HB3903 99TH GENERAL ASSEMBLY

LRB099 07895 HLH 28035 b

99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3903

Introduced , by Rep. Avery Bourne

SYNOPSIS AS INTRODUCED:

35 ILCS 5/224 new

Amends the Illinois Income Tax Act. Creates a credit for each person who hires a beginning farmer to do agricultural contract work for the production of crops or livestock in Illinois during the taxable year pursuant to a custom farming contract. Provides that the amount of the credit shall be 7% of the amount actually paid to the beginning farmer under the contract during the taxable year, except that, if the beginning farmer is a veteran, then, during the first taxable year of the contract, the amount of the credit shall be increased to 8% of the amount actually paid to that beginning farmer. Provides that the credit is exempt from the Act's automatic sunset provision. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

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 224 as follows:

(35 ILCS 5/224 new)

Sec. 224. Custom farming tax contract credit.

(a) For taxable years beginning on or after January 1, 2016, any person who hires a beginning farmer to do agricultural contract work for the production of crops or livestock in Illinois during the taxable year pursuant to a custom farming contract is entitled to a credit as provided in this Section. The amount of the credit shall be 7% of the amount actually paid to the beginning farmer under the contract during the taxable year, except that, if the beginning farmer is a veteran, then, during the first taxable year of the contract, the amount of the credit shall be increased to 8% of the amount actually paid to that beginning farmer. The custom farming contract must (i) provide that the taxpayer pay the beginning farmer on a cash basis, (ii) be in writing for a term of not more than 12 months, (iii) provide for payment of at least $1,000, and (iv) be approved by the Illinois Finance Authority. The taxpayer must make all management decisions substantially contributing to or affecting the production of crops or livestock located on the agricultural land. However, the beginning farmer is not prohibited from regularly or frequently taking part in making day-to-day operational decisions affecting production.

(b) For partners, shareholders of subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this subsection to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and subchapter S of the Internal Revenue Code.

(c) In no event shall a credit under this Section reduce the taxpayer's liability to less than zero. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The tax credit shall be applied to the earliest year for which there is a tax liability. If there are credits for more than one year that are available to offset a liability, the earlier credit shall be applied first.

(d) As used in this Section:

"Beginning farmer" means a person who meets the following qualifications:

(1) the person is a resident of Illinois;

(2) the person is at least 18 years of age;

(3) the person is not related to the taxpayer as a spouse, child, stepchild, brother, or sister;

(4) the person has a net worth of less than $703,844 at the time of the contract;

(5) the person must submit a letter with the agreement at the time of approval by the Illinois Finance Authority documenting their education, training, and experience in farming;

(6) the person must have adequate working capital, farm equipment, machinery, and livestock, as determined by the Illinois Finance Authority; and

(7) the person must perform the duties required of the beginning farmer according to the terms of the contract.

(e) This Section is exempt from the provisions of Section 250.

Section 99. Effective date. This Act takes effect upon becoming law.