What's happening
This bill creates tax-exempt farm savings accounts for New York farmers to promote farm sustainability, with specific rules for contributions and distributions.
Why it matters
Helps New York farmers manage financial risks. By allowing farmers to set aside pre-tax income in dedicated savings accounts, the bill gives them a tool to better weather unpredictable events like poor harvests, price drops, or equipment failures, supporting long-term farm sustainability.
Encourages reinvestment in farming operations. Since tax deductions are only available for money contributed from farm income, and withdrawals must be for farm sustainability purposes, the policy incentivizes farmers to reinvest profits back into their agricultural businesses rather than diverting them elsewhere.
Discourages misuse through penalties. Non-qualified withdrawals (those not used for farm sustainability) are subject to both income tax and an additional 15% surcharge, minimizing the risk that these accounts become general-purpose tax shelters rather than a genuine farm support tool.
Provides flexibility for farm families. The legislation includes provisions for account rollovers, divorce, and inheritance, allowing farm savings accounts to transfer to spouses or be rolled over within a short window, helping family farms maintain continuity across generations and life events.
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Who cares
Headline styles
Create Farm Savings Accounts
Plain English, a few words. Used as the page title.
Sponsors
2 Co-sponsors
History
- Print number 3835a
- Amend and recommit to investigations and government operations
- Referred to investigations and government operations
- Returned to senate
- Died in assembly
- Referred to ways and means
- Delivered to assembly
- Passed senateVote 62–0
- Ordered to third reading cal.447
- Committee discharged and committed to rules
- Referred to investigations and government operations
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Create Farm Savings Accounts
In Assembly Committee · Ways And Means · Sponsor William Magee
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3835--A
2017-2018 Regular Sessions
IN SENATE
January 27, 2017
Introduced by Sens. RITCHIE, CARLUCCI, MARCHIONE -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations -- recommitted to the Committee on Investigations and Government Operations in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
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 Assembly, do enact as follows:
Section 1. The tax law is amended by adding a new section 44 to read as follows:
§ 44. 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 qualified 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 institution 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 property 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.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08789-02-8
S. 3835--A 2
(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.
2. Program description. (a) Deductions allowed. In the case of a qualified 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 beneficiary 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 individual'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 beneficiary, 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:
S. 3835--A 3
(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 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 43 to read as follows:
(43) 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-four of this chapter.
§ 3. Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 44 to read as follows:
(44) An amount equal to any qualified contribution to a farm savings account established pursuant to section forty-four 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-four 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 established under section forty-four 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.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to farm savings accounts
Purpose
To establish a farm savings accounts plan in statute that will allow farmers to self insure part of their risk to counter-act strong cyclical downturns in the farm economy.
Summary of provisions
Section 1 adds a new section 44 to the Tax Law which establishes farm savings accounts. This section outlines the definitions of farm savings accounts and provides the requirements for deductions, contributions, and distributions with regard to a variety of contingencies for farm savings accounts.
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 busi- ness 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 meth- ods 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
2015-2016: S.2469/A.7085 2013-2014: S.3692-AJA.5583-A
Fiscal implications
Minimal
Effective date
This act shall take effect immediately and applies to taxable years commencing on or after the effective date.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.