AB574: Bill Text

Farmland tax relief credit and farmland preservation credit

The farmland tax relief credit is a refundable income and franchise tax credit that is based on property taxes accrued on farmland and gross farm profits. Under this bill, a person who claims the farmland tax relief credit may not also claim the farmland preservation tax credit if both claims relate to the same taxable year. Also under the bill, both the farmland tax relief credit and the farmland preservation tax credit are funded from the same appropriations. Currently, these credits are funded from different appropriations.

This bill also makes a number of changes in the farmland preservation credit. The bill changes the definition of "claimant" to prevent a person who is ineligible for the credit because of outstanding property taxes due on the farmland from receiving the credit after the outstanding taxes have been paid by a subsequent landowner. Current law requires recipients of the credit to be in compliance with soil and water conservation standards at the time the claim is filed. Under the bill, recipients of the credit are required to be in compliance with soil and water conservation standards at the end of the year for which the credit is claimed. The bill also exempts from income and franchise taxation amounts received under the farmland preservation credit.

For taxable years beginning after December 31, 1997, based on property taxes accrued in the previous year, the bill creates a new method of computing the farmland preservation credit for farmland that, at the close of the year to which the claim relates, is in an area zoned for exclusive agricultural use and is not subject to a farmland preservation agreement. Under the bill, a claim under the credit is calculated to be 50% of the property taxes accrued on farmland that is in an area zoned by a city, village, town or county for exclusive agricultural use at the close of the year or, if the farmland is in an area identified in a county agricultural preservation plan as a transition area, 25% of the property taxes accrued on the farmland. Under either calculation, the maximum credit is $7,500.

This bill will be referred to the joint survey committee on tax exemptions for a detailed analysis, which will be printed as an appendix to this bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB574, s. 1 Section 1. 20.835 (2) (dm) of the statutes is amended to read:

AB574,4,5 20.835 (2) (dm) (title) Farmland preservation credit and farmland tax relief credit supplement. A sum sufficient to pay the aggregate claims approved under subch. IX of ch. 71 and the aggregate claims approved under ss. 71.07 (3m) (c), 71.28 (2m) (c) and 71.47 (2m) (c) that exceed the amount appropriated under par. (r).

AB574, s. 2 Section 2. 20.835 (2) (q) of the statutes is repealed.

AB574, s. 3 Section 3 . 20.835 (2) (r) of the statutes is created to read:

AB574,4,11 20.835 (2) (r) Farmland preservation credit; farmland tax relief credit. From the lottery fund, a sum sufficient, not to exceed, in a fiscal year, $16,300,000, to pay the aggregate claims approved under subch. IX of ch. 71 and the aggregate claims approved under ss. 71.07 (3m) (c), 71.28 (2m) (c) and 71.47 (2m) (c).

AB574, s. 4 Section 4 . 71.05 (6) (a) 17. of the statutes is amended to read:

AB574,4,14 71.05 (6) (a) 17. The amount received under s. 71.07 (3m) (c) or 71.60, or both, that is not included in federal adjusted gross income.

AB574, s. 5 Section 5 . 71.05 (6) (b) 25. of the statutes is created to read:

AB574,5,3 71.05 (6) (b) 25. All amounts received as a farmland preservation credit under subch. IX to the extent that the amounts are included in federal adjusted gross income.

AB574, s. 6 Section 6. 71.07 (3m) (b) 1. a. of the statutes is amended to read:

AB574,5,12 71.07 (3m) (b) 1. a. Subject to the limitations provided in this subsection and s. 71.80 (3) and (3m), a claimant may claim as a credit against Wisconsin income taxes otherwise due, the amount derived under par. (c). If the allowable amount of claim exceeds the income taxes otherwise due on the claimant's income or if there are no Wisconsin income taxes due on the claimant's income, the amount of the claim not used as an offset against income taxes shall be certified to the department of administration for payment to the claimant by check, share draft or other draft paid from the appropriation under s. 20.835 (2) (q) (dm) or (r) or both.

AB574, s. 7 Section 7 . 71.07 (3m) (b) 2. c. of the statutes is created to read:

AB574,5,15 71.07 (3m) (b) 2. c. If the claimant files a claim for the credit under subch. IX for the same taxable year for which the claimant files a claim under this subsection.

AB574, s. 8 Section 8 . 71.26 (1) (g) of the statutes is created to read:

AB574,5,19 71.26 (1) (g) Farmland preservation credit. Any amount received as a farmland preservation credit under subch. IX to the extent that such an amount is included in federal taxable income.

AB574, s. 9 Section 9. 71.28 (2m) (b) 1. a. of the statutes is amended to read:

AB574,6,4 71.28 (2m) (b) 1. a. Subject to the limitations provided in this subsection and s. 71.80 (3) and (3m), a claimant may claim as a credit against Wisconsin income or franchise taxes otherwise due, the amount derived under par. (c). If the allowable amount of claim exceeds the income or franchise taxes otherwise due on or measured by the claimant's income or if there are no Wisconsin income or franchise taxes due on or measured by the claimant's income, the amount of the claim not used as an offset against income or franchise taxes shall be certified to the department of administration for payment to the claimant by check, share draft or other draft paid from the appropriation under s. 20.835 (2) (q) (dm) or (r) or both.

AB574, s. 10 Section 10 . 71.28 (2m) (b) 2. c. of the statutes is created to read:

AB574,6,7 71.28 (2m) (b) 2. c. If the claimant files a claim for the credit under subch. IX for the same taxable year for which the claimant files a claim under this subsection.

AB574, s. 11 Section 11. 71.45 (2) (a) 15. of the statutes is created to read:

AB574,6,11 71.45 (2) (a) 15. By subtracting from federal taxable income all amounts received as a farmland preservation credit under subch. IX to the extent that the amounts are included in federal taxable income.

AB574, s. 12 Section 12. 71.47 (2m) (b) 1. a. of the statutes is amended to read:

AB574,6,21 71.47 (2m) (b) 1. a. Subject to the limitations provided in this subsection and s. 71.80 (3) and (3m), a claimant may claim as a credit against Wisconsin income or franchise taxes otherwise due, the amount derived under par. (c). If the allowable amount of claim exceeds the income or franchise taxes otherwise due on or measured by the claimant's income or if there are no Wisconsin income or franchise taxes due on or measured by the claimant's income, the amount of the claim not used as an offset against income or franchise taxes shall be certified to the department of administration for payment to the claimant by check, share draft or other draft paid from the appropriation under s. 20.835 (2) (q) (dm) or (r) or both.

AB574, s. 13 Section 13 . 71.47 (2m) (b) 2. c. of the statutes is created to read:

AB574,6,24 71.47 (2m) (b) 2. c. If the claimant files a claim for the credit under subch. IX for the same taxable year for which the claimant files a claim under this subsection.

AB574, s. 14 Section 14. 71.58 (1) (h) of the statutes is created to read:

AB574,7,3 71.58 (1) (h) For purposes of filing a claim under this subchapter, "claimant" does not include a person who has transferred farmland to a new owner and who was not able to provide the certification under s. 71.59 (1) (b) 2. at the time of the transfer.

AB574, s. 15 Section 15. 71.58 (8) of the statutes is amended to read:

AB574,8,3 71.58 (8) "Property taxes accrued" means property taxes, exclusive of special assessments, delinquent interest and charges for service, levied on the farmland and improvements owned by the claimant or any member of the claimant's household in any calendar year under ch. 70, less the tax credit, if any, afforded in respect of the property by s. 79.10. "Property taxes accrued" shall not exceed $6,000 for claims filed under s. 71.60. If farmland is owned by a tax-option corporation, a limited liability company or by 2 or more persons or entities as joint tenants, tenants in common or partners or is marital property or survivorship marital property and one or more such persons, entities or owners is not a member of the claimant's household, "property taxes accrued" is that part of property taxes levied on the farmland, reduced by the tax credit under s. 79.10, that reflects the ownership percentage of the claimant and the claimant's household. For purposes of this subsection, property taxes are "levied" when the tax roll is delivered to the local treasurer for collection. If farmland is sold during the calendar year of the levy the "property taxes accrued" for the seller is the amount of the tax levy, reduced by the tax credit under s. 79.10, prorated to each in the closing agreement pertaining to the sale of the farmland, except that if the seller does not reimburse the buyer for any part of those property taxes there are no "property taxes accrued" for the seller, and the "property taxes accrued" for the buyer is the property taxes levied on the farmland, reduced by the tax credit under s. 79.10, minus, if the seller reimburses the buyer for part of the property taxes, the amount prorated to the seller in the closing agreement. With the claim for credit under this subchapter, the seller shall submit a copy of the closing agreement and the buyer shall submit a copy of the closing agreement and a copy of the property tax bill.

AB574, s. 16 Section 16. 71.59 (1) (a) of the statutes is amended to read:

AB574,8,13 71.59 (1) (a) Subject to the limitations provided in this subchapter and s. 71.80 (3) and (3m), a claimant may claim as a credit against Wisconsin income or franchise taxes otherwise due, the amount derived under s. 71.60 or 71.605. If the allowable amount of claim exceeds the income or franchise taxes otherwise due on or measured by the claimant's income or if there are no Wisconsin income or franchise taxes due on or measured by the claimant's income, the amount of the claim not used as an offset against income or franchise taxes shall be certified to the department of administration for payment to the claimant by check, share draft or other draft drawn on the general fund.

AB574, s. 17 Section 17 . 71.59 (1) (d) 5. and (2) (b) and (c) of the statutes are amended to read:

AB574,8,22 71.59 (1) (d) 5. That soil and water conservation standards applicable to the land are established and approved as required under s. 92.105 (1) to (3) and that no notice of noncompliance is in effect under s. 92.105 (5) with respect to the claimant at the time the certificate is issued end of the taxable year for which the claim is made. A zoning authority shall not issue a zoning certificate for property for any year at the end of which a notice of noncompliance under s. 92.104 (4) or 92.105 (5) is in effect for the property.

AB574,8,25 (2) (b) If a notice of noncompliance with an applicable soil and water conservation plan under s. 92.104 is in effect with respect to the claimant at the time the claim is filed end of the taxable year for which the claim is made.

AB574,9,3 (c) If a notice of noncompliance with applicable soil and water conservation standards under s. 92.105 is in effect with respect to the claimant at the time the claim is filed end of the taxable year for which the claim is made.

AB574, s. 18 Section 18. 71.59 (2) (f) of the statutes is created to read:

AB574,9,7 71.59 (2) (f) If the claimant files a claim for the credit under s. 71.07 (3m), 71.28 (2m) or 71.47 (2m) for the same taxable year for which the claimant files a claim under this subchapter.

AB574, s. 19 Section 19 . 71.60 (title), (1) (intro.) and (2) of the statutes are amended to read:

AB574,9,13 71.60 (title) Computation; farmland preservation agreements. (1) (intro.) Except as provided in sub. (2), for farmland that is subject to a farmland preservation agreement under subch. II of ch. 91 at the close of the year to which the claim relates, the amount of any claim filed in calendar years based upon property taxes accrued in the preceding calendar year shall be determined as follows:

AB574,9,17 (2) If the farmland is subject to a certified ordinance under subch. V of ch. 91, or an agreement under subch. II of ch. 91, in effect at the close of the year for to which the credit is claimed claim relates, the amount of the claim is 10% of the property taxes accrued or the amount determined under sub. (1), whichever is greater.

AB574, s. 20 Section 20 . 71.605 of the statutes is created to read:

AB574,9,24 71.605 Computation; exclusive agricultural zoning. (1) For farmland that, at the close of the year to which the claim relates, is in an area zoned for exclusive agricultural use under subch. V of ch. 91 by a city, village, town or county and is not subject to a farmland preservation agreement under subch. II of ch. 91, the amount of any claim filed in a calendar year based upon property taxes accrued in the preceding calendar year shall be determined as follows:

AB574,9,25 (a) Except as provided in par. (b), 50% of the property taxes accrued.

AB574,10,2 (b) If the farmland is in a transition area identified under s. 91.55 (1) (b), 25% of the property taxes accrued.

AB574,10,4 (2) The maximum credit for a claim filed under this section is $7,500 for each claimant.

AB574, s. 21 Section 21 . 71.61 (2) of the statutes is repealed.

AB574, s. 22 Section 22. 79.10 (11) (b) of the statutes is amended to read:

AB574,10,18 79.10 (11) (b) Before October 16, the department of administration shall determine the total funds available for distribution under the lottery credit in the following year and shall inform the joint committee on finance of that total. Total funds available for distribution shall be all existing and projected lottery proceeds and interest for the fiscal year of the distribution, less the amount estimated to be expended under ss. 20.455 (2) (r), 20.566 (2) (r) and 20.835 (2) (q) and 20.835 (3) (r) and less the required reserve under s. 20.003 (5). The joint committee on finance may revise the total amount to be distributed if it does so at a meeting that takes place before November 1. If the joint committee on finance does not schedule a meeting to take place before November 1, the total determined by the department of administration shall be the total amount estimated to be distributed under the lottery credit in the following year.

AB574, s. 23 Section 23. 91.06 of the statutes is amended to read:

AB574,10,24 91.06 Certification. The board shall review farmland county agricultural preservation plans and exclusive agricultural use zoning ordinances submitted to it under ss. 91.61 and 91.78 and shall certify to the appropriate zoning authority whether the plans and ordinances meet the standards of subchs. IV and V, respectively. Certifications may be in whole or in part.

AB574, s. 24 Section 24. 91.13 (1) of the statutes is amended to read:

AB574,11,13 91.13 (1) Any owner of eligible farmlands who desires to have the lands covered by a farmland preservation agreement may apply to the county clerk by executing a form provided by the department. If an application is received by the county clerk on or after May 14, 1992, and it is not signed by all persons holding a recorded mortgage on the land to be covered by the agreement, the application is void and may not be processed by the county clerk. The application shall include a land survey or legal description of all eligible farmland to be covered under the agreement, a map showing significant natural features and all structures and physical improvements on the lands or an aerial photograph of all land which is an integral part of the owner's farming operation which is marked to indicate the farmland and structures to be covered by the agreement, the soil classification of the lands and such other data as the department deems reasonably necessary to determine the eligibility of the lands for coverage under the agreement.

AB574, s. 25 Section 25. 91.19 (6n) of the statutes is created to read:

AB574,11,17 91.19 (6n) The department shall release from a farmland preservation agreement any land whose ownership changes as a result of foreclosure of a mortgage.

AB574, s. 26 Section 26. 91.19 (7) and (8) of the statutes are amended to read:

AB574,12,8 91.19 (7) Whenever a farmland preservation agreement is relinquished under sub. (2) or (6t) or all or part of the land is released from a farmland preservation agreement under sub. (2) or (6p) or a transition area agreement is relinquished under sub. (2) or, subject to subs. (12) and (13), a transition area agreement is relinquished under sub. (1) or (1m), the department shall cause to be prepared and recorded a lien against the property formerly subject to the agreement for the total amount of all credits received by all owners of such lands under subch. IX of ch. 71 during the last 10 5 years that the land was eligible for such credit, plus interest at the rate of 9.3% per year compounded annually on the credits received from the time the credits were received until the lien is paid for farmland preservation agreements relinquished under sub. (6t) and 6% per year compounded annually on the credits received from the time the credits were received until the lien is paid for other agreements. No interest shall be compounded for any period during which the farmland is subject to a subsequent farmland preservation agreement or transition area agreement or is zoned for exclusive agricultural use under an ordinance certified under subch. V.

AB574,12,18 (8) Subject to subs. (12) and (13), upon the relinquishment of a farmland preservation agreement under sub. (1) or (1m), the department shall cause to be prepared and recorded a lien against the property formerly subject to the farmland preservation agreement for the total amount of the credits received by all owners thereof under subch. IX of ch. 71 during the last 10 5 years that the land was eligible for such credit, plus 6% interest per year compounded from the time of relinquishment. No interest shall be compounded for any period during which the farmland is subject to a subsequent farmland preservation agreement or transition area agreement or is zoned for exclusive agricultural use under an ordinance certified under subch. V.

AB574, s. 27 Section 27. 91.21 (1) of the statutes is amended to read:

AB574,13,3 91.21 (1) If the owner or a successor in title of the land upon which a farmland preservation agreement has been recorded under this chapter changes the use of the land to a prohibited use without first acting under ss. s. 91.17 and, 91.19 or 91.25 (3) or (4) and the land is not relinquished under s. 91.19 (6p) or (6t), the owner or successor in title may be enjoined by the state, acting through the attorney general, or by the local governing body having jurisdiction, acting through its attorney, and is subject to a civil penalty for actual damages, but in no case to exceed double the value of the land as established at the time the application for the agreement was approved.

AB574, s. 28 Section 28 . 91.25 of the statutes is created to read:

AB574,13,8 91.25 Phase-out of agreements. (1) The department may not enter into, or extend, a farmland preservation agreement for land after the date for recertification of exclusive agricultural use zoning ordinances in the county in which the land is located, as established under s. 91.78 (2).

AB574,13,13 (2) Notwithstanding s. 91.13 (10), a farmland preservation agreement entered into, or extended, after the effective date of this subsection .... [revisor inserts date], shall expire no later than the date for recertification of exclusive agricultural use zoning ordinances in the county in which the land is located, as established under s. 91.78 (2).

AB574,13,17 (3) The department shall release land from a farmland preservation agreement after the date for recertification of exclusive agricultural use zoning ordinances in the county in which the land is located, as established under s. 91.78 (2), if the owner of the land so requests.

AB574,13,20 (4) The department shall release land that is subject to a certified exclusive agricultural use zoning ordinance from a farmland preservation agreement if the owner of the land so requests.

AB574, s. 29 Section 29. 91.51 of the statutes is amended to read:

AB574,14,2 91.51 (title) Purpose Planning. The purpose of this subchapter is to specify standards for county agricultural preservation plans required to enable farmland owners to enter into farmland preservation agreements under this chapter. Agricultural preservation planning shall be undertaken in accordance with s. 59.69 and agricultural preservation plans shall be a component of and consistent with any county development plan prepared under s. 59.69 (3).

AB574, s. 30 Section 30. 91.52 of the statutes is created to read:

AB574,14,7 91.52 Guidelines. The department, after consultation with the board, shall promulgate rules establishing guidelines for agricultural preservation planning. The guidelines shall establish priorities for the preservation of agricultural land, recognizing regional differences and the unique conditions in the various counties.

AB574, s. 31 Section 31. 91.55 (1) (b) of the statutes is amended to read:

AB574,14,11 91.55 (1) (b) Maps identifying agricultural areas to be preserved, areas of special environmental, natural resource or open space significance and, if any, transition areas.

AB574,14,13 (1m) (b) Transition areas mapped shall be areas in predominantly agricultural use which the plan identifies for future development.

AB574,14,15 (c) Any agricultural preservation areas mapped must be a minimum of 100 acres.

AB574,14,16 (d) Any transition areas mapped must be a minimum of 35 acres.

AB574,14,20 (e) In mapping agricultural preservation areas, the maps a map identifying preliminary agricultural preservation areas prepared under s. 91.05 shall be considered if the map is provided to the county at least 12 months prior to adoption of the agricultural preservation plan.

AB574, s. 32 Section 32. 91.55 (1m) (intro.) and (a) of the statutes are created to read:

AB574,14,23 91.55 (1m) (intro.) Maps prepared under sub. (1) (b) shall comply with the following conditions:

AB574,14,25 (a) Agricultural preservation areas and transition areas shall be consistent with the guidelines in rules promulgated under s. 91.52.

AB574, s. 33 Section 33. 91.55 (3) of the statutes is renumbered 91.55 (1) (c).

AB574, s. 34 Section 34. 91.63 of the statutes is amended to read:

AB574,15,8 91.63 Revisions. Counties shall continually review and evaluate the agricultural preservation plan in light of changing needs and conditions and changes to this subchapter or rules promulgated under this subchapter and shall provide for periodic revision of the agricultural preservation plan set forth in this subchapter. Revisions shall be made in the same manner as adoption of the plan , including submission to the board for certification under s. 91.06.

AB574, s. 35 Section 35. 91.72 of the statutes is created to read: