Bill Text: IL HB5200 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the Illinois Income Tax Act. Creates an income tax credit for beginning farmers who participate in a financial management program approved by the Department of Agriculture. Creates an income tax credit for owners of agricultural assets who sell or rent those agricultural assets to a beginning farmer. Effective immediately.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Introduced - Dead) 2020-05-22 - Added Co-Sponsor Rep. Jonathan "Yoni" Pizer [HB5200 Detail]

Download: Illinois-2019-HB5200-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB5200 Introduced , by Rep. Nathan D. Reitz SYNOPSIS AS INTRODUCED:
35 ILCS 5/232 new
Amends the Illinois Income Tax Act. Creates an income tax credit for beginning farmers who participate in a financial management program approved by the Department of Agriculture. Creates an income tax credit for owners of agricultural assets who sell or rent those agricultural assets to a beginning farmer. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Income Tax Act is amended by adding
Section 232 as follows:
(35 ILCS 5/232 new)
Sec. 232. Beginning farmer credit.
(a) For the purposes of this Section, the following terms
have the following meanings:
"Agricultural asset" means agricultural land, livestock,
facilities, buildings, and machinery used for farming in
Illinois.
"Beginning farmer" means a resident of Illinois who:
(1) is seeking entry into farming or has become a
farmer within the 10 years preceding the taxable year in
which the credit is taken;
(2) intends to farm land located within the State;
(3) is not related by blood or marriage to the owner of
the agricultural asset from whom the beginning farmer is
seeking to purchase or rent the agricultural asset;
(4) is not related by blood or marriage to a partner,
member, shareholder, or trustee of the owner of
agricultural assets from whom the beginning farmer is

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seeking to purchase or rent the agricultural asset; and
(5) meets the following eligibility requirements as
determined by the Department
(A) provides the majority of the day-to-day
physical labor and management of the farm;
(B) has, in the judgment of the Department,
adequate farming experience or demonstrates knowledge
in the type of farming for which the beginning farmer
seeks assistance from the Department;
(C) demonstrates to the Department a profit
potential by submitting projected earnings statements;
and
(D) asserts to the satisfaction of the Department
that farming will be a significant source of income for
the beginning farmer.
"Department" means the Department of Agriculture.
"Farm product" means plants and animals useful to humans,
including, but is not limited to, forage and sod crops,
oilseeds, grain and feed crops, dairy and dairy products,
poultry and poultry products, livestock, fruits, and
vegetables.
"Farming" means the active use, management, and operation
of real and personal property for the production of a farm
product.
"Owner of an agricultural asset" means an individual,
trust, or pass-through entity that is the owner in fee of

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agricultural land or has legal title to any other agricultural
asset. An equipment dealer or comparable entity engaged in the
business of selling agricultural assets for profit is not
considered an owner of an agricultural asset.
"Share rent agreement" means a rental agreement in which
the principal consideration given to the owner of agricultural
assets is a predetermined portion of the production of farm
products produced from the rented agricultural assets and which
provides for sharing production costs, risk of loss, or both.
(b) For taxable years ending on or after December 31, 2020,
an owner of an agricultural asset may take a credit against the
tax due under subsections (a) and (b) of Section 201 of this
Act for the sale or rental of that agricultural asset to a
beginning farmer. The credit shall be equal to:
(1) 5% of the sale price of the agricultural asset;
(2) 10% of the gross rental income in each of the
first, second, and third years of a rental agreement; or
(3) 15% of the cash equivalent of the gross rental
income in each of the first, second, and third years of a
share rent agreement.
(c) A qualifying rental agreement includes the cash rent of
an agricultural asset or a share rent agreement. The
agricultural asset must be rented at prevailing community rates
as determined by the Department. The credit may be claimed only
after approval and certification by the Department.
(d) An owner of an agricultural assets or beginning farmer

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may terminate a rental agreement, including a share rent
agreement, for reasonable cause upon approval of the
Department. If a rental agreement is terminated without the
fault of the owner of the agricultural asset, the tax credits
shall not be retroactively disallowed. If an agreement is
terminated with fault by the owner of agricultural assets, any
prior tax credits claimed under this Section by the owner of
the agricultural asset shall be disallowed and must be repaid
to the Department of Revenue.
(e) For taxable years ending on or after December 31, 2020,
a beginning farmer may take a credit against the tax imposed
under subsections (a) and (b) of Section 201 for participating
in a financial management program approved by the Department.
The credit is equal to 100% of the cost of participating in the
program. The credit is available for up to 3 years while the
farmer is in the program. The Department shall maintain a list
of approved financial management programs and establish a
procedure for approving equivalent programs that are not on the
list.
(f) The Department, in consultation with the Department of
Revenue, shall:
(1) approve and certify beginning farmers as eligible
for the program under this Section;
(2) approve and certify owners of agricultural assets
as eligible for the tax credit under Section;
(3) provide necessary and reasonable assistance and

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support to beginning farmers for qualification and
participation in financial management programs approved by
the Department; and
(4) refer beginning farmers to agencies and
organizations that may provide additional pertinent
information and assistance.
(g) This Section is exempt from the provisions of Section
250.
Section 99. Effective date. This Act takes effect upon
becoming law.