Session of 2000
SENATE BILL No. 495
By Committee on Agriculture
1-27
9 AN ACT
enacting the beginning farmer tax credit act.
10
11 Be it enacted by the Legislature of the
State of Kansas:
12 Section
1. This act shall be known and may be cited as the
beginning
13 farmer tax credit act.
14 Sec. 2. As
used in the beginning farmer tax credit act:
15 (a) "Agricultural
assets" means agricultural land, livestock, farming,
16 or livestock production facilities or
buildings and machinery used for
17 farming or livestock production.
18 (b) "Board" means
the beginning farmer board created by section 5,
19 and amendments thereto.
20 (c) "Farm" means
any tract of land over 10 acres in area used for or
21 devoted to the commercial production of
farm products.
22 (d) "Farm
product" means those plants and animals useful to humans
23 and includes, but is not limited to,
forages and sod crops, grains and feed
24 crops, dairy and dairy products, poultry
and poultry products, livestock,
25 including breeding and grazing livestock,
fruits and vegetables.
26 (e) "Farming" or
"livestock production" means the active use, man-
27 agement and operation of real and personal
property for the production
28 of a farm product.
29 (f) "Financial
management program" means a program for beginning
30 farmers or livestock producers which
includes, but is not limited to, as-
31 sistance in the creation and proper use of
record-keeping systems, peri-
32 odic private consultations with licensed
financial management personnel,
33 year-end monthly cash flow analysis, and
detailed enterprise analysis.
34 (g) "Owner of
agricultural assets" means an individual who is a Kansas
35 resident, who has derived at least 50% or
more of such individual's gross
36 annual income for income tax purposes from
farming or livestock pro-
37 duction, who has a net worth of at least
$100,000, including any holding
38 by a spouse or dependent, based on fair
market value, who has provided
39 the majority of the day-to-day physical
labor and management of a farm
40 over a period of time deemed sufficient to
qualify for the granting of tax
41 credits under the act by the board, and who
has such other qualifications
42 as determined by the board.
43 (h) "Qualified
beginning farmer" or "livestock producer" means an
2
1 individual who is a Kansas resident,
who has entered farming or livestock
2 production or is seeking entry into
farming or livestock production, who
3 intends to farm or raise crops or
livestock on land located within the state
4 borders of Kansas, and who meets the
eligibility guidelines established in
5 section 10, and amendments thereto,
and such other qualifications as
6 determined by the board.
7
(i) "Relative" means a spouse and any biological or adopted
parent,
8 child, grandparent of any degree,
grandchild of any degree, brother, sis-
9 ter, uncle of any degree, aunt of any
degree, nephew of any degree or
10 niece of any degree.
11 Sec. 3. For
the purpose of developing and directing programs to pro-
12 vide increased and enhanced opportunities
for beginning farmers and
13 livestock producers, the beginning farmer
board is hereby created. For
14 administrative and budgetary purposes only,
the board shall be housed
15 within the department of agriculture. The
board shall have the following
16 duties and responsibilities:
17 (a) Approve and
certify beginning farmers and livestock producers as
18 eligible for the programs provided by the
board;
19 (b) approve and
certify owners of agricultural assets as eligible for
20 the tax credits authorized by sections 12
to 14, and amendments thereto;
21 (c) advocate
joint ventures between beginning farmers or livestock
22 producers and existing licensed financial
institutions, as well as to advo-
23 cate joint ventures with owners of
agricultural assets desiring to assist
24 beginning farmers and livestock producers
seeking entry into farming or
25 livestock production;
26 (d) provide
necessary and reasonable assistance and support to be-
27 ginning farmers and livestock producers for
qualification and participation
28 in financial management programs approved
by the board;
29 (e) advocate
appropriate changes in policies and programs of other
30 public and private institutions or agencies
which will directly benefit be-
31 ginning farmers and livestock producers and
may include changes re-
32 garding financing, taxation and any other
existing policies which prohibit
33 or impede individuals from entering into
farming or livestock production;
34 (f) provide
adequate explanations of facts and aspects of available
35 programs offered or recommended by the
board or other state and federal
36 agencies intended for beginning farmers and
livestock producers;
37 (g) encourage
licensed financial institutions and individuals to use
38 alternative amortization schedules for
loans and land contracts granted to
39 beginning farmers and livestock
producers;
40 (h) to refer
beginning farmers and livestock producers to agencies
41 and organizations which may provide
additional pertinent information
42 and assistance;
43 (i) provide any
other assistance and support the board deems nec-
3
1 essary and appropriate in order for
entry into farming or livestock
2 production;
3 (j) adopt
rules and regulations necessary to carry out the purposes of
4 the beginning farmer tax credit act,
including criteria required for tax
5 credit eligibility and financial
management program certification and
6 guidelines which constitute a viably
sized farm that is necessary to ade-
7 quately support a beginning farmer or
livestock producer. Such guidelines
8 shall vary and take into account the
region of the state, number of acres,
9 land quality and type, type of
operation, type of crops or livestock raised,
10 and other factors of farming or livestock
production;
11 (k) keep minutes
of the board's meetings and other books and records
12 which will adequately reflect actions and
decisions of the board; and
13 (l) provide an
annual report to the legislature and governor pursuant
14 to section 6, and amendments thereto.
15 Sec. 4. (a)
The board shall consist of the follow members:
16 (1) The secretary
of agriculture or the secretary's designee;
17 (2) the secretary
of revenue or the secretary's designee;
18 (3) one
individual representing lenders of agricultural credit;
19 (4) one
individual of the academic community with extensive knowl-
20 edge and insight in the analysis of
agricultural economic issues; and
21 (5) four
individuals, one from each congressional district, who are
22 currently engaged in farming or livestock
production and are represen-
23 tative of a variety of farming or livestock
production interests based on
24 size of farm, type of farm operation, net
worth of farm operation and
25 geographic location.
26 (b) Members of
the board listed in paragraphs (3) through (5) shall
27 be appointed by the governor, subject to
confirmation by the senate as
28 provided in K.S.A. 75-4315b, and amendments
thereto.
29 (c) Of the
members of the board initially appointed, two members
30 shall have terms for one year, two members
shall have terms for two years
31 and two members shall have terms for three
years. Each member ap-
32 pointed thereafter shall be appointed for a
four-year term and shall con-
33 tinue in office until a successor is
appointed and qualified. Members shall
34 be eligible for reappointment.
35 (d) Once every
two years, the members of the board shall elect a
36 chairperson and a vice-chairperson. A
member of the board may be re-
37 elected to the position of chairperson or
vice-chairperson upon the dis-
38 cretion of the board.
39 (e) Each
appointed member of the board shall receive compensation,
40 subsistence allowances, mileage and other
expenses as provided for in
41 K.S.A. 79-3223, and amendments thereto.
42 (f) Five of the
members of the board shall constitute a quorum for
43 the transaction of official business. The
affirmative vote of at least five
4
1 members shall be necessary for any
action to be taken by the board. No
2 vacancy in the membership of the
board shall constitute an impairment
3 of a quorum to exercise any and all
rights and perform all duties of the
4 board.
5 (g) The
board shall meet quarterly during the year and shall review
6 pending applications in order to
approve and certify beginning farmers
7 and livestock producers as eligible
for the programs provided by the board
8 and to approve and certify owners of
agricultural assets as eligible for the
9 tax credits authorized by sections 12
to 14, and amendments thereto. Any
10 action taken by the board regarding
approval and certification of program
11 eligibility, granting of tax credits or
termination of share-rental agree-
12 ments shall require the affirmative vote of
at least five members of the
13 board.
14 Sec. 5. (a)
The board shall determine who is qualified as a beginning
15 farmer or livestock producer based on the
qualifications found in this
16 section. A qualified beginning farmer or
livestock producer shall be an
17 individual who:
18 (1) Has a net
worth of not more than $100,000, including any hold-
19 ings by a spouse or dependent, based on
fair market value;
20 (2) alone, or
with a spouse, provides the majority of the day-to-day
21 physical labor and management of the
farm;
22 (3) has, by the
judgment of the board, adequate farming or livestock
23 production experience or demonstrates
knowledge in the type of farming
24 or livestock production for which the
individual seeks assistance from the
25 board;
26 (4) demonstrates
to the board a profit potential by submitting board-
27 approved projected earnings statements and
agrees that farming or live-
28 stock production is intended to become the
individual's principal source
29 of income;
30 (5) demonstrates
to the board a need for assistance;
31 (6) participates
in a financial management program approved by the
32 board;
33 (7) submits a
nutrient management plan and a soil conservation plan
34 to the board for approval on any applicable
agricultural assets purchased
35 or rented from an owner of agricultural
assets;
36 (8) is not a
relative of the owner of agricultural assets in which the
37 beginning farmer or livestock producer is
seeking to enter into a share-
38 rental agreement; and
39 (9) has such
other qualifications as specified by the board.
40 (b) A qualified
beginning farmer or livestock producer who has par-
41 ticipated in a board approved and certified
three-year share-rental agree-
42 ment with an owner of agricultural assets
shall not be eligible to file a
43 subsequent application with the board but
may refer to the board for
5
1 additional support and participate in
programs, including educational and
2 financial programs and seminars,
established or recommended by the
3 board that are applicable to the
continued success of such farmer or
4 livestock producer.
5 Sec.
6. The board, following the close of each fiscal year, shall
submit
6 an annual report of the activities
and actions of the board for the preced-
7 ing fiscal year to the governor and
the legislature. Each member of the
8 legislature shall receive a copy of
such report by request to the chairper-
9 son of the board. Each report shall
include the following information:
10 (a) A complete
operating and financial statement for the board for
11 the prior fiscal year.
12 (b) The number of
qualified beginning farmers and livestock pro-
13 ducers receiving assistance from the
board.
14 (c) The number of
owners of agricultural assets claiming tax credits
15 and the monetary amount of credits granted
by the board.
16 (d) Any other
relevant information which the board deems necessary
17 to report.
18 Sec. 7. (a)
For all taxable years commencing after December 31,
19 2000, there shall be allowed as a credit
against the tax liability of an owner
20 of agricultural assets, imposed under the
Kansas income tax act an amount
21 equal to five percent of the gross rental
income on any share-rental agree-
22 ment that is approved and certified by the
board under the beginning
23 farmer tax credit act, including the
renting of agricultural assets by an
24 owner of such assets to a qualified
beginning farmer or livestock producer.
25 If the amount of such tax credit exceeds
the taxpayer's income tax liability
26 for the taxable year, the amount thereof
which exceeds such tax liability
27 shall be refunded to the taxpayer.
28 (b) The
share-rental agreement shall be between the individual who
29 is an owner of agricultural assets and a
qualified beginning farmer or
30 livestock producer. The share-rental
agreement basis shall include, but
31 not be limited to, cash rent of
agricultural assets or cash equivalent of a
32 share-crop rental. Such asset shall be
rented at prevailing community
33 rates as determined by the board. The
credit allowed shall be for renting
34 agricultural assets used for farming or
livestock production.
35 (c) Such credit
shall be allowed only after approval and certification
36 by the board and a written three-year
share-rental agreement for such
37 assets is entered into between an owner of
agricultural assets and a qual-
38 ified beginning farmer or livestock
producer. An owner of agricultural
39 assets or qualified beginning farmer or
livestock producer may terminate
40 such agreement for reasonable cause upon
approval by the board. If an
41 agreement is terminated without fault on
the part of the owner of agri-
42 cultural assets as determined by the board,
the tax credit shall not be
43 retroactively disallowed. If an agreement
is terminated with fault on the
6
1 part of the owner of agricultural
assets as determined by the board, any
2 prior tax credits claimed by such
owner shall be disallowed and recaptured
3 and shall be immediately due and
payable to the state of Kansas.
4 (d) A
credit may be granted to an owner of agricultural assets for
5 renting agricultural assets,
including cash rent of agricultural assets or
6 cash equivalent of a share-crop
rental, to any qualified beginning farmer
7 or livestock producer for a period of
three years. An owner of agricultural
8 assets shall not be eligible for
further credits under the beginning farmer
9 tax credit act unless the
share-rental agreement is terminated prior to the
10 end of the three-year period through no
fault of the owner of agricultural
11 assets. If the board finds that such a
termination was not the fault of the
12 owner of agricultural assets, it may
approve the owner for credits arising
13 from a subsequent qualifying share-rental
agreement with a different
14 qualified beginning farmer or livestock
producer.
15 (e) The board
shall review each existing three-year share-rental
16 agreement between a beginning farmer or
livestock producer and an
17 owner of agricultural assets on a quarterly
basis and shall either certify or
18 terminate program eligibility for beginning
farmers or livestock producers
19 or tax credits granted to owners of
agricultural assets on an annual basis.
20 Sec. 8. In
evaluating a share-rental agreement between an owner of
21 agricultural assets and a qualified
beginning farmer or livestock producer,
22 the board shall not approve and certify
credit for an owner of agricultural
23 assets who has, with fault, terminated a
prior board approved and certified
24 share-rental agreement with a qualified
beginning farmer or livestock
25 producer. Any person aggrieved by a
decision of the board may appeal
26 the decision, and the appeal shall be in
accordance with the Kansas ad-
27 ministrative procedure act.
28 Sec. 9. The
board shall conduct a study in order to ascertain the fiscal
29 impact of future tax credits granted by the
board to owners of agricultural
30 assets. Such study shall attempt to
reasonably estimate the number of
31 qualified beginning farmers or livestock
producers that would be eligible
32 to enter into a board approved and
certified three-year share-rental agree-
33 ment with an owner of agricultural assets
and other such relevant facts
34 and information for review by the board.
The findings of such study by
35 the board shall be submitted to the
governor and the legislature by Jan-
36 uary 3, 2001. In order to carry out the
study and the provisions of the
37 beginning farmer tax credit act, the
department of agriculture shall pro-
38 vide any and all of the necessary support
and assistance to the board.
39 Sec. 10. This act shall
take effect and be in force from and after its
40 publication in the statute book.