[§235-110.93]  Important agricultural landqualified agricultural cost tax credit.  (a)  There shall be allowed toeach taxpayer an important agricultural land qualified agricultural cost taxcredit that may be claimed in taxable years beginning after the taxable yearduring which the tax credit under section 235-110.46 is repealed, exhausted, orexpired.  The credit shall be deductible from the taxpayer's net income taxliability, if any, imposed by this chapter for the taxable year in which thecredit is properly claimed.  The tax credit amount shall be determined asfollows:

(1)  In the first year in which the credit is claimed,twenty-five per cent of the lesser of the following:

(A)  The qualified agricultural costs incurredby the taxpayer after July 1, 2008; or

(B)  $625,000;

(2)  In the second year in which the credit isclaimed, fifteen per cent of the lesser of the following:

(A)  The qualified agricultural costs incurredby the taxpayer after July 1, 2008; or

(B)  $250,000; and

(3)  In the third year in which the credit is claimed,ten per cent of the lesser of the following:

(A)  The qualified agricultural costs incurredby the taxpayer after July 1, 2008; or

(B)  $125,000.

The taxpayer may incur qualified agricultural costsduring a taxable year in anticipation of claiming the credit in future taxableyears during which the credit is available.  The taxpayer may claim the creditin any taxable year after the taxable year during which the taxpayer incurredthe qualified agricultural costs upon which the credit is claimed.  Thetaxpayer also may claim the credit in consecutive or inconsecutive taxableyears until exhausted.

(b)  No other credit may be claimed under thischapter for qualified agricultural costs for which a credit is claimed underthis section for the taxable year.

(c)  The amount of the qualified agriculturalcosts eligible to be claimed under this section shall be reduced by the amountof funds received by the taxpayer during the taxable year from the irrigationrepair and maintenance special fund under section 167-24.

(d)  The cost upon which the tax credit iscomputed shall be determined at the entity level.  In the case of apartnership, S corporation, estate, trust, or other pass through entity,distribution and share of the credit shall be determined pursuant to section235-110.7(a).

If a deduction is taken under section 179 (withrespect to election to expense depreciable business assets) of the InternalRevenue Code, no tax credit shall be allowed for that portion of the qualifiedagricultural cost for which a deduction was taken.

The basis of eligible property for depreciationor accelerated cost recovery system purposes for state income taxes shall bereduced by the amount of credit allowable and claimed.  No deduction shall beallowed for that portion of otherwise deductible qualified agricultural costson which a credit is claimed under this section.

(e)  If the credit under this section exceedsthe taxpayer's net income tax liability for the taxable year, the excess of thecredit over liability shall be refunded to the taxpayer; provided that norefunds or payments on account of the credits allowed by this section shall bemade for amounts less than $1.

All claims for a tax credit under this section,including amended claims, shall be filed on or before the end of the twelfthmonth following the close of the taxable year for which the credit is claimed. Failure to comply with the foregoing provision shall constitute a waiver of theright to claim the credit.

(f)  The director of taxation:

(1)  Shall prepare any forms that may be necessary toclaim a credit under this section;

(2)  May require the taxpayer to furnish informationto ascertain the validity of the claim for credit made under this section; and

(3)  May adopt rules pursuant to chapter 91 toeffectuate this section.

(g)  The department of agriculture shall:

(1)  Maintain records of the total amount of qualifiedagricultural costs for each taxpayer claiming a credit;

(2)  Verify the amount of the qualified agriculturalcosts claimed;

(3)  Total all qualified agricultural costs claimed;and

(4)  Certify the total amount of the tax credit foreach taxable year.

Upon each determination, the department ofagriculture shall issue a certificate to the taxpayer verifying the qualifyingagricultural costs and the credit amount certified for each taxable year.  Fora taxable year, the department of agriculture may certify a credit for ataxpayer who could have claimed the credit in a previous taxable year, but chosenot to because the maximum annual credit amount under subsection (h) wasreached in that taxable year.

The taxpayer shall file the certificate withthe taxpayer's tax return with the department of taxation.  Notwithstanding thedepartment of agriculture's certification authority under this section, thedirector of taxation may audit and adjust certification to conform to thefacts.

Notwithstanding any other law to the contrary,the information required by this subsection shall be available for public inspectionand dissemination under chapter 92F.

(h)  If in any taxable year the annual amountof certified credits reaches $7,500,000 in the aggregate, the department ofagriculture shall immediately discontinue certifying credits and notify thedepartment of taxation.  In no instance shall the department of agriculturecertify a total amount of credits exceeding $7,500,000 per taxable year.  Tocomply with this restriction, the department of agriculture shall certifycredits on a first come, first served basis.

The department of taxation shall not allow theaggregate amount of credits claimed to exceed that amount per taxable year.

(i)  The department of agriculture, inconsultation with the department of taxation, shall annually determine theinformation necessary to provide a quantitative and qualitative assessment ofthe outcomes of the tax credit.

Every taxpayer, no later than the last day ofthe taxable year following the close of the taxpayer's taxable year in whichthe credit is claimed, shall submit a certified written statement to thedepartment of agriculture.  Failure to provide the information shall result inineligibility and a recapture of any credit already claimed for that taxableyear.  The amount of the recaptured tax credit shall be added to the taxpayer'stax liability for the taxable year in which the recapture occurs.

Notwithstanding any law to the contrary, astatement submitted under this subsection shall be a public document.

(j)  The department of agriculture, inconsultation with the department of taxation, shall annually submit a reportevaluating the effectiveness of the tax credit.  The report shall include butnot be limited to findings and recommendations to improve the effectiveness ofthe tax credit to further encourage the development of agricultural businesses.

(k)  As used in this section:

"Agricultural business" means anyperson with a commercial agricultural, silvicultural, or aquacultural facilityor operation, including:

(1)  The care and production of livestock and livestockproducts, poultry and poultry products, apiary products, and plant and animalproduction for nonfood uses;

(2)  The planting, cultivating, harvesting, andprocessing of crops; and

(3)  The farming or ranching of any plant or animalspecies in a controlled salt, brackish, or freshwater environment;

provided that the principal place of theagricultural business is maintained in the State and more than fifty per centof the land the agricultural business owns or leases, excluding land classifiedas conservation land, is important agricultural land.

"Important agricultural lands" meanslands identified and designated as important agricultural lands pursuant topart III of chapter 205.

"Net income tax liability" meansincome tax liability reduced by all other credits allowed under this chapter.

"Qualified agricultural costs" meansexpenditures for:

(1)  The plans, design, engineering, construction,renovation, repair, maintenance, and equipment for:

(A)  Roads or utilities, primarily foragricultural purposes, where the majority of the lands serviced by the roads orutilities, excluding lands classified as conservation lands, are importantagricultural lands;

(B)  Agricultural processing facilities in theState, primarily for agricultural purposes, where the majority of the crops orlivestock processed, harvested, treated, washed, handled, or packaged are fromagricultural businesses;

(C)  Water wells, reservoirs, dams, waterstorage facilities, water pipelines, ditches, or irrigation systems in the State,primarily for agricultural purposes, providing water for lands, the majority ofwhich, excluding lands classified as conservation lands, are importantagricultural lands; and

(D)  Agricultural housing in the State,exclusively for agricultural purposes; provided that:

(i)  The housing units are occupied solely byfarmers or employees for agricultural businesses and their immediate familymembers;

(ii)  The housing units are owned by theagricultural business;

(iii)  The housing units are in the generalvicinity, as determined by the department of agriculture, of agricultural landsowned or leased by the agricultural business; and

(iv)  The housing units conform to any otherconditions that may be required by the department of agriculture;

(2)  Feasibility studies, regulatory processing, andlegal and accounting services related to the items under paragraph (1);

(3)  Equipment, primarily for agricultural purposes,used to cultivate, grow, harvest, or process agricultural products by anagricultural business; and

(4)  Regulatory processing, studies, and legal andother consultant services related to obtaining or retaining sufficient waterfor agricultural activities and retaining the right to farm on lands identifiedas important agricultural lands.

(l)  The department of agriculture shall ceasecertifying credits pursuant to this section after the fourth taxable yearfollowing the taxable year during which the credits are first claimed; providedthat a taxpayer with accumulated, but unclaimed, certified credits may continueclaiming the credits in subsequent taxable years until exhausted.

[(m)]  The department of taxation, inconsultation with the department of agriculture, shall submit to thelegislature an annual report, no later than twenty days prior to the conveningof each regular session, beginning with the regular session of 2010, regardingthe quantitative and qualitative assessment of the impact of the importantagricultural land qualified agricultural cost tax credit. [L 2008, c 233, §§4,5]