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| | 101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB5200 Introduced , by Rep. Nathan D. Reitz SYNOPSIS AS INTRODUCED:
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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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| | HB5200 | | LRB101 17571 HLH 66990 b |
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| 1 | | AN ACT concerning revenue.
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| 2 | | Be it enacted by the People of the State of Illinois,
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| 3 | | represented in the General Assembly:
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| 4 | | Section 5. The Illinois Income Tax Act is amended by adding |
| 5 | | Section 232 as follows:
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| 6 | | (35 ILCS 5/232 new) |
| 7 | | Sec. 232. Beginning farmer credit. |
| 8 | | (a) For the purposes of this Section, the following terms |
| 9 | | have
the following meanings: |
| 10 | | "Agricultural asset" means agricultural land, livestock, |
| 11 | | facilities, buildings, and
machinery used for farming in |
| 12 | | Illinois. |
| 13 | | "Beginning farmer" means a resident of Illinois who: |
| 14 | | (1) is seeking entry into farming or has become a |
| 15 | | farmer within the 10 years preceding the taxable year in |
| 16 | | which the credit is taken; |
| 17 | | (2) intends to farm land located within the State; |
| 18 | | (3) is not related by blood or marriage to the owner of |
| 19 | | the agricultural asset from whom the beginning farmer is |
| 20 | | seeking to purchase or rent the agricultural asset; |
| 21 | | (4) is not related by blood or marriage to a partner, |
| 22 | | member, shareholder, or trustee of
the owner of |
| 23 | | agricultural assets from whom the beginning farmer is |
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| 1 | | seeking to purchase or
rent the agricultural asset; and |
| 2 | | (5) meets the following eligibility requirements as |
| 3 | | determined by the Department |
| 4 | | (A) provides the majority of the day-to-day |
| 5 | | physical labor and management of the farm; |
| 6 | | (B) has, in the judgment of the Department, |
| 7 | | adequate farming experience or demonstrates
knowledge |
| 8 | | in the type of farming for which the beginning farmer |
| 9 | | seeks assistance from the
Department; |
| 10 | | (C) demonstrates to the Department a profit |
| 11 | | potential by submitting projected earnings
statements; |
| 12 | | and |
| 13 | | (D) asserts to the satisfaction of the Department |
| 14 | | that farming will be a significant source of income for |
| 15 | | the beginning farmer. |
| 16 | | "Department" means the Department of Agriculture. |
| 17 | | "Farm product" means plants and animals useful to humans, |
| 18 | | including, but is not
limited to, forage and sod crops, |
| 19 | | oilseeds, grain and feed crops, dairy and dairy products,
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| 20 | | poultry and poultry products, livestock, fruits, and |
| 21 | | vegetables. |
| 22 | | "Farming" means the active use, management, and operation |
| 23 | | of real and personal
property for the production of a farm |
| 24 | | product. |
| 25 | | "Owner of an agricultural asset" means an individual, |
| 26 | | trust, or pass-through entity that
is the owner in fee of |
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| 1 | | agricultural land or has legal title to any other agricultural |
| 2 | | asset. An equipment dealer or comparable entity engaged in
the |
| 3 | | business of selling agricultural assets for profit is not |
| 4 | | considered an owner of an agricultural asset. |
| 5 | | "Share rent agreement" means a rental agreement in which |
| 6 | | the principal consideration
given to the owner of agricultural |
| 7 | | assets is a predetermined portion of the production of
farm |
| 8 | | products produced from the rented agricultural assets and which |
| 9 | | provides for sharing
production costs, risk of loss, or both. |
| 10 | | (b) For taxable years ending on or after December 31, 2020, |
| 11 | | an owner of an agricultural
asset may take a credit against the |
| 12 | | tax due under subsections (a) and (b) of Section 201 of this |
| 13 | | Act for the sale or rental of
that agricultural asset to a |
| 14 | | beginning farmer. The credit shall be
equal to: |
| 15 | | (1) 5% of the sale price of the agricultural asset; |
| 16 | | (2) 10% of the gross rental income in each of the |
| 17 | | first, second, and third years of
a rental agreement; or |
| 18 | | (3) 15% of the cash equivalent of the gross rental |
| 19 | | income in each of the first,
second, and third years of a |
| 20 | | share rent agreement. |
| 21 | | (c) A qualifying rental agreement includes the cash rent of |
| 22 | | an agricultural asset or a share rent agreement. The |
| 23 | | agricultural asset must be rented at prevailing community rates |
| 24 | | as determined by the Department. The credit may be claimed only |
| 25 | | after approval and certification by the Department. |
| 26 | | (d) An owner of an agricultural assets or beginning farmer |
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| 1 | | may terminate a rental agreement, including a share rent |
| 2 | | agreement, for reasonable cause upon approval of the |
| 3 | | Department. If a rental agreement is terminated without the |
| 4 | | fault of the owner of the agricultural asset, the tax credits |
| 5 | | shall not be retroactively disallowed. If an agreement is |
| 6 | | terminated with fault by the owner of agricultural assets, any |
| 7 | | prior tax credits claimed under this Section by the owner of |
| 8 | | the agricultural asset shall be disallowed and must be repaid |
| 9 | | to the Department of Revenue. |
| 10 | | (e) For taxable years ending on or after December 31, 2020, |
| 11 | | a beginning farmer may take
a credit against the tax imposed |
| 12 | | under subsections (a) and (b) of Section 201 for participating |
| 13 | | in a financial management
program approved by the Department. |
| 14 | | The credit is equal to 100% of the cost of
participating in the |
| 15 | | program. The credit is available for up to 3 years while the |
| 16 | | farmer
is in the program. The Department shall maintain a list |
| 17 | | of approved financial management
programs and establish a |
| 18 | | procedure for approving equivalent programs that are not on the
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| 19 | | list. |
| 20 | | (f) The Department, in consultation with the Department of |
| 21 | | Revenue, shall: |
| 22 | | (1) approve and certify beginning farmers as eligible |
| 23 | | for the program under this Section; |
| 24 | | (2) approve and certify owners of agricultural assets |
| 25 | | as eligible for the tax credit under
Section; |
| 26 | | (3) provide necessary and reasonable assistance and |