S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3835
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             January 27, 2017
                                ___________
 
 Introduced by Sens. RITCHIE, CARLUCCI -- read twice and ordered printed,
   and  when  printed  to be committed to the Committee on Investigations
   and Government Operations
 
 AN ACT to amend the tax law, in relation to farm savings accounts
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The tax law is amended by adding a new section 43 to read
 as follows:
   § 43. FARM SAVINGS ACCOUNTS. 1. DEFINITIONS. (A) QUALIFIED FARMER. FOR
 PURPOSES OF THIS  SECTION,  THE  TERM  "QUALIFIED  FARMER"  MEANS,  WITH
 RESPECT  TO  ANY TAXABLE YEAR, ANY INDIVIDUAL WHO, DURING SUCH YEAR, WAS
 ENGAGED IN THE TRADE OR BUSINESS OF FARMING.
   (B) FARM SAVINGS ACCOUNT. FOR PURPOSES OF THIS SECTION, THE TERM "FARM
 SAVINGS ACCOUNT" MEANS A TRUST CREATED OR ORGANIZED IN THE UNITED STATES
 AS A FARM SAVINGS ACCOUNT EXCLUSIVELY FOR THE PURPOSE OF  MAKING  QUALI-
 FIED  DISTRIBUTIONS FOR PURPOSES OF FARM SUSTAINABILITY, BUT ONLY IF THE
 WRITTEN GOVERNING INSTRUMENT CREATING  THE  TRUST  MEETS  THE  FOLLOWING
 REQUIREMENTS:
   (I) NO CONTRIBUTION WILL BE ACCEPTED UNLESS IT IS IN CASH.
   (II) THE TRUSTEE IS A BANK, CREDIT UNION OR OTHER APPROPRIATE INSTITU-
 TION  THAT  DEMONSTRATES ADMINISTRATION OF THE TRUST IN A MANNER THAT IS
 CONSISTENT WITH THE REQUIREMENTS OF THIS SECTION.
   (III) THE ASSETS OF THE TRUST WILL NOT BE COMMINGLED WITH OTHER  PROP-
 ERTY EXCEPT IN A COMMON TRUST FUND OR COMMON INVESTMENT FUND.
   (IV)  THE  INTEREST  OF  AN  INDIVIDUAL  IN  THE BALANCE IN HIS OR HER
 ACCOUNT IS NONFORFEITABLE.
   (C) QUALIFIED DISTRIBUTION. THE TERM  "QUALIFIED  DISTRIBUTION"  MEANS
 ANY  AMOUNT  PAID FROM A FARM SAVINGS ACCOUNT TO THE ACCOUNT BENEFICIARY
 EXCLUSIVELY FOR PURPOSES OF FARM SUSTAINABILITY.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08789-01-7

              

 S. 3835                             2
 
   (D) ACCOUNT BENEFICIARY. THE  TERM  "ACCOUNT  BENEFICIARY"  MEANS  THE
 INDIVIDUAL  OR  BUSINESS  ON  WHOSE  BEHALF THE FARM SAVINGS ACCOUNT WAS
 ESTABLISHED.
   2. PROGRAM DESCRIPTION. (A) DEDUCTIONS ALLOWED. IN THE CASE OF A QUAL-
 IFIED FARMER, THERE SHALL BE ALLOWED AS A DEDUCTION FOR THE TAXABLE YEAR
 AN AMOUNT EQUAL TO THE AGGREGATE AMOUNT PAID IN CASH DURING SUCH TAXABLE
 YEAR  BY  OR  ON  BEHALF OF SUCH INDIVIDUAL TO A FARM SAVINGS ACCOUNT OF
 SUCH INDIVIDUAL.
   (B) CONTRIBUTION REQUIREMENT. THERE SHALL BE  NO  MINIMUM  OR  MAXIMUM
 CONTRIBUTION  REQUIREMENT.  HOWEVER,  AGGREGATE  CONTRIBUTIONS  MAY  NOT
 EXCEED TOTAL INCOME DERIVED FROM FARMING DURING A GIVEN TAXABLE YEAR.
   (C) TAX TREATMENT OF ACCOUNTS. A FARM SAVINGS ACCOUNT IS  EXEMPT  FROM
 TAXATION  UNDER THIS CHAPTER UNLESS SUCH ACCOUNT HAS CEASED TO BE A FARM
 SAVINGS ACCOUNT.
   (D) TERMINATION OF ACCOUNTS. IF  THE  ACCOUNT  BENEFICIARY  CEASES  TO
 ENGAGE IN THE TRADE OR BUSINESS OF FARMING, ALL FARM SAVINGS ACCOUNTS OF
 SUCH  INDIVIDUAL  SHALL CEASE TO BE SUCH ACCOUNTS AND THE BALANCE OF ALL
 SUCH ACCOUNTS SHALL BE TREATED AS (I) DISTRIBUTED  TO  SUCH  INDIVIDUAL,
 AND (II) NOT PAID IN A QUALIFIED DISTRIBUTION.
   (E)  TAX  TREATMENT  OF  DISTRIBUTIONS.  (I)  GENERAL. IN GENERAL, ANY
 AMOUNT PAID OR DISTRIBUTED OUT  OF  A  FARM  SAVINGS  ACCOUNT  SHALL  BE
 INCLUDED IN GROSS INCOME.
   (II) ADDITIONAL TAX ON NON-QUALIFIED DISTRIBUTIONS. (1) IN ADDITION TO
 ANY  OTHER  TAX  IMPOSED BY THIS CHAPTER, ANY NON-QUALIFIED DISTRIBUTION
 FROM A FARM SAVINGS ACCOUNT  SHALL  BE  SUBJECT  TO  A  FIFTEEN  PERCENT
 SURCHARGE ON THE AMOUNT OF SUCH NON-QUALIFYING DISTRIBUTION.
   (2)  CLAUSE ONE OF THIS SUBPARAGRAPH SHALL NOT APPLY IF THE PAYMENT OR
 DISTRIBUTION IS MADE AFTER THE ACCOUNT BENEFICIARY BECOMES  DISABLED  OR
 DIES.
   (III) ROLLOVER CONTRIBUTIONS. FOR PURPOSES OF THIS SECTION, ANY AMOUNT
 PAID OR DISTRIBUTED FROM A FARM SAVINGS ACCOUNT TO THE ACCOUNT BENEFICI-
 ARY  SHALL  BE  TREATED  AS  A  QUALIFIED DISTRIBUTION TO THE EXTENT THE
 AMOUNT RECEIVED IS PAID INTO A FARM SAVINGS ACCOUNT FOR THE  BENEFIT  OF
 SUCH  BENEFICIARY NOT LATER THAN THE SIXTIETH DAY AFTER THE DAY ON WHICH
 THE BENEFICIARY RECEIVES THE PAYMENT OR DISTRIBUTION.
   (IV) TRANSFER OF ACCOUNT INCIDENT TO DIVORCE. THE TRANSFER OF AN INDI-
 VIDUAL'S INTEREST IN A FARM SAVINGS ACCOUNT TO AN INDIVIDUAL'S SPOUSE OR
 FORMER SPOUSE UNDER A DIVORCE OR  SEPARATION  INSTRUMENT  SHALL  NOT  BE
 CONSIDERED  A  TAXABLE  TRANSFER MADE BY SUCH INDIVIDUAL NOTWITHSTANDING
 ANY OTHER PROVISION OF THIS SECTION, AND SUCH INTEREST SHALL, AFTER SUCH
 TRANSFER, BE TREATED AS A FARM SAVINGS ACCOUNT  WITH  RESPECT  TO  WHICH
 SUCH SPOUSE IS THE ACCOUNT BENEFICIARY.
   (V)  TREATMENT  AFTER  DEATH  OF ACCOUNT BENEFICIARY. (1) TREATMENT IF
 DESIGNATED BENEFICIARY IS SPOUSE. IF THE ACCOUNT BENEFICIARY'S SURVIVING
 SPOUSE ACQUIRES SUCH BENEFICIARY'S INTEREST IN A FARM SAVINGS ACCOUNT BY
 REASON OF BEING THE DESIGNATED BENEFICIARY OF SUCH ACCOUNT AT THE  DEATH
 OF  THE  ACCOUNT BENEFICIARY, SUCH FARM SAVINGS ACCOUNT SHALL BE TREATED
 AS IF THE SPOUSE WERE THE ACCOUNT BENEFICIARY.
   (2) OTHER CASES. IF, BY REASON OF THE DEATH OF THE  ACCOUNT  BENEFICI-
 ARY,  ANY  PERSON  ACQUIRES THE ACCOUNT BENEFICIARY'S INTEREST IN A FARM
 SAVINGS ACCOUNT IN A CASE TO WHICH CLAUSE ONE OF THIS SUBPARAGRAPH  DOES
 NOT APPLY:
   (A)  SUCH  ACCOUNT  SHALL CEASE TO BE A FARM SAVINGS ACCOUNT AS OF THE
 DATE OF DEATH, AND
   (B) AN AMOUNT EQUAL TO THE FAIR MARKET VALUE OF  THE  ASSETS  IN  SUCH
 ACCOUNT ON SUCH DATE SHALL BE INCLUDED IN SUCH PERSON'S GROSS INCOME FOR

 S. 3835                             3
 
 THE  TAXABLE  YEAR  WHICH  INCLUDES  SUCH DATE IF SUCH PERSON IS NOT THE
 ESTATE OF SUCH BENEFICIARY; OR IF SUCH PERSON  IS  THE  ESTATE  OF  SUCH
 BENEFICIARY,  IN  SUCH  BENEFICIARY'S  GROSS INCOME FOR THE LAST TAXABLE
 YEAR OF SUCH BENEFICIARY.
   § 2. Subsection (b) of section 612 of the tax law is amended by adding
 a new paragraph 42 to read as follows:
   (42)  ANY  NON-QUALIFYING  DISTRIBUTIONS  MADE  FROM  A  FARM  SAVINGS
 ACCOUNT. THIS SHALL NOT INCLUDE ANY DISTRIBUTIONS THAT ARE  EXEMPT  FROM
 TAXATION  AS  SPECIFIED  IN  PARAGRAPH (E) OF SUBDIVISION TWO OF SECTION
 FORTY-THREE OF THIS CHAPTER.
   § 3. Subsection (c) of section 612 of the tax law is amended by adding
 a new paragraph 42 to read as follows:
   (42) AN AMOUNT EQUAL TO ANY QUALIFIED CONTRIBUTION TO A  FARM  SAVINGS
 ACCOUNT ESTABLISHED PURSUANT TO SECTION FORTY-THREE OF THIS CHAPTER.
   §  4.  Subdivision  4  of  section  209  of the tax law, as separately
 amended by section 2 of part FF-1 of chapter 57 of the laws of 2008  and
 section  5  of  part  A of chapter 59 of the laws of 2014, is amended to
 read as follows:
   4. Corporations liable to tax under sections one hundred  eighty-three
 to  one hundred eighty-five, inclusive, corporations taxable under arti-
 cle thirty-three of this chapter, any trust company  organized  under  a
 law  of  this  state all of the stock of which is owned by not less than
 twenty savings banks organized under a law of this state, a captive REIT
 or a captive RIC filing a  combined  return  under  subdivision  (f)  of
 section  fifteen  hundred fifteen of this chapter, and housing companies
 organized and operating pursuant to the provisions  of  article  two  or
 article  five of the private housing finance law and housing development
 fund companies organized pursuant to the provisions of article eleven of
 the private housing finance law,  AND  FARM  SAVINGS  ACCOUNTS  PROPERLY
 ESTABLISHED  UNDER  SECTION  FORTY-THREE  OF  THIS CHAPTER, shall not be
 subject to tax under this article.
   § 5. Subdivision 4 of section 209  of  the  tax  law,  as  amended  by
 section  5  of  part  A of chapter 59 of the laws of 2014, is amended to
 read as follows:
   4. Corporations liable to tax under sections one hundred  eighty-three
 to  one  hundred  eighty-four-a,  inclusive,  corporations taxable under
 article thirty-three of this chapter, any trust company organized  under
 a  law of this state all of the stock of which is owned by not less than
 twenty savings banks organized under a law of this state, a captive REIT
 or a captive RIC filing a  combined  return  under  subdivision  (f)  of
 section  fifteen  hundred fifteen of this chapter, and housing companies
 organized and operating pursuant to the provisions  of  article  two  or
 article  five of the private housing finance law and housing development
 fund companies organized pursuant to the provisions of article eleven of
 the private housing finance law,  AND  FARM  SAVINGS  ACCOUNTS  PROPERLY
 ESTABLISHED  UNDER  SECTION  FORTY-THREE  OF  THIS CHAPTER, shall not be
 subject to tax under this article.
   § 6. Section 601 of the tax law is amended by adding a new  subsection
 (g-1) to read as follows:
   (G-1)  FARM SAVINGS ACCOUNTS. ANY FARM SAVINGS ACCOUNT PROPERLY ESTAB-
 LISHED UNDER SECTION FORTY-THREE OF THIS CHAPTER SHALL NOT BE SUBJECT TO
 TAX UNDER THIS ARTICLE.
   § 7. This act shall take effect immediately and shall apply to taxable
 years commencing after such  effective  date;  provided,  however,  that
 section  five  of this act shall take effect on the same date and in the
 same manner as section 5 of part A of chapter 59 of the  laws  of  2014,

 S. 3835                             4
 
 takes  effect.   Effective immediately, the commissioner of taxation and
 finance may add, amend, or repeal any rule or  regulation  necessary  to
 timely implement the provisions of this act on its effective date.