Print Friendly HOUSE BILL NO. 262 – Income tax credit, land conservatn
HOUSE BILL NO. 262
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H0262...............................................by REVENUE AND TAXATION
LAND CONSERVATION - Adds to existing law to provide an individual and
corporate income tax credit for voluntary conservation of ranch, farm and
forest land; to provide limitations; and to allow for transfer of the tax
03/02 House intro - 1st rdg - to printing
03/05 Rpt prt - to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature First Regular Session - 2007
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 262
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO TAXATION; PROVIDING LEGISLATIVE INTENT; AMENDING TITLE 63, IDAHO
3 CODE, BY THE ADDITION OF A NEW CHAPTER 45, TITLE 63, IDAHO CODE, TO PRO-
4 VIDE A SHORT TITLE, TO DEFINE TERMS, TO PROVIDE AN INDIVIDUAL AND CORPO-
5 RATE INCOME TAX CREDIT FOR VOLUNTARY CONSERVATION OF RANCH, FARM AND FOR-
6 EST LAND, TO PROVIDE FOR TRANSFER OF THE TAX CREDIT AND TO PROVIDE FOR
7 ADMINISTRATION; DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE APPLICA-
9 Be It Enacted by the Legislature of the State of Idaho:
10 SECTION 1. LEGISLATIVE INTENT. (1) It is hereby declared by the Legisla-
11 ture of the State of Idaho that:
12 (a) Idaho's working ranches, farms, and forests provide important bene-
13 fits to all Idahoans by sustaining habitat for wildlife, intact watersheds
14 for clean water, and the economy, customs, and culture of local communi-
16 (b) Working ranches, farms and forests, and the benefits they provide,
17 are being lost at a rapid rate.
18 (c) Many of Idaho's rural landowners are deeply committed to maintaining
19 agriculture and forestry traditions and to serving as stewards of fish,
20 wildlife and plants.
21 (d) The state of Idaho is actively pursuing cooperative programs to pro-
22 tect fish and wildlife habitat and address the population decline of some
23 of Idaho's species.
24 (e) The state of Idaho must marshal the various resources of the state in
25 a cooperative, consensus-based approach to address the needs of fish,
26 wildlife and plants.
27 (2) It is hereby declared that the purposes of this act are to:
28 (a) Conserve lands important for fish, wildlife and plants as a legacy
29 for future generations.
30 (b) Provide a tax credit to honor the stewardship commitment of ranch,
31 farm, and forest owners who make voluntary donations to conserve such
33 (c) Ensure that lands subject to such tax credit will remain available
34 for continued agricultural and forestry uses.
35 (d) Target the tax credit on lands that have been specifically identified
36 as meeting the objectives of the state of Idaho for the conservation of
37 fish, wildlife and plants.
38 (e) Provide oversight to ensure accountability in the use of the tax
39 credit and to coordinate the tax credit with the ongoing wildlife priori-
40 ties and programs of the state of Idaho.
41 (f) Avoid affecting property tax revenue because lands subject to volun-
42 tary conservation donations under this act will be assessed based on their
43 continued use for agriculture or forestry or, if managed for wildlife pur-
44 suant to section 63-605, Idaho Code, at their previous agriculture rate.
1 SECTION 2. That Title 63, Idaho Code, be, and the same is hereby amended
2 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
3 ter 45, Title 63, Idaho Code, and to read as follows:
4 CHAPTER 45
5 RANCH, FARM AND FOREST PROTECTION ACT
6 63-4501. SHORT TITLE. This chapter shall be known and may be cited as the
7 "Idaho Ranch, Farm and Forest Protection Act."
8 63-4502. DEFINITIONS. (1) "Advisory committee" means the conservation tax
9 credit advisory committee established by section 63-4505, Idaho Code.
10 (2) "Commission" means the state tax commission.
11 (3) "Eligible lands" means an identified parcel of land located in the
12 state of Idaho and actively devoted to agriculture as defined by section
13 63-604, Idaho Code, or held as forest land as defined by section 63-1701,
14 Idaho Code.
15 (4) "Plants" means communities of vegetation that are unique, high qual-
16 ity or composed of rare or declining species as well as other vegetation
17 important to fish, wildlife, and water quality.
18 (5) "Qualified sponsor" means any government entity authorized to hold
19 interests in real property, or any private not-for-profit charitable organiza-
20 tion organized for land conservation purposes. To be a qualified sponsor, a
21 not-for-profit charitable organization must:
22 (a) Be authorized to do business in the state of Idaho and have tax
23 exempt status as a charity under section 501(c)(3) of the Internal Revenue
25 (b) Meet the requirements of an "eligible donee" as defined in 26 CFR
26 1.170A-14(c)(1), and therefore have the power to acquire, hold, or main-
27 tain land or interests in land;
28 (c) Have adopted by resolution of the organization's governing board the
29 land trust alliance's standards and practices as guidelines for the
30 organization's operation and is committed to making continual progress
31 toward implementation of these standards and practices;
32 (d) Have been operated as a not-for-profit corporation in good standing
33 under Idaho laws for a period of not less than two (2) years; and
34 (e) Have registered with the advisory committee, established by section
35 63-4505, Idaho Code, by showing that it has met the requirements of this
37 (6) "Taxpayer" means an individual or a domestic or foreign corporation
38 operated in good standing under Idaho laws, S corporation, partnership, or
39 other similar pass-through entity, estate, or trust that makes a voluntary
40 conservation donation as an entity.
41 (7) "Voluntary conservation donation" means the conveyance of a conserva-
42 tion easement, pursuant to chapter 21, title 55, Idaho Code, on eligible
43 lands, provided that such conservation easement satisfies the requirements of
44 section 170(h) of the U.S. Internal Revenue Code, except that such conserva-
45 tion easement may be for a duration less than in perpetuity but greater than
46 fifteen (15) years. A voluntary conservation donation includes the value of
47 the charitable contribution made when the taxpayer sells the conservation
48 easement to a qualified sponsor for less than its market value, as established
49 by the taxpayer's qualified appraisal, where such contribution value is
50 claimed in compliance with sections 170 and 1011(b) of the U.S. Internal Reve-
51 nue Code. The terms of such conservation easement shall reserve to the land-
52 owner the right to continue agricultural or forestry uses on all or part of
1 the eligible lands. A voluntary conservation donation may include conveyance
2 of a right of public access.
3 63-4503. TAX CREDIT FOR VOLUNTARY CONSERVATION OF RANCH, FARM AND FOREST
4 LAND. (1) Subject to the limitations of this chapter, a taxpayer who makes a
5 voluntary conservation donation to a qualified sponsor shall be allowed a non-
6 refundable credit against taxes imposed by sections 63-3024, 63-3025 and
7 63-3025A, Idaho Code, in the amount of fifty percent (50%) of the fair market
8 value of such voluntary conservation donation. The total amount of the tax
9 credit that may be claimed by a taxpayer shall not exceed five hundred thou-
10 sand dollars ($500,000) per voluntary conservation donation.
11 (2) The fair market value of voluntary conservation donations made under
12 this chapter shall be substantiated by a "qualified appraisal" prepared by a
13 "qualified appraiser," as those terms are defined under applicable federal law
14 and regulations governing income tax deductions for charitable contributions,
15 provided that appraisals of voluntary conservation donations for a term of
16 less than in perpetuity shall comply with any guidelines for valuation of such
17 donations adopted by the advisory committee. Such qualified appraisal shall be
18 prepared in conformance with the uniform standards of professional appraisal
19 practice. Such qualified appraiser shall be licensed or certified pursuant to
20 the Idaho real estate appraisers act, chapter 41, title 54, Idaho Code. A copy
21 of the appraisal must be provided to the commission with the taxpayer's return
22 for the year in which the credit is claimed.
23 (3) To qualify for the tax credit established by this section, a volun-
24 tary conservation donation must further at least one (1) of the following
26 (a) To protect lands important to fish, wildlife and plants including,
27 but not limited to: big game winter range, fish spawning and rearing
28 areas, river corridors and flood plains, riparian areas, wetlands, migra-
29 tion corridors and other important habitats;
30 (b) To assist in agreements and plans with government entities for the
31 conservation of endangered, threatened, petitioned, candidate, rare or
32 declining species;
33 (c) To further the plan for state conservation assessments and strategies
34 for rare and declining species prepared by the office of species conserva-
35 tion pursuant to section 67-818, Idaho Code; and
36 (d) To meet any additional criteria adopted by the conservation tax
37 credit advisory committee established by section 63-4505, Idaho Code.
38 (4) In addition, in any one (1) tax year the credit used may not exceed
39 the amount of individual or corporate income tax otherwise due. Any portion
40 of the credit which is unused in any one (1) tax year may be carried forward
41 for a maximum of fifteen (15) consecutive tax years following the tax year in
42 which the credit originated until fully expended. The unused portion of the
43 tax credit shall survive the death of the taxpayer and may be claimed by the
44 decedent's estate and passed on to its beneficiaries.
45 (5) A taxpayer may claim only one (1) tax credit under this section per
46 income tax year, except that a transferee of the tax credit under section
47 63-4504, Idaho Code, may claim an unlimited number of tax credits. A taxpayer
48 who has carried forward the tax credit shall not claim an additional tax
49 credit under this section for any income tax year in which the taxpayer
50 applies the amount carried forward against the income tax due.
51 (6) Any tax credits for voluntary conservation donations made by a joint
52 tenancy, tenancy in common, partnership, S corporation, or other similar
53 entity or ownership group that makes such donation as an entity or group, the
54 amount of the credit allowed pursuant to subsection (1) of this section shall
1 be allocated to the entity's owners, partners, members or shareholders in pro-
2 portion to the owners', partners', members' or shareholders' pro rata or dis-
3 tributive shares as determined by the controlling agreement with regard to
4 assets of such entity or group. Such tax credits may not be claimed by both
5 the entity and the member, manager, partner, shareholder and/or beneficiary
6 for the same voluntary conservation donation.
7 63-4504. TRANSFER OF TAX CREDIT. (1) Subject to the requirements of this
8 section, a taxpayer who earns and is entitled to the credit or to an unused
9 portion of the credit allowed by this chapter may transfer all or a portion of
10 the unused credit to:
11 (a) Another taxpayer required to file a return under chapter 30, title
12 63, Idaho Code; or
13 (b) An intermediary for its use or for resale to a taxpayer required to
14 file a return under chapter 30, title 63, Idaho Code.
15 In the event of either such transfer, the transferee may claim the credit on
16 the transferee's income tax return originally filed in the income tax year in
17 which the transfer takes place. The transferee may carry forward the tax
18 credit for the number of years of carryover available to the transferor at the
19 time of the transfer, unless earlier exhausted.
20 (2) Before completing a transfer under this section, the transferor shall
21 notify the state tax commission of its intention to transfer the credit and
22 the identity of the transferee. The state tax commission shall provide the
23 transferor with a written statement of the amount of the credit available
24 under this section as then appearing in the commission's records and the num-
25 ber of years the credit may be carried over. The transferee shall attach a
26 copy of the statement to any return in regard to which the transferred credit
27 is claimed.
28 (3) In the event that after the transfer the state tax commission deter-
29 mines that the amount of credit properly available under this section is less
30 than the amount claimed by the transferor of the credit or that the credit is
31 subject to recapture, the commission shall assess the amount of overstated or
32 recaptured credit as taxes due from the transferor and not the transferee. The
33 assessment shall be made in the manner provided for a deficiency in taxes
34 under section 63-3044, Idaho Code.
35 (4) Any payment for the transfer of the tax credit received by a taxpayer
36 making a voluntary conservation donation shall not constitute Idaho taxable
38 63-4505. ADMINISTRATION. (1) The state tax commission shall enforce the
39 provisions of this chapter and may prescribe, adopt and enforce reasonable
40 rules relating to the administration and enforcement of those provisions. For
41 purposes of carrying out its duties to enforce or administer the provisions of
42 this chapter, the commission shall have the powers and duties provided by sec-
43 tions 63-3038, 63-3039, 63-3042 through 63-3068, 63-3071, 63-3074 through
44 63-3078, and 63-217, Idaho Code.
45 (2) There is hereby created the conservation tax credit advisory commit-
46 tee that will assist the commission in implementation of this chapter. The
47 advisory committee shall consist of the following members appointed by and
48 serving at the pleasure of the governor:
49 (a) Two (2) members representing the interests of livestock grazing,
50 agriculture or private forest landowners;
51 (b) Two (2) members representing the interests of hunting, fishing, or
52 fish and wildlife conservation;
53 (c) A representative of the department of fish and game;
1 (d) A representative of the office of species conservation; and
2 (e) A representative of the department of lands.
3 (3) The governor shall appoint the chair of the advisory committee.
4 (4) The advisory committee shall have the following powers and duties:
5 (a) To establish and revise criteria describing priorities for the
6 achievement of the objectives set forth in this chapter including, but not
7 limited to, specific descriptions of lands important to fish, wildlife and
9 (b) To establish procedures for administration of the tax credit includ-
10 ing, but not limited to, submission and review of applications for pro-
11 posed use of the tax credit and guidelines for valuation of voluntary con-
12 servation donations that are for a term less than in perpetuity;
13 (c) To approve or reject tax credit applications based on consideration
14 of the objectives for voluntary conservation donations as well as the pro-
15 cedures and criteria established by the advisory committee;
16 (d) To reject in whole or in part any tax credit application that would
17 represent an inefficient or abusive use of the tax credit or that contains
18 an improper valuation of the voluntary conservation donation;
19 (e) To register not-for-profit charitable organizations as qualified
20 sponsors and brokers serving as intermediaries who receive transfers of
21 unused tax credits for resale to other taxpayers;
22 (f) To complete an annual report describing the use of the tax credit,
23 the location and acreage of eligible lands, the conservation value of
24 donations, the fiscal impact of the tax credit, and any proposed modifica-
25 tions in the tax credit program;
26 (g) To coordinate the use of the tax credit with the ongoing wildlife
27 priorities and programs of the state of Idaho; and
28 (h) To recommend to the commission any rules necessary for the adminis-
29 tration and enforcement of this chapter.
30 (5) No tax credit shall be allowed under this chapter unless the taxpayer
31 files with the taxpayer's income tax return a certification that the advisory
32 committee has approved its application for use of the tax credit.
33 (6) In no case shall the advisory committee approve, during a tax year,
34 tax credits which exceed three million dollars ($3,000,000) in total.
35 (7) For budgetary and administrative support purposes, the advisory com-
36 mittee shall be assigned to the office of species conservation. The advisory
37 committee may request staff services from the commission and any department or
38 office represented on the advisory committee. Members of the advisory commit-
39 tee shall serve without compensation except for reimbursement of actual and
40 necessary expenses pursuant to section 59-509(b), Idaho Code.
41 (8) Each application to the advisory committee for a proposed use of the
42 tax credit shall contain all of the following:
43 (a) Identification of the donor and qualified sponsor serving as donee;
44 (b) The draft conservation easement upon which the voluntary conservation
45 donation is based and any other documentation of how such lands meet the
46 objectives for voluntary conservation donations and the criteria estab-
47 lished by the advisory committee;
48 (c) A statement of the fair market value of the proposed voluntary con-
49 servation donation;
50 (d) A certification from the donor that the voluntary conservation dona-
51 tion was not, and is not, required to satisfy a requirement or condition
52 imposed upon the donor by any subdivision or building approval, lease,
53 permit, license, certificate, or other entitlement for use issued by fed-
54 eral, state, or local government entities other than permits and agree-
55 ments provided for by 16 U.S.C. section 1531, et seq.
1 (e) A certification from the qualified sponsor serving as donee that it
2 has reviewed and approves the application; and
3 (f) Such other contents as may be prescribed by the commission or the
4 advisory committee.
5 (9) Within ninety (90) days following approval of the application by the
6 advisory committee, the taxpayer shall submit to the advisory committee the
7 appraisal required by section 63-4503(2), Idaho Code, stating the fair market
8 value of the voluntary conservation donation. The amount of the voluntary con-
9 servation donation claimed on the taxpayer's return filed with the commission
10 shall not exceed one hundred twenty percent (120%) of the statement of fair
11 market value contained in the application approved by the advisory committee.
12 SECTION 3. An emergency existing therefor, which emergency is hereby
13 declared to exist, this act shall be in full force and effect on and after its
14 passage and approval, and retroactively to January 1, 2007.
STATEMENT OF PURPOSE
The Ranch, Farm and Forest Protection Act is intended to help keep
Idaho's rural working lands working and give the State of Idaho a tool
to meet the State's most important wildlife objectives. Idaho's
working farms, ranches and timberlands offer the way of life, rural
character, open space and outdoor recreation vital to maintaining
Idaho's natural resource heritage. They also provide lands that
sustain the state's fish and wildlife.
The Ranch, Farm and Forest Protection Act would provide a tax
credit to owners of agricultural and forest land who voluntarily agree
not to develop lands important to fish and wildlife. Eligible lands
must remain available for continued agricultural and forestry uses. An
advisory committee will review each proposed use of the tax credit to
ensure that it meets wildlife objectives and to safeguard against
misuse of the credit. A landowner who meets the criteria set by the
advisory committee will receive a transferable income tax credit equal
to 50% of the appraised value of his voluntary conservation donation,
with a maximum credit of $500,000.
The maximum amount of tax credits authorized annually will not exceed $3
Suzanne Budge Schaefer
On behalf of:
Idaho Cattle Association
Idaho Farm Bureau
Idaho Forest Owners Association
Idaho Woolgrowers Association
Intermountain Forest Association
Land Trusts in Idaho
Rocky Mountain Elk Foundation
Sportsmen for Fish and Wildlife
The Nature Conservancy
The Trust for Public Land
STATEMENT OF PURPOSE/FISCAL NOTE H 262