BILL NUMBER:  S2899

 TITLE OF BILL :  An act to amend the tax law, in relation to property
tax credits for farmers

 PURPOSE :

This bill would make a technical amendment to the tax code to allow
for tenant farmers who rent land from a trust to claim the Farmer's
School Tax Credit.

 SUMMARY OF PROVISIONS :

Section one amends section 606 (n) (3) of the Tax Law, to allow tenant
farmers who are renting land from a trust, to claim the Farmer's
School Tax Credit.

Section 2 sets forth an immediate effective date.

 JUSTIFICATION :

Under current law family members who operate farms held in trust may
not qualify for the Farmer's School Tax Credit (FSTC), despite the
fact that the law provides for tenant farmers to qualify for the
credit in other cases. There are over 400 farms in New York State
classified as "cooperative, estate or trust, institutional" and a
              

significant number of those are trusts. This number has grown
significantly in the last five years indicating an increased use of
trusts as a generational transfer tool for family farms, helping to
ensure that older farm generation can retire, while the next
generation can continue operating the farm.

Under section 606 (n) (3) of the Tax Law, to qualify for the Farmer's
School Tax Credit, the agricultural property must either be owned by
the taxpayer or owned by a parent, grandparent or sibling with whom
you have a written agreement to eventually purchase the property. If a
trust exists, however, and a child will inherit the property through
the trust, section 606 (n) (3) cannot be applied. A family member
farming on land held in trust should also be eligible for the Farmer's
School Tax Credit, and this legislation would make that technical
correction. Technical guidance contained in New York State tax
publication 51.1 indicates the intent of 606 (n) (3) is to help ensure
family farms will pass to the next generation which is what this
legislation seeks to accomplish.

 LEGISLATIVE HISTORY :

S.7170-A Passed the Senate/A.9892 Referred to Ways and Means.

 FISCAL IMPLICATIONS :

Changes to the Farmer's School Tax Credit (FSTC) are revenue neutral
since, in most cases, the trust or beneficiary is already able to
claim the FSTC. By allowing the farm operator to claim the FSTC
instead, this allows the tax benefit to flow directly to the
individual or entity involved in farming and who is generally covering
the cost of the property tax. Similar to existing provisions, the
trust or beneficiary would have to waive its right to claim the
credit, ensuring that only one entity could claim the tax credit.

 EFFECTIVE DATE :
This act shall take effect immediately.