Establishes a farm savings account program

Section 2 adds a new paragraph 43, to subsection (b) of section 612 of the Tax Law to add a non-qualifying distribution from a farm savings account to a person's adjusted gross income.

Section 3 amends subsection (c) of section 612 of the Tax Law by adding a new paragraph 44, to exempt a contribution to a farm savings account from a person's adjusted gross income.

Section 4 amends subdivision 4 of section 209 of the Tax Law, as 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, to exempt farm savings accounts from the list of corporations liable for taxation.

Section 5 amends 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 to exempt farm saving accounts from the corporation tax under article thirty-three of this chapter.

Section 6 amends section 601 of the tax law by adding a new subsection (g-1) to exempt farm savings accounts from inclusion as personal income, subject to taxation.

Section 7 provides the effective date.

Justification

Agriculture, by the nature of its business, is extremely dependent upon weather and pricing. We have seen the impacts of weather on farm business during Hurricane Irene, Tropical Storm Lee, and Superstorm Sandy, where farms lost cows and a year's worth of forage, fruit and produce. Weather events combined with the strong cyclical nature of commodity pricing, especially in the dairy industry, makes pecuniary gains extremely difficult for agricultural businesses. The succession of low milk price cycles has negatively impacted farm income over the last ten years. To combat these deficiencies, farm savings accounts provide a viable alternative to offset farmers' losses.

A farm savings account is a tax deferred account that offers farmers the unique opportunity to self-insure part of their risk. Some of the methods used by farmers to help offset losses in difficult years include delaying the purchase of equipment and the repayment of loans. A farm savings account will offer farmers another management tool to help offset their costs. Farm savings accounts will encourage farmers to place revenue gained during years of good economic times into a tax deferred savings account that can then be drawn from during times of depressed markets. This will allow farmers to continue payments on expenses and offset losses. In summation, farm savings accounts provide farmers with an investment mechanism and aids farmers in their future financial planning.

Legislative history

2013-2014: S.3692-A/A.5583-A

Fiscal implications

Minimal

Effective date

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 27 of part S of chapter 59 of the laws of 2014, 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.