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

 

HB5200LRB101 17571 HLH 66990 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by adding
5Section 232 as follows:
 
6    (35 ILCS 5/232 new)
7    Sec. 232. Beginning farmer credit.
8    (a) For the purposes of this Section, the following terms
9have the following meanings:
10    "Agricultural asset" means agricultural land, livestock,
11facilities, buildings, and machinery used for farming in
12Illinois.
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,
18including, but is not limited to, forage and sod crops,
19oilseeds, grain and feed crops, dairy and dairy products,
20poultry and poultry products, livestock, fruits, and
21vegetables.
22    "Farming" means the active use, management, and operation
23of real and personal property for the production of a farm
24product.
25    "Owner of an agricultural asset" means an individual,
26trust, or pass-through entity that is the owner in fee of

 

 

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1agricultural land or has legal title to any other agricultural
2asset. An equipment dealer or comparable entity engaged in the
3business of selling agricultural assets for profit is not
4considered an owner of an agricultural asset.
5    "Share rent agreement" means a rental agreement in which
6the principal consideration given to the owner of agricultural
7assets is a predetermined portion of the production of farm
8products produced from the rented agricultural assets and which
9provides for sharing production costs, risk of loss, or both.
10    (b) For taxable years ending on or after December 31, 2020,
11an owner of an agricultural asset may take a credit against the
12tax due under subsections (a) and (b) of Section 201 of this
13Act for the sale or rental of that agricultural asset to a
14beginning 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
22an agricultural asset or a share rent agreement. The
23agricultural asset must be rented at prevailing community rates
24as determined by the Department. The credit may be claimed only
25after approval and certification by the Department.
26    (d) An owner of an agricultural assets or beginning farmer

 

 

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1may terminate a rental agreement, including a share rent
2agreement, for reasonable cause upon approval of the
3Department. If a rental agreement is terminated without the
4fault of the owner of the agricultural asset, the tax credits
5shall not be retroactively disallowed. If an agreement is
6terminated with fault by the owner of agricultural assets, any
7prior tax credits claimed under this Section by the owner of
8the agricultural asset shall be disallowed and must be repaid
9to the Department of Revenue.
10    (e) For taxable years ending on or after December 31, 2020,
11a beginning farmer may take a credit against the tax imposed
12under subsections (a) and (b) of Section 201 for participating
13in a financial management program approved by the Department.
14The credit is equal to 100% of the cost of participating in the
15program. The credit is available for up to 3 years while the
16farmer is in the program. The Department shall maintain a list
17of approved financial management programs and establish a
18procedure for approving equivalent programs that are not on the
19list.
20    (f) The Department, in consultation with the Department of
21Revenue, 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

 

 

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1    support to beginning farmers for qualification and
2    participation in financial management programs approved by
3    the Department; and
4        (4) refer beginning farmers to agencies and
5    organizations that may provide additional pertinent
6    information and assistance.
7    (g) This Section is exempt from the provisions of Section
8250.
 
9    Section 99. Effective date. This Act takes effect upon
10becoming law.