MISSISSIPPI LEGISLATURE
2003 Regular Session
To: Finance
By: Senator(s) Williamson
AN ACT TO CREATE THE BEGINNING FARMER TAX CREDIT ACT; TO CREATE THE BEGINNING FARMER BOARD TO BE HOUSED WITHIN THE DEPARTMENT OF AGRICULTURE AND COMMERCE; TO PROVIDE FOR THE POWERS AND DUTIES OF SUCH BOARD; TO PROVIDE FOR THE MEMBERSHIP OF SUCH BOARD; TO PROVIDE THAT THE BOARD SHALL DETERMINE WHO IS QUALIFIED AS A BEGINNING FARMER OR LIVESTOCK PRODUCER AND TO PROVIDE THE QUALIFICATIONS TO A BEGINNING FARMER OR LIVESTOCK PRODUCER; TO PROVIDE FOR AN ANNUAL REPORT BY THE BOARD; TO AUTHORIZE AN INCOME TAX CREDIT FOR THE OWNER OF AGRICULTURAL ASSETS FOR AGRICULTURAL ASSETS RENTED ON A SHARE-RENTAL AGREEMENT BASIS; TO PROVIDE THAT SUCH CREDIT SHALL BE GRANTED BY THE STATE TAX COMMISSION ONLY AFTER APPROVAL AND CERTIFICATION BY THE BOARD AND A WRITTEN THREE-YEAR SHARE-RENTAL AGREEMENT FOR SUCH ASSETS IS ENTERED INTO BETWEEN AN OWNER OF AGRICULTURAL ASSETS AND A QUALIFIED BEGINNING FARMER OR LIVESTOCK PRODUCER; TO PROVIDE FOR THE AMOUNT OF THE TAX CREDIT; TO REQUIRE THE BOARD TO CONDUCT CERTAIN STUDIES; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. This act may be cited as the Beginning Farmer Tax Credit Act.
SECTION 2. (1) The Legislature hereby finds and declares that:
(a) Current farm economic conditions in the State of Mississippi have resulted in unemployment, out-migration of people, loss of agricultural jobs, and difficulty in attracting and retaining farm operations; and
(b) Major revisions in Mississippi's tax structure are necessary to accomplish economic revitalization of rural Mississippi and to be competitive with other states involved in economic revitalization and development of agriculture.
(2) It is the policy of this state to make revisions in Mississippi's tax structure in order to encourage persons to seek careers in the farming industry, retain existing and established farm operations, promote the creation and retention of new farm jobs in Mississippi, and attract and retain investment capital in rural Mississippi.
SECTION 3. For purposes of this act:
(a) "Agricultural assets" mean agricultural land, livestock, farming or livestock production facilities or buildings and machinery used for farming or livestock production located in Mississippi;
(b) "Board" means the Beginning Farmer Board created by this act;
(c) "Farm" means any tract of land over ten (10) acres in area used for or devoted to the commercial production of farm products;
(d) "Farm product" means those plants and animals useful to man and includes, but is not limited to, forages and sod crops, grains and feed crops, dairy and dairy products, poultry and poultry products, livestock, including breeding and grazing livestock, fruits and vegetables;
(e) "Farming or livestock production" means the active use, management and operation of real and personal property for the production of a farm product;
(f) "Financial management program" means a program
for beginning farmers or livestock producers which includes, but is not limited to, assistance in the creation and proper use of record keeping systems, periodic private consultations with licensed financial management personnel, year-end monthly cash flow analysis, and detailed enterprise analysis;
(g) "Owner of agricultural assets" means:
(i) An individual or trustee who:
1. Is a resident individual of Mississippi; 2. In the case of an individual, has derived at least fifty percent (50%) of his or her gross annual income for income tax purposes from farming or livestock production, or in the case of a trustee, the trust has derived at least fifty percent (50%) of its income for income tax purposes from farming or livestock production;
3. Has provided the majority of
the day-to-day physical labor and management of a farm
over a period of time deemed sufficient to qualify for the granting of tax credits under this act by the board; and
4. Has other such qualifications as determined by the board.
(ii) A partnership:
1. Which has at least one (1) general partner that is a resident of this state;
2. Which derives at least fifty percent (50%) of its income from farming or livestock production; and
3. In which one or more partners have provided the majority of the day-to-day physical labor and management of a farm over a period of time deemed sufficient to qualify for the granting of tax credits by the board; or
(h) "Qualified beginning farmer" or "livestock
producer" means an individual who is a resident of Mississippi who has entered farming or livestock production or is seeking entry into farming or livestock production, who intends to farm or raise crops or livestock on land located within Mississippi, and who meets the eligibility guidelines established in Section 9 of this act and such other qualifications as determined by the board.
SECTION 4. For the purpose of developing and directing programs to provide increased and enhanced opportunities for
beginning farmers and livestock producers, the Beginning Farmer Board is created. For administrative and budgetary purposes only, the board shall be housed within the Department of Agriculture and Commerce. The board shall be vested with the following duties and responsibilities:
(a) To approve and certify beginning farmers and livestock producers as eligible for the programs provided by the board;
(b) To approve and certify owners of agricultural assets as eligible for the tax credits authorized by Sections 11 through 13;
(c) To advocate joint ventures between beginning farmers or livestock producers and existing private and public credit and banking licensed institutions, as well as to advocate joint ventures with owners of agricultural assets desiring to assist beginning farmers and livestock producers seeking entry into farming or livestock production;
(d) To provide necessary and reasonable assistance and support to beginning farmers and livestock producers for qualification and participation in financial management programs approved by the board;
(e) To advocate appropriate changes in policies and programs of other public and private institutions or agencies which will directly benefit beginning farmers and livestock producers and may include changes regarding financing, taxation and any other existing policies which prohibit or impede individuals from entering into farming or livestock production;
(f) To provide adequate explanations of facts and aspects of available programs offered or recommended by the board intended for beginning farmers and livestock producers;
(g) To assist and educate beginning farmers and livestock producers;
(h) To encourage licensed financial institutions and
individuals to use alternative amortization schedules for loans and land contracts granted to beginning farmers and livestock producers;
(i) To refer beginning farmers and livestock producers to agencies and organizations which may provide additional pertinent information and assistance;
(j) To provide any other assistance and support
the board deems necessary and appropriate inorder for entry into farming or livestock production;
(k) To adopt and promulgate rules and regulations
necessary to carry out the purposes of the Beginning Farmer Tax Credit Act, including criteria required for tax credit eligibility and financial management program certification and guidelines which constitute a viably sized farm that isnecessary to adequately support a beginning farmer or livestock producer. Such guidelines shall vary and take into account the region of the state, number of acres, land quality and type, type of
operation, type of crops or livestock raised, and other factors of farming or livestock production.
(l) To keep minutes of the board's meetings and other books and records which will adequately reflect actions and decisions of the board and to file an annual report to the Governor, the Secretary of the Senate and the Clerk of the House of Representatives by December 1 of each year.
SECTION 5. (1) The board shall consist of the following:
(a) The Commissioner of Agriculture and Commerce, or his or her designee;
(b) The Chairman of the State Tax Commission, or his or her designee;
(c) One (1) member representing lenders of agricultural credit;
(d) One (1) member of the academic community with extensive knowledge and insight in the analysis of agricultural economic issues; and
(e) Four (4) members, one (1) from each congressional district, who are currently engaged in farming or livestock production and are representative of a variety of farming or livestock production interests based on size of farm, type of farm operation, net worth of farm operation, and geographic location.
(2) All members of the board shall be resident individuals of the State of Mississippi. Members of the board listed in subsection (1)(c),(d) and (e) of this section shall be appointed by the Governor with the advice and consent of the Senate. All appointments shall be for terms of four (4) years.
(3) Vacancies in the appointed membership of the board shall be filled for the unexpired term by appointment by the Governor with the advice and consent of the Senate. Members of the board shall serve the full term and until a successor has been appointed by the Governor and approved by the Senate. Any member may be removed from the board by the Governor or by an affirmative vote by any four (4) members of the board for incompetence, neglect of duty or malfeasance.
SECTION 6. Once every two (2) years, the members of the board shall elect a chairperson and a vice chairperson. A member of the board may be reelected to the position of chairperson or vice chairperson in the discretion of the board. Each member of the board shall receive per diem compensation as provided in Section 25-3-69 for attendance at board meetings, together with necessary travel and other expenses incurred in the discharge of his or her official duties as a board member.
SECTION 7. Four (4) of the members of the board shall constitute a quorum for the transaction of official business. The affirmative vote of at least four (4) members shall be necessary for any action to be taken by the board. No vacancy in the membership of the board shall constitute an impairment of a quorum to exercise any and all rights and perform all duties of the board.
SECTION 8. The board shall meet quarterly during the year and shall review pending applications in order to approve and certify beginning farmers and livestock producers as eligible for the programs provided by the board and to approve and certify owners of agricultural assets as eligible for the tax credits authorized by Sections 11 through 13 of this act. Any action taken by the board regarding approval and certification of program eligibility, granting of tax credits, or termination of share-rental agreements shall require the affirmative vote of at least four (4) members of the board.
SECTION 9. (1) The board shall determine who is qualified as a beginning farmer or livestock producer based on the qualifications found in this section. A qualified beginning farmer or livestock producer shall be an individual who:
(a) Has a net worth of not more than One Hundred Thousand Dollars ($100,000.00), including any holdings by a spouse or dependent based on fair market value;
(b) Provides the majority of the day-to-day physical labor and management of the farm;
(c) Has, in the judgment of the board, adequate farming or livestock production experience or demonstrates knowledge in the type of farming or livestock production for which he or she seeks assistance from the board;
(d) Demonstrates to the board a profit potential by submitting board approved projected earnings statements and agrees that farming or livestock production is intended to become his or her principal source of income;
(e) Demonstrates to the board a need for assistance;
(f) Participates in a financial management program approved by the board;
(g) Submits nutrient management plan and a soil conservation plan to the board for approval on any applicable agricultural assets purchased or rented from an owner of agricultural assets; and
(h) Has such other qualifications as specified by the board.
(2) A qualified beginning farmer or livestock producer who has participated in board approved and certified three-year share-rental agreement with an owner of agricultural assets shall not be eligible to file a subsequent application with the board but may refer to the board for additional support and participate in programs, including educational and financial programs and seminars established or recommended by the board that are applicable to the continued success of such farmer or livestock producer.
SECTION 10. (1) The board shall submit an annual report of the activities and actions of the board for the preceding fiscal year to the Governor, Secretary of the Senate and the Clerk of the House of Representative by December 1 of each year. Each member of the Legislature shall receive a copy of such report by making a request to the chairperson of the board. Each report shall include the following information:
(a) A complete operating and financial statement for the board for the prior fiscal year;
(b) The number of qualified beginning farmers and
livestock producers receiving assistance from the board;
(c) The number of owners of agricultural assets claiming tax credits and the monetary amount of credits granted by the board; and
(d) Any other relevant information which the board deems necessary to report.
(2) No information furnished to the board shall be disclosed in the report in such a way as to reveal information from a tax return of any person.
SECTION 11. Beginning January 1, 2004, an owner of agricultural assets shall be allowed a credit to be applied against the taxes imposed pursuant to Chapter 7, Title 27, Mississippi Code of 1972, for agricultural assets rented on a share-rental agreement basis, including cash rent of agricultural assets or cash equivalent of a share-crop rental, to qualified beginning farmers or livestock producers. The credit shall be in the amount allowed under Section 13 of this act. Such asset shall be rented at prevailing community rates as determined by the board. The credit allowed shall be for renting agricultural assets used for farming or livestock production. Such credit shall be granted by the State Tax Commission only after approval and certification by the board and a written three-year share-rental agreement for such assets is entered into between an owner of agricultural assets and a qualified beginning farmer or livestock producer. An owner of agricultural assets or qualified beginning farmer or livestock producer may terminate such agreement for reasonable cause upon approval by the board. If an agreement is terminated without fault on the part of the owner of agricultural assets as determined by the board, the tax credit shall not be retroactively disallowed. If an agreement is terminated with fault on the part of the owner of agricultural assets as determined by the board, any prior tax credits claimed by such owner shall be disallowed and recaptured and shall be immediately due and payable to the State of Mississippi. A credit may be granted to an owner of agricultural assets for renting agricultural assets, including cash rent of agricultural assets or cash equivalent of a share-crop rental, to any qualified beginning farmer or livestock producer for a period of three (3) years. An owner of agricultural assets shall not be eligible for further credits under the Beginning Farmer Tax Credit Act unless the share-rental agreement is terminated prior to the end of the three-year period through no fault of the owner of agricultural assets. If the board finds that such a termination was not the fault of the owner of agricultural assets, it may approve the owner for credits arising from a subsequent qualifying share-rental agreement with a different qualified beginning farmer or livestock producer. Any credit allowable to a partnership, a corporation or an estate or trust may be distributed to the partners, members, shareholders or beneficiaries. Any credit distributed shall be distributed in the same manner as income is distributed.
SECTION 12. (1) In evaluating a share-rental agreement between an owner of agricultural assets and a qualified beginning farmer or livestock producer, the board shall not approve and certify credit for an owner of agricultural assets who:
(a) Has, with fault, terminated a prior board approved and certified share-rental agreement with a qualified beginning farmer or livestock producer; or
(b) Is proposing a share-rental agreement of agricultural assets which, if rented to a qualified beginning farmer or livestock producer, would cause the lessee to be responsible for managing or maintaining a farm which, based on the discretion of the board, is of greater scope and scale than necessary for a viably sized farm as established by the guidelines implemented by the board in order to adequately support a beginning farmer or livestock producer.
(2) Any person aggrieved by a decision of the board may appeal the decision to the Circuit Court of the First Judicial District of Hinds County.
SECTION 13. The tax credit approved and certified by the board under Section 11 of this act for an owner of agricultural assets shall be equal to five percent (5%) of the gross rental income on any share-rental agreement that is approved and certified by the board under the Beginning Farmer Tax Credit Act, including the renting of agricultural assets by an owner of such assets to a qualified beginning farmer or livestock producer. The board shall review each existing three-year share-rental agreement between a beginning farmer or livestock producer and an owner of agricultural assets on a quarterly basis and shall either certify or terminate program eligibility for beginning farmers or livestock producers or tax credits granted to owners of agricultural assets on an annual basis.
SECTION 14. The board shall conduct a study in order to ascertain the fiscal impact of future tax credits granted by the board to owners of agricultural assets. Such study shall attempt to reasonably estimate the number of qualified beginning farmers or livestock producers that would be eligible to enter into a board approved and certified three-year share-rental agreement with an owner of agricultural assets and other such relevant facts and information for review by the board. The findings of such study by the board shall be submitted to the Governor, the Clerk of the House of Representatives and the Secretary of the Senate by January 3, 2004. In order to carry out the study and the provisions of the Beginning Farmer Tax Credit Act, the Department of Agriculture and Commerce shall provide any and all of the necessary support and assistance to the board.
SECTION 15. This act shall take effect and be in force from and after July 1, 2003.