NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4650
SPONSOR: Magee 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 corpo-
rations, which lease real estate, to claim the Manufacturer's Tax Cred-
it.
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 "cooper-
ative, 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. Tech-
nical guidance contained in New York State tax publication 51.1 indi-
cates 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 accom-
plish.
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 busi-
nesses" 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 prop-
erty 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.
STATE OF NEW YORK
________________________________________________________________________
4650
2017-2018 Regular Sessions
IN ASSEMBLY
February 3, 2017
___________
Introduced by M. of A. MAGEE, CROUCH -- read once and referred to the
Committee on Ways and Means
AN ACT to amend the tax law, in relation to property tax credits for
farmers
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 3 of subsection (n) of section 606 of the tax
2 law, as amended by chapter 728 of the laws of 2005, is amended to read
3 as follows:
4 (3) School district property taxes. For purposes of this subsection,
5 the term "school district property taxes" means all property taxes,
6 special ad valorem levies and special assessments, exclusive of penal-
7 ties and interest, levied for school district purposes on the qualified
8 agricultural property (A) owned by the taxpayer [or], (B) owned by the
9 father, mother, grandfather, grandmother, brother or sister of the
10 taxpayer and a written agreement expressing intent to eventually
11 purchase the land has been entered into, or (C) owned by trust to which
12 the taxpayer is a beneficiary.
13 § 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD08277-01-7
