BILL NUMBER:  S7170

 TITLE OF BILL :

An act to amend the tax law, in relation to property tax credits for
farmers

 PURPOSE :

This bill would make technical amendments to the tax code to (1) allow
for tenant farmers who rent land from a trust to claim the Farmer's
School Tax Credit and (2) allow farm businesses organized as
corporations, which lease real estate, to claim the Manufacturer's Tax
Credit.

 SUMMARY OF PROVISIONS :

Section one amends section 606 (n) (3) of the Tax Law, to allow tenant
farmers who are renting land from a trust, to claim the Farmer's
School Tax Credit.

Section 2 amends section 210-B (43) (b) (2) of the Tax Law, to allow
farms organized as corporations which lease property to claim the
Manufacturer's Tax Credit.

Section 3 sets forth an immediate effective date.
              

 JUSTIFICATION :

Under current law family members who operate farms held in trust may
not qualify for the Farmer's School Tax Credit (FSTC), despite the
fact that the law provides for tenant farmers to qualify for the
credit in other cases. There are over 400 farms in New York State
classified as "cooperative, estate or trust, institutional" and a
significant number of those are trusts. This number has grown
significantly in the last five years indicating an increased use of
trusts as a generational transfer tool for family farms, helping to
ensure that older farm generation can retire, while the next
generation can continue operating the farm.

Under section 606 (n) (3) of the Tax Law, to qualify for the Farmer's
School Tax Credit, the agricultural property must either be owned by
the taxpayer or owned by a parent, grandparent or sibling with whom
you have a written agreement to eventually purchase the property. If a
trust exists, however, and a child will inherit the property through
the trust, section 606 (n) (3) cannot be applied. A family member
farming on land held in trust should also be eligible for the Farmer's
School Tax Credit, and this legislation would make that technical
correction. Technical guidance contained in New York State tax
publication 51.1 indicates the intent of 606 (n) (3) is to help ensure
family farms will pass to the next generation which is what this
legislation seeks to accomplish.

Section two of this bill would make a technical correction to the
Manufacturer's Tax Credit. The 2014-15 State Budget provided for a 20%
real property tax credit for manufacturers who own or lease property.
In 2015 this provision was amended to clarify that "agricultural
businesses" who lease property and pay real estate taxes, may also
claim the credit. The 2015 change did not provide for agricultural
businesses organized as corporations, and this legislation would fix
that technical oversight.

 LEGISLATIVE HISTORY :

This is a new bill.

 FISCAL IMPLICATIONS :

Changes to the Farmer's School Tax Credit (FSTC) are revenue neutral
since, in most cases, the trust or beneficiary is already able to
claim the FSTC. By allowing the farm operator to claim the FSTC
instead, this allows the tax benefit to flow directly to the
individual or entity involved in farming and who is generally covering
the cost of the property tax. Similar to existing provisions, the
trust or beneficiary would have to waive its right to claim the
credit, ensuring that only one entity could claim the tax credit.

Changes to the Manufacturer's Tax Credit would also be minimal since
the change would affect only a small number of farming operations
organized as corporations.

 EFFECTIVE DATE :
This act shall take effect immediately.