREDIT THAT WOULD BE ALLOWED TO
AN  ELIGIBLE  FARMER, CALCULATING THE ALLOWABLE SCHOOL DISTRICT PROPERTY
TAXES AS PROVIDED IN THIS PARAGRAPH, WITH ALL STATED QUALIFICATIONS.
  (b) (1) Eligible farmer. For purposes of this  subdivision,  the  term
"eligible farmer" means a taxpayer whose federal gross income from farm-
ing  for the taxable year is at least two-thirds of excess federal gross
income. The term "eligible farmer" also  includes  a  corporation  other
than  the  taxpayer  of record for qualified agricultural land which has
paid the school district property taxes  on  such  land  pursuant  to  a

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05398-01-9

S. 702                              2

contract for the future purchase of such land; provided that such corpo-
ration  has  a  federal  gross  income from farming for the taxable year
which is at  least  two-thirds  of  excess  federal  gross  income;  and
provided further that, in determining such income eligibility, a taxpay-
er  may,  for  any  taxable  year, use the average of such federal gross
income from farming for that taxable year and such income  for  the  two
consecutive  taxable  years  immediately  preceding  such  taxable year.
Excess federal gross income means the amount  of  federal  gross  income
from  all  sources  for  the  taxable  year in excess of thirty thousand
dollars.
  (2) PARTIALLY ELIGIBLE FARMER. FOR PURPOSES OF THIS  SUBDIVISION,  THE
TERM  "PARTIALLY  ELIGIBLE  FARMER" MEANS A TAXPAYER WHOSE FEDERAL GROSS
INCOME FROM FARMING FOR THE TAXABLE YEAR IS AT LEAST FORTY  PERCENT  OF,
BUT  LESS  THAN  TWO-THIRDS  OF,  EXCESS  FEDERAL GROSS INCOME. THE TERM
"PARTIALLY ELIGIBLE FARMER" ALSO INCLUDES A CORPORATION OTHER  THAN  THE
TAXPAYER  OF  RECORD  FOR QUALIFIED AGRICULTURAL LAND WHICH HAS PAID THE
SCHOOL DISTRICT PROPERTY TAXES ON SUCH LAND PURSUANT TO A  CONTRACT  FOR
THE  FUTURE  PURCHASE OF SUCH LAND; PROVIDED THAT SUCH CORPORATION HAS A
FEDERAL GROSS INCOME FROM FARMING FOR THE TAXABLE YEAR WHICH IS AT LEAST
FORTY PERCENT OF, BUT LESS THAN  TWO-THIRDS  OF,  EXCESS  FEDERAL  GROSS
INCOME;  AND PROVIDED FURTHER THAT, IN DETERMINING SUCH INCOME ELIGIBIL-
ITY, A TAXPAYER MAY, FOR ANY TAXABLE  YEAR,  USE  THE  AVERAGE  OF  SUCH
FEDERAL  GROSS INCOME FROM FARMING FOR THAT TAXABLE YEAR AND SUCH INCOME
FOR THE TWO CONSECUTIVE TAXABLE YEARS IMMEDIATELY PRECEDING SUCH TAXABLE
YEAR.  EXCESS FEDERAL GROSS INCOME MEANS THE  AMOUNT  OF  FEDERAL  GROSS
INCOME  FROM  ALL SOURCES FOR THE TAXABLE YEAR IN EXCESS OF THIRTY THOU-
SAND DOLLARS.
  S 2. Subparagraph 1 of paragraph (e), paragraph (g), and subparagraphs
1 and 2 of paragraph (h) of subdivision 22 of section  210  of  the  tax
law, as added by chapter 309 of the laws of 1996, are amended to read as
follows:
  (1) Eligible taxes. In the event that the qualified agricultural prop-
erty  owned  by the taxpayer includes land in excess of the base acreage
as provided in this paragraph, the amount of  school  district  property
taxes eligible for credit OR PARTIAL CREDIT under this subdivision shall
be  that  portion  of the school district property taxes which bears the
same ratio to the total school district property taxes paid  during  the
taxable year, as the acreage allowable under this paragraph bears to the
entire acreage of such land.
  (g)  In no event shall the credit OR PARTIAL CREDIT provided herein be
allowed in an amount which will reduce the tax payable to less than  the
higher  of  the amounts prescribed in paragraphs (c) and (d) of subdivi-
sion one of this section.  If, however, the amount of credit OR  PARTIAL
CREDIT allowable under this subdivision for any taxable year reduces the
tax  to  such amount, any amount of credit OR PARTIAL CREDIT not deduct-
ible in such taxable year may be carried over to the following  year  or
years  and  may  be  deducted  from  the taxpayer's tax for such year or
years.  Provided, however, in lieu of carrying over the  unused  portion
of  such  credit OR PARTIAL CREDIT, the taxpayer may elect to treat such
unused portion as an overpayment of tax to be credited  or  refunded  in
accordance with the provisions of section ten hundred eighty-six of this
chapter except that no interest shall be paid on such overpayment.
  (1)  No credit OR PARTIAL CREDIT in conversion year. In the event that
qualified agricultural property is converted by the taxpayer to nonqual-
ified use, credit OR PARTIAL CREDIT under this subdivision shall not  be

S. 702                              3

allowed with respect to such property for the taxable year of conversion
(the conversion year).
  (2)  Credit  OR  PARTIAL  CREDIT recapture.   If the conversion by the
taxpayer of qualified agricultural property to nonqualified  use  occurs
during  the  period  of the two taxable years following the taxable year
for which the credit OR PARTIAL CREDIT under this subdivision was  first
claimed  with  respect  to  such  property, the credit OR PARTIAL CREDIT
allowed with respect to such property for the taxable years prior to the
conversion year must be added back in the conversion year.    Where  the
property  converted includes land, and where the conversion is of only a
portion of such land, the credit OR PARTIAL CREDIT allowed with  respect
to  the property converted shall be determined by multiplying the entire
credit OR PARTIAL CREDIT under this subdivision for  the  taxable  years
prior  to  the  conversion year by a fraction, the numerator of which is
the acreage converted and the denominator of which is the entire acreage
of such land owned by the taxpayer immediately prior to the conversion.
  S 3. Paragraphs 1 and 2 of subsection (n) of section 606  of  the  tax
law, paragraph 1 as amended by chapter 315 of the laws of 1998 and para-
graph  2  as  amended by chapter 527 of the laws of 2003, are amended to
read as follows:
  (1) General. In the case of a taxpayer who is an  eligible  farmer  OR
PARTIALLY  ELIGIBLE  FARMER  or an eligible farmer OR PARTIALLY ELIGIBLE
FARMER who has paid taxes pursuant to a land contract,  there  shall  be
allowed  a  credit  OR  PARTIAL CREDIT for the allowable school district
property taxes. The term  "allowable  school  district  property  taxes"
means the school district property taxes paid during the taxable year on
qualified  agricultural  property,  subject  to  the  acreage limitation
provided in paragraph five of this subsection and the income  limitation
provided in paragraph six of this subsection, WHICH QUALIFICATIONS SHALL
ALL  APPLY  IDENTICALLY  TO  ELIGIBLE  FARMERS  AND  PARTIALLY  ELIGIBLE
FARMERS.   THE PARTIAL CREDIT ALLOWED TO  A  PARTIALLY  ELIGIBLE  FARMER
SHALL  BE  EQUAL  TO  ONE-HALF OF THE CREDIT THAT WOULD BE ALLOWED TO AN
ELIGIBLE FARMER, CALCULATING  THE  ALLOWABLE  SCHOOL  DISTRICT  PROPERTY
TAXES  AS  PROVIDED  IN  THIS PARAGRAPH, WITH ALL STATED QUALIFICATIONS.
Such credit OR PARTIAL CREDIT shall be allowed against the taxes imposed
by this article for the taxable year reduced by the credits permitted by
this article. If the credit OR PARTIAL CREDIT  exceeds  the  tax  as  so
reduced,  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.
  (2)  (A)  Eligible  farmer.  For purposes of this subsection, the term
"eligible farmer" means a taxpayer whose federal gross income from farm-
ing for the taxable year is at least two-thirds of excess federal  gross
income.  The  term  "eligible  farmer" also includes an individual other
than the taxpayer of record for qualified agricultural land who has paid
the school district property taxes on such land pursuant to  a  contract
for  the future purchase of such land; provided that such individual has
a federal gross income from farming for the taxable  year  which  is  at
least  two-thirds  of  excess federal gross income; and provided further
that, in determining such income eligibility, a taxpayer  may,  for  any
taxable  year, use the average of such federal gross income from farming
for that taxable year and such income for the  two  consecutive  taxable
years  immediately  preceding  such  taxable  year. Excess federal gross
income means the amount of federal gross income from all sources for the
taxable year reduced by the sum (not to exceed thirty thousand  dollars)
of  those  items  included  in federal gross income which consist of (i)

S. 702                              4

earned  income,  (ii)  pension  payments,  including   social   security
payments, (iii) interest, and (iv) dividends. For purposes of this para-
graph,  the  term  "earned  income" shall mean wages, salaries, tips and
other  employee  compensation, and those items of gross income which are
includible in the computation of net earnings from self-employment.
  (B) PARTIALLY ELIGIBLE FARMER. FOR PURPOSES OF  THIS  SUBSECTION,  THE
TERM  "PARTIALLY  ELIGIBLE  FARMER" MEANS A TAXPAYER WHOSE FEDERAL GROSS
INCOME FROM FARMING FOR THE TAXABLE YEAR IS AT LEAST FORTY  PERCENT  OF,
BUT  LESS  THAN  TWO-THIRDS  OF,  EXCESS  FEDERAL GROSS INCOME. THE TERM
"PARTIALLY ELIGIBLE FARMER" ALSO INCLUDES AN INDIVIDUAL OTHER  THAN  THE
TAXPAYER  OF  RECORD  FOR  QUALIFIED  AGRICULTURAL LAND WHO HAS PAID THE
SCHOOL DISTRICT PROPERTY TAXES ON SUCH LAND PURSUANT TO A  CONTRACT  FOR
THE  FUTURE  PURCHASE  OF SUCH LAND; PROVIDED THAT SUCH INDIVIDUAL HAS A
FEDERAL GROSS INCOME FROM FARMING FOR THE TAXABLE YEAR WHICH IS AT LEAST
FORTY PERCENT OF, BUT LESS THAN  TWO-THIRDS  OF,  EXCESS  FEDERAL  GROSS
INCOME;  AND PROVIDED FURTHER THAT, IN DETERMINING SUCH INCOME ELIGIBIL-
ITY, A TAXPAYER MAY, FOR ANY TAXABLE  YEAR,  USE  THE  AVERAGE  OF  SUCH
FEDERAL  GROSS INCOME FROM FARMING FOR THAT TAXABLE YEAR AND SUCH INCOME
FOR THE TWO CONSECUTIVE TAXABLE YEARS IMMEDIATELY PRECEDING SUCH TAXABLE
YEAR. EXCESS FEDERAL GROSS INCOME MEANS  THE  AMOUNT  OF  FEDERAL  GROSS
INCOME  FROM ALL SOURCES FOR THE TAXABLE YEAR REDUCED BY THE SUM (NOT TO
EXCEED THIRTY THOUSAND DOLLARS) OF THOSE ITEMS INCLUDED IN FEDERAL GROSS
INCOME WHICH CONSIST  OF  (I)  EARNED  INCOME,  (II)  PENSION  PAYMENTS,
INCLUDING  SOCIAL SECURITY PAYMENTS, (III) INTEREST, AND (IV) DIVIDENDS.
FOR PURPOSES OF THIS PARAGRAPH, THE  TERM  "EARNED  INCOME"  SHALL  MEAN
WAGES,  SALARIES,  TIPS AND OTHER EMPLOYEE COMPENSATION, AND THOSE ITEMS
OF GROSS INCOME WHICH ARE INCLUDIBLE IN THE COMPUTATION OF NET  EARNINGS
FROM SELF-EMPLOYMENT.
  S  4. Subparagraph (A) of paragraph 5 and subparagraphs (A) and (B) of
paragraph 7 of subsection (n) of section 606 of the tax law, as added by
chapter 309 of the laws of 1996, are amended to read as follows:
  (A) Eligible taxes. In the event that the qualified agricultural prop-
erty owned by the taxpayer includes land in excess of the  base  acreage
as  provided  in  this paragraph, the amount of school district property
taxes eligible for credit OR PARTIAL CREDIT under this subsection  shall
be  that  portion  of the school district property taxes which bears the
same ratio to the total school district property taxes paid  during  the
taxable year, as the acreage allowable under this paragraph bears to the
entire acreage of such land.
  (A)  No credit OR PARTIAL CREDIT in conversion year. In the event that
qualified agricultural property is converted by the taxpayer to nonqual-
ified use, credit OR PARTIAL CREDIT under this subsection shall  not  be
allowed with respect to such property for the taxable year of conversion
(the conversion year).
  (B)  Credit  OR  PARTIAL  CREDIT  recapture.  If the conversion by the
taxpayer of qualified agricultural property to nonqualified  use  occurs
during  the  period  of the two taxable years following the taxable year
for which the credit OR PARTIAL CREDIT under this subsection  was  first
claimed  with  respect  to  such  property, the credit OR PARTIAL CREDIT
allowed with respect to such property for the taxable years prior to the
conversion year must be added back in the conversion year.    Where  the
property  converted includes land, and where the conversion is of only a
portion of such land, the credit OR PARTIAL CREDIT allowed with  respect
to  the property converted shall be determined by multiplying the entire
credit OR PARTIAL CREDIT under this subsection  for  the  taxable  years
prior  to  the  conversion year by a fraction, the numerator of which is

S. 702                              5

the acreage converted and the denominator of which is the entire acreage
of such land owned by the taxpayer immediately prior to the conversion.
  S  5.  The  commissioner  of  taxation  and  finance is authorized and
directed to promulgate any rules and regulations necessary to  implement
the provisions of this act.
  S 6. This act shall take effect immediately and shall apply to taxable
years  commencing  on  or after the first of January next succeeding the
date on which it shall have become a law.

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Senate Bill S702

Sponsored By

Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

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co-Sponsors

2009-S702 (ACTIVE) - Details

2009-S702 (ACTIVE) - Summary

2009-S702 (ACTIVE) - Sponsor Memo

2009-S702 (ACTIVE) - Bill Text download pdf

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Sponsored By

William Larkin

Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

Actions

co-Sponsors

John J. Bonacic

Kenneth P. LaValle

Vincent L. Leibell

George D. Maziarz

2009-S702 (ACTIVE) - Details

2009-S702 (ACTIVE) - Summary

2009-S702 (ACTIVE) - Sponsor Memo

2009-S702 (ACTIVE) - Bill Text download pdf

Comments