2008 Legislation
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HOUSE BILL NO. 467<br /> – Ranch, farm and forest protectn act


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Bill Status

H0467...............................................by REVENUE AND TAXATION
RANCH, FARM AND FOREST PROTECTION ACT - Adds to existing law to enact the
Ranch, Farm and Forest Protection Act to provide legislative intent; to
define terms; and to provide an income tax credit for voluntary
conservation of ranch, farm and forest land.

02/06    House intro - 1st rdg - to printing
02/07    Rpt prt - to Rev/Tax
03/05    Rpt out - to Gen Ord
03/06    Ret'd to Rev/Tax

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008


                              IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 467

                             BY REVENUE AND TAXATION COMMITTEE

  1                                        AN ACT

  8    Be It Enacted by the Legislature of the State of Idaho:

  9        SECTION 1.  LEGISLATIVE INTENT. (1) It is hereby declared by the  Legisla-
 10    ture of the State of Idaho that:
 11        (a)  Idaho's working ranches, farms and forests provide important benefits
 12        to  all Idahoans by sustaining habitat for wildlife, intact watersheds for
 13        clean water, and the economy, custom and culture of local communities;
 14        (b)  Working ranches, farms and forests, and the  benefits  they  provide,
 15        are being lost at a rapid rate;
 16        (c)  Many  of Idaho's rural landowners are deeply committed to maintaining
 17        agriculture and forestry traditions and to serving as  stewards  of  fish,
 18        wildlife and plants;
 19        (d)  The  state of Idaho is actively pursuing cooperative programs to pro-
 20        tect fish and wildlife habitat and address the population decline of  some
 21        of Idaho's species; and
 22        (e)  The state of Idaho must marshal the various resources of the state in
 23        a  cooperative,  consensus-based  approach  to  address the needs of fish,
 24        wildlife and plants.
 25        (2)  It is hereby declared that the purposes of this act are to:
 26        (a)  Conserve lands important for fish, wildlife and plants  as  a  legacy
 27        for future generations;
 28        (b)  Provide  a  tax  credit to honor the stewardship commitment of ranch,
 29        farm and forest land owners who make voluntary donations to conserve  such
 30        lands;
 31        (c)  Ensure  that  lands  subject to such tax credit will remain available
 32        for continued agricultural and forestry uses;
 33        (d)  Target the tax credit on lands that have been specifically identified
 34        as meeting the objectives of the state of Idaho for  the  conservation  of
 35        fish, wildlife and plants;
 36        (e)  Provide  oversight  to  ensure  accountability  in the use of the tax
 37        credit and to coordinate the tax credit with the ongoing wildlife  priori-
 38        ties and programs of the state of Idaho; and
 39        (f)  Avoid  affecting property tax revenue because lands subject to volun-
 40        tary conservation donations under this act will be assessed based on their
 41        continued use for agriculture or forestry or, if managed for wildlife pur-
 42        poses pursuant to section 63-605, Idaho Code, at their  previous  agricul-
 43        tural 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. As used in this chapter:
  9        (1)  "Advisory  board"  means  the  conservation tax credit advisory board
 10    established in section 63-4505, Idaho Code.
 11        (2)  "Commission" means the state tax commission.
 12        (3)  "Eligible lands" means an identified parcel of land  located  in  the
 13    state  of  Idaho  and  actively  devoted  to agriculture as defined in section
 14    63-604, Idaho Code, or held as forest land  as  defined  in  section  63-1701,
 15    Idaho Code.
 16        (4)  "Plants"  means communities of vegetation that are unique, high qual-
 17    ity or composed of rare or declining species,  as  well  as  other  vegetation
 18    important to fish, wildlife and water quality.
 19        (5)  "Qualified  sponsor" means any governmental entity authorized to hold
 20    interests in real property, or any private not-for-profit charitable organiza-
 21    tion organized for land conservation purposes. To be a  qualified  sponsor,  a
 22    not-for-profit charitable organization must:
 23        (a)  Be  authorized  to  do  business  in  the state of Idaho and have tax
 24        exempt status as a charity under section 501(c)(3) of the Internal Revenue
 25        Code;
 26        (b)  Meet the requirements of an "eligible donee" as  defined  in  26  CFR
 27        1.170A-14(c)(1),  and  therefore have the power to acquire, hold, or main-
 28        tain land or interests in land;
 29        (c)  Have adopted, by resolution of the organization's board of directors,
 30        the land trust alliance's standards and practices as  guidelines  for  the
 31        organization's  operation  and  be  committed to making continual progress
 32        toward implementation of these standards and practices;
 33        (d)  Have been operated in good standing as a  not-for-profit  corporation
 34        under Idaho laws for a period of not less than two (2) years; and
 35        (e)  Have  registered  with  the  advisory  board,  established in section
 36        63-4505, Idaho Code, showing that it has  met  the  requirements  of  this
 37        chapter.
 38        (6)  "Taxpayer"  means  any  taxpayer as defined in section 63-3009, Idaho
 39    Code.
 40        (7)  "Voluntary conservation donation" means the conveyance of a conserva-
 41    tion easement, pursuant to chapter 21,  title  55,  Idaho  Code,  on  eligible
 42    lands,  provided that such conservation easement satisfies the requirements of
 43    section 170(h) of the Internal Revenue Code,  except  that  such  conservation
 44    easement  may  be  for  a term less than in perpetuity but greater than thirty
 45    (30) years. A voluntary conservation donation includes the value of the chari-
 46    table contribution made when the taxpayer sells the conservation easement to a
 47    qualified sponsor for less than  its  market  value,  as  established  by  the
 48    taxpayer's  qualified  appraisal,  where such contribution value is claimed in
 49    compliance with sections 170 and 1011(b) of the  Internal  Revenue  Code.  The
 50    terms  of  such conservation easement shall reserve to the landowner the right
 51    to continue agricultural or forestry uses on  all  or  part  of  the  eligible
 52    lands.  A voluntary conservation donation may include conveyance of a right of


  1    public access.

  3    LAND. (1) Subject to the limitations of this chapter, a taxpayer who  makes  a
  4    voluntary  conservation  donation  to  a  qualified sponsor shall be allowed a
  5    credit against taxes imposed in sections 63-3024, 63-3025 and 63-3025A,  Idaho
  6    Code,  in  the  amount of fifty percent (50%) of the fair market value of such
  7    voluntary conservation donation. The total amount of the tax credit  that  may
  8    be  claimed  by  a  taxpayer  shall  not  exceed five hundred thousand dollars
  9    ($500,000) per voluntary conservation donation.
 10        (2)  The fair market value of voluntary conservation donations made  under
 11    this  chapter  shall be substantiated by a "qualified appraisal" prepared by a
 12    "qualified appraiser," as those terms are defined under applicable federal law
 13    and regulations governing income tax deductions for charitable  contributions,
 14    provided  that the valuation of voluntary conservation donations for a term of
 15    less than in perpetuity shall comply with any guidelines for valuation of such
 16    donations adopted by the advisory board.  Such qualified  appraisal  shall  be
 17    prepared  in  conformance with the uniform standards of professional appraisal
 18    practice.  Such qualified appraiser shall be licensed or certified pursuant to
 19    the Idaho real estate appraisers act, chapter 41, title 54, Idaho Code. A copy
 20    of the appraisal must be provided to the commission with the taxpayer's return
 21    for the year in which the credit is claimed.
 22        (3)  To qualify for the tax credit established by this section,  a  volun-
 23    tary  conservation  donation  must  further  at least one (1) of the following
 24    objectives:
 25        (a)  To protect lands important to fish, wildlife  and  plants,  including
 26        but  not  limited  to:  big  game  winter range, fish spawning and rearing
 27        areas, river corridors and flood plains, riparian areas, wetlands,  migra-
 28        tion corridors and other important habitats;
 29        (b)  To  assist in agreements and plans with governmental entities for the
 30        conservation of endangered, threatened,  petitioned,  candidate,  rare  or
 31        declining species;
 32        (c)  To further the plan for state conservation assessments and strategies
 33        for rare and declining species prepared by the office of species conserva-
 34        tion pursuant to section 67-818, Idaho Code; and
 35        (d)  To  meet  any  additional  criteria  adopted  by the conservation tax
 36        credit advisory board established in section 63-4505, Idaho Code.
 37        (4)  The unused portion of the tax credit shall survive the death  of  the
 38    taxpayer and may be claimed by the decedent's estate and passed on to its ben-
 39    eficiaries.
 40        (5)  A  taxpayer and any person related to the taxpayer as defined in sec-
 41    tion 267 of the Internal Revenue Code may claim only one (1) tax credit  under
 42    this section per income taxable year.
 43        (6)  With  regard  to any tax credits for voluntary conservation donations
 44    made by a joint tenancy, tenancy in common,  partnership,  S  corporation,  or
 45    other  similar entity or ownership group that makes such donation as an entity
 46    or group, the amount of the credit allowed pursuant to subsection (1) of  this
 47    section shall be allocated to the entity's owners, partners, members or share-
 48    holders in proportion to the owners', partners', members' or shareholders' pro
 49    rata  or  distributive  shares as determined by the controlling agreement with
 50    regard to assets of such entity or group.  Such tax credits may not be claimed
 51    by the entity and the member, manager, partner, shareholder and/or beneficiary
 52    for the same voluntary conservation donation.

 53        63-4504.  REFUND. If the amount of the credit under this chapter  for  any


  1    taxable  year  shall  exceed  the taxpayer's tax due for such year, the excess
  2    shall be treated as an overpayment of tax to be credited or refunded from  the
  3    state  refund  account  provided  for  in section 63-3067, Idaho Code, with no
  4    interest on the credit or refund. The amount  refunded  shall  not  constitute
  5    Idaho taxable income.

  6        63-4505.  ADMINISTRATION.  (1)  The state tax commission shall enforce the
  7    provisions of this chapter and may prescribe,  adopt  and  enforce  reasonable
  8    rules relating to the administration and enforcement of those provisions.  For
  9    purposes of carrying out its duties to enforce or administer the provisions of
 10    this chapter, the commission shall have the powers and duties provided in sec-
 11    tions  63-3038,  63-3039,  63-3042  through  63-3068, 63-3071, 63-3074 through
 12    63-3078 and 63-217, Idaho Code.
 13        (2)  There is hereby created the conservation tax  credit  advisory  board
 14    that  will  assist  the  commission in the implementation of this chapter. The
 15    advisory board shall consist of the following members appointed by and serving
 16    at the pleasure of the governor:
 17        (a)  A representative of livestock grazing interests;
 18        (b)  A representative of farming interests;
 19        (c)  A representative of private forestry interests;
 20        (d)  Two (2) members representing the interests of  hunting,  fishing,  or
 21        fish and wildlife conservation;
 22        (e)  A representative of the department of fish and game;
 23        (f)  A representative of the office of species conservation;
 24        (g)  A representative of the department of lands; and
 25        (h)  A representative of the department of agriculture.
 26        (3)  The governor shall appoint the chair of the advisory board from among
 27    its members.
 28        (4)  The advisory board shall have the following powers and duties:
 29        (a)  To establish, by rule, criteria for the review, approval or rejection
 30        of tax credit applications;
 31        (b)  To  establish procedures for administration of the tax credit includ-
 32        ing, but not limited to, submission and review of  applications  for  pro-
 33        posed use of the tax credit and guidelines for valuation of voluntary con-
 34        servation donations that are for a term less than in perpetuity;
 35        (c)  To  approve  or reject tax credit applications based on consideration
 36        of the objectives of this chapter, the duration of the voluntary conserva-
 37        tion donation, any procedures and criteria  established  by  the  advisory
 38        board, and the public interest;
 39        (d)  To  reject  in whole or in part any tax credit application that would
 40        represent an inefficient or abusive use of the tax credit or that contains
 41        an improper valuation of the voluntary conservation donation;
 42        (e)  To register  not-for-profit  charitable  organizations  as  qualified
 43        sponsors;
 44        (f)  To  complete  an  annual report describing the use of the tax credit,
 45        the location and acreage of lands subject to voluntary conservation  dona-
 46        tions,  the  conservation  benefits of donations, the fiscal impact of the
 47        tax credit and any proposed modifications in the tax credit program;
 48        (g)  To coordinate the use of the tax credit  with  the  ongoing  wildlife
 49        priorities and programs of the state of Idaho; and
 50        (h)  In  accordance  with chapter 52, title 67, Idaho Code, to promulgate,
 51        adopt, amend and rescind any rules necessary for the implementation of the
 52        advisory board's powers and duties.
 53        (5)  No tax credit shall be allowed under this chapter unless the taxpayer
 54    files with the taxpayer's income tax return a certification that the  advisory


  1    board has approved its application for use of the tax credit.
  2        (6)  In  no  case  shall  the  advisory board approve, during any calendar
  3    year, tax credits which exceed three million dollars ($3,000,000) in total.
  4        (7)  For budgetary and administrative support purposes, the advisory board
  5    shall be assigned to the office of species conservation.  The  advisory  board
  6    may  request  staff  services from the commission and any department or office
  7    represented on the advisory board. Members of the advisory board  shall  serve
  8    without compensation except for reimbursement of actual and necessary expenses
  9    pursuant to section 59-509(b), Idaho Code.
 10        (8)  Each  application to the advisory board for a proposed use of the tax
 11    credit shall contain all of the following:
 12        (a)  Identification of the donor and qualified sponsor serving as donee;
 13        (b)  The draft conservation easement upon which the voluntary conservation
 14        donation is based and any other documentation of how such lands  meet  the
 15        purposes for voluntary conservation donations and the criteria established
 16        by the advisory board;
 17        (c)  A statement of the estimated fair market value of the proposed volun-
 18        tary conservation donation;
 19        (d)  A  certification from the donor that the voluntary conservation dona-
 20        tion was not, and is not, required to satisfy a requirement  or  condition
 21        imposed  upon  the  donor  by any subdivision or building approval, lease,
 22        permit, license, certificate or other entitlement for use issued  by  fed-
 23        eral,  state  or local governmental entities other than permits and agree-
 24        ments provided for in 16 U.S.C. sections 1531, et seq;
 25        (e)  A certification from the qualified sponsor serving as donee  that  it
 26        has reviewed and approves the application; and
 27        (f)  Such  other  contents  as  may be prescribed by the commission or the
 28        advisory board.
 29        (9)  Within ninety (90) days following approval of the application by  the
 30    advisory board or such other time specified in procedures adopted by the advi-
 31    sory  board,  the  taxpayer  shall  submit to the advisory board the appraisal
 32    required in section 63-4503(2), Idaho Code, stating the estimated fair  market
 33    value of the voluntary conservation donation. The amount of the voluntary con-
 34    servation  donation claimed on the taxpayer's return filed with the commission
 35    shall not exceed one hundred twenty percent (120%) of the statement  of  esti-
 36    mated  fair market value contained in the application approved by the advisory
 37    board.
 38        (10) (a) Credits under this chapter are subject to recapture by  the  com-
 39        mission when:
 40             (i)   The  board  determines  and  notifies  the  commission that the
 41             credit was not properly granted; or
 42             (ii)  The commission determines that the credit has been claimed on a
 43             tax return for an amount not otherwise permitted in this chapter.
 44        (b)  The commission is authorized to disclose to the  board  any  informa-
 45        tion,  however  obtained,  that  is  or may be relevant to a determination
 46        regarding the granting of the credit.
 47        (c)  Any amount subject to recapture under this section is a deficiency in
 48        tax in the taxable year in which the determination  in  paragraph  (a)  of
 49        this  subsection  is  made and may be enforced and collected in the manner
 50        provided in the Idaho income tax act.

 51        SECTION 3.  An emergency existing therefore,  which  emergency  is  hereby
 52    declared to exist, this act shall be in full force and effect on and after its
 53    passage and approval, and retroactively to January 1, 2008.

Statement of Purpose / Fiscal Impact


                       STATEMENT OF PURPOSE

                             RS 17695

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 board 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 refundable
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

Name: Suzanne Budge, SBS Associates 
Phone: 208.850.3065

On behalf of:  
Idaho Cattle Association; Idaho Farm Bureau; Idaho Forest Owners
Association; Idaho Sportsmen's Caucus Advisory Council; Idaho
Woolgrowers Associations; Intermountain Forest Association; Land
Trusts in Idaho; Rocky Mountain Elk Foundation; Sportsmen for
Fish and Wildlife; The Nature Conservancy; The Trust for Public

STATEMENT OF PURPOSE/FISCAL NOTE                                   H 467