S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5488
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              March 13, 2023
                                ___________
 
 Introduced  by M. of A. MAHER -- read once and referred to the Committee
   on Ways and Means
 
 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 48 to read
 as follows:
   § 48. 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.
   (D) ACCOUNT BENEFICIARY. THE  TERM  "ACCOUNT  BENEFICIARY"  MEANS  THE
 INDIVIDUAL  OR  BUSINESS  ON  WHOSE  BEHALF THE FARM SAVINGS ACCOUNT WAS
 ESTABLISHED.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD09187-01-3
              

 A. 5488                             2
 
   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
 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
 A. 5488                             3
 
 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 44 to read as follows:
   (44)  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-EIGHT OF THIS CHAPTER.
   § 3. Subsection (c) of section 612 of the tax law is amended by adding
 a new paragraph 45 to read as follows:
   (45) AN AMOUNT EQUAL TO ANY QUALIFIED CONTRIBUTION TO A  FARM  SAVINGS
 ACCOUNT ESTABLISHED PURSUANT TO SECTION FORTY-EIGHT OF THIS CHAPTER.
   §  4.  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-EIGHT OF  THIS  CHAPTER,  shall  not  be
 subject to tax under this article.
   §  5. 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-EIGHT OF THIS CHAPTER SHALL NOT BE SUBJECT TO
 TAX UNDER THIS ARTICLE.
   § 6. This act shall take effect immediately and shall apply to taxable
 years commencing after such effective date.