2007 Legislation
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HOUSE BILL NO. 262 – Income tax credit, land conservatn


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Bill Status

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

Bill Text

  ]]]]              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
  8        TION.
  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-
 15        ties.
 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
 32        lands.
 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
 24        Code;
 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
 36        chapter.
 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.
  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
 25    objectives:
 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
 37    income.
 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
  8        plants;
  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 / Fiscal Impact

                    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.

                        FISCAL NOTE
  The maximum amount of tax credits authorized annually will not exceed $3

  Suzanne Budge Schaefer
  SBS Associates
  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