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AN ACT relating to farmland retention. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 154.60-040 is amended to read as follows: 3
(1) As used in this section: 4
(a) "Actively engaged farmer" means a person who makes a significant 5
contribution of: 6
1. Land, capital, and equipment to a farming operation; and 7
2. Active personal labor or management to a farming operation. 8
(b) 1. "Agricultural assets" means: 9
a. Agricultural land which has been appraised by an individual 10
certified by the Real Estate Appraisers Board created under KRS 11
324A.015; and 12
b. Buildings, facilities, machinery, equipment, agricultural products, 13
or horticultural products, if: 14
i. Owned by the same seller[selling farmer] owning the 15
agricultural land sold to a beginning farmer or actively 16
engaged[beginning] farmer; 17
ii. Purchased at the same time and in the same transaction with 18
the agricultural land; and 19
iii. Purchased with the intent to be used on the purchased 20
agricultural land. 21
2. "Agricultural assets" does not mean: 22
a. A personal residence or any other residential structures; and 23
b. Any agricultural assets that have been previously included in an 24
approved application for the farmland retention tax credit 25
[Kentucky selling farmer tax credit]; 26
(c)[(b)] "Agricultural land" means: 27 UNOFFICIAL COPY 25 RS BR 361
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1. Any land located entirely in Kentucky that is zoned or permitted for 1
farming, if the jurisdiction where the land is located has enacted an 2
ordinance for zoning or permitting; and 3
2. a. Is a tract of land of at least ten (10) contiguous acres in area for a 4
farming operation for agricultural products; or 5
b. Is a tract of land of at least five (5) contiguous acres in area for a 6
farming operation for aquaculture or horticultural products; 7
owned by the seller[selling farmer] prior to the sale; 8
(d)[(c)] "Agricultural products" means: 9
1. Livestock or livestock products; 10
2. Poultry or poultry products; 11
3. Milk or milk products; or 12
4. Field crops and other crops, including timber if approved by the 13
authority; 14
(e)[(d)] "Aquaculture" means the farming of fish, crustaceans, mollusks, aquatic 15
plants, algae, or other similar organisms; 16
(f) "Beginning farmer" means an actively engaged farmer who has not 17
previously held an ownership interest in agricultural land used for a 18
farming operation for a period exceeding twenty (20) years prior to entering 19
into an agreement to purchase agricultural assets from a seller; 20
(g)[(e)] "Farm product" means aquaculture, agricultural products, or 21
horticultural products; 22
(h)[(f)] 1. "Farming operation" means the management and operation of 23
agricultural assets for the purpose of pursuing a profitable commercial 24
business venture to produce agricultural products, horticultural products, 25
or both for sale. 26
2. "Farming operation" does not mean any: 27 UNOFFICIAL COPY 25 RS BR 361
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[a. Hobby farm, as determined by the Internal Revenue Service;] 1
a.[b.] Nonprofit venture; 2
b.[c.] Farm used primarily for storing agricultural products or 3
horticultural products; or 4
c.[d.] Farm used to grow or raise agricultural products or horticultural 5
products primarily for use by the immediate family members or 6
owners of the agricultural assets; 7
(i)[(g)] "Horticultural products" means orchards, fruits, vegetables, nuts, 8
flowers, or ornamental plants; [and] 9
(j)[(h)] "Immediate family member" means any of the following in relation to 10
any owner or spouse of the owner of the agricultural assets: 11
1. Parent or grandparent; 12
2. Children or their spouses; or 13
3. Siblings or their spouses; 14
(k) "Significant Contribution" has the same meaning as in 7 C.F.R. sec 15
1400.3. 16
(2) Any incentive offered to an eligible company under the Farmland Retention Tax 17
Credit Program[Selling Farmer Tax Credit Program] shall be negotiated by Cabinet 18
for Economic Development officials and shall be subject to approval by the 19
authority. 20
(3) The purpose of the Farmland Retention Tax Credit Program[ Selling Farmer Tax 21
Credit Program] is to promote the continued use of agricultural land in Kentucky 22
for farming purposes by granting a tax credit to a seller[selling farmer] who agrees 23
to sell agricultural assets to a beginning or actively engaged[beginning] farmer. 24
(4) Sellers[Selling farmers] wanting to sell agricultural land and assets may be eligible 25
for a tax credit up to five percent (5%) of the selling price of qualifying agricultural 26
assets, subject to: 27 UNOFFICIAL COPY 25 RS BR 361
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(a) A twenty-five thousand dollar ($25,000) cap for each taxable year of the 1
seller when assets are sold to an actively engaged farmer who does not meet 2
the definition of beginning farmer[selling farmer]; 3
(b) A fifty thousand dollar ($50,000) cap for each taxable year of the seller 4
when assets are sold to a beginning farmer; 5
(c) A one hundred thousand dollar ($100,000) lifetime cap for each seller selling 6
to an active farmer;[ and ] 7
(d) A two hundred thousand dollar ($200,000) lifetime cap for each eligible 8
entity selling to a beginning farmer or actively engaged; and 9
(e)[(c)] A proration by the authority based on the overall cap shared between the 10
Small Business Tax Credit Program and the Farmland Retention[Selling 11
Farmer] Tax Credit Program cap of three million dollars ($3,000,000) under 12
KRS 154.60-020. 13
(5) The tax credit allowed in subsection (4) of this section may be claimed under KRS 14
141.3841. 15
(6) In order to be eligible to receive approval for a tax credit, a the seller[selling 16
farmer] shall, at a minimum: 17
(a) 1. a. Be registered with the Kentucky Secretary of State; and 18
b. Be in good standing with the Kentucky Secretary of State; or 19
2. If not required to be registered with the Kentucky Secretary of State, be 20
a taxpayer[ resident] of Kentucky; 21
(b) Prior to a sale of agricultural assets, be a small business with fifty (50) or 22
fewer full-time employees and be the sole legal owner of agricultural assets 23
sold to a beginning actively engaged[farmer]; 24
(c) Not be a farm equipment dealer, livestock dealer, or similar entity primarily 25
engaged in the business of selling agricultural assets for profit and not 26
engaged in farming as a primary business activity; 27 UNOFFICIAL COPY 25 RS BR 361
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(d) Not be a bank or any other similar lending or financial institution; 1
(e) Not be: 2
1. An owner, partner, member, shareholder, or trustee; 3
2. A spouse of an owner, partner, member, shareholder, or trustee; 4
3. An immediate family member of any of the owners, partners, members, 5
shareholders, or trustees; 6
of the beginning farmer to whom the seller[selling farmer] is seeking to sell 7
agricultural assets; 8
(f) 1. Demonstrate management and operation of real and personal property 9
for the production of a farm product; 10
2. Execute and effectuate a purchase contract to sell agricultural land with 11
a beginning or actively engaged farmer for an amount evidenced by an 12
appraisal; and 13
(g) Sell, convey, and transfer ownership of related agricultural assets to a 14
beginning or actively engaged farmer[farmer]. 15
(7) In order for the seller[selling farmer] to qualify for the tax credit, a beginning or 16
actively engaged farmer shall, at a minimum: 17
(a) 1. a. Be registered with the Kentucky Secretary of State; and 18
b. Be in good standing with the Kentucky Secretary of State; or 19
2. If not required to be registered with the Kentucky Secretary of State, be 20
a resident of Kentucky; 21
(b) Possess all licenses, registrations, and experience needed to legally operate a 22
farming operation within the jurisdiction for the agricultural land purchased 23
from the seller[a selling farmer]; 24
[(c) Not previously have held an ownership interest in agricultural land used for a 25
farming operation for a period exceeding ten (10) years prior to entering into 26
an agreement to purchase agricultural assets from a selling farmer;] 27 UNOFFICIAL COPY 25 RS BR 361
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(c)[(d)] Not have an ownership interest in any of the agricultural assets included 1
in the transaction with the seller[selling farmer]; and 2
(d)[(e)] Provide a majority of the management, and materially participate in the 3
operation of a for-profit farming operation located in Kentucky and purchased 4
from a seller[selling farmer], with the intent to continue a for-profit farming 5
operation on the purchased agricultural land for a minimum of ten (10)[five 6
(5)] years after the sale date. 7
(8) The seller[selling farmer] shall submit an application [after consummation of the 8
sale, transfer of title, and conveyance of agricultural assets together ]with all 9
information necessary for the authority to determine eligibility for the tax credit. 10
(9) The authority may consider applications prior to the consumption of the sale, 11
transfer of title, and conveyance of agricultural assets. 12
(10)[(9)] An application for the farmland retention tax credit[selling farmer tax credit] 13
shall contain, at a minimum, information about the: 14
(a) Seller and buyer[Selling farmer and purchasing beginning farmer eligibility;] 15
(b) Purchase contract and closing statement; 16
(c) Documentation, such as a deed, title conveyance for the transfer of assets, 17
including verification of Kentucky residency; and 18
(d) Any other information the authority may require to determine eligibility for 19
the credit. 20
(11)[(10)] For each approved application, the authority shall transmit to the Department 21
of Revenue sufficient information about the seller[selling farmer] to ensure 22
compliance with this section and KRS 141.3841, including the amount of approved 23
tax credit allowed to the selling farmer.[ 24
(11) Beginning January 1, 2020, the authority may approve selling farmer tax credits.] 25
(12) The department may assess an additional ten percent (10%) penalty in excess of 26
the tax credit awarded. 27 UNOFFICIAL COPY 25 RS BR 361
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(13) The farmland retention tax credit shall sunset on December 31, 2031. New 1
applications shall not be accepted or considered on or after December 31, 2031. 2
All outstanding applications with preliminary or final approval under this 3
subchapter as of December 31, 2031, shall continue to be governed by the 4
provisions of this subchapter. 5
Section 2. KRS 141.3841 is amended to read as follows: 6
(1) The farmland retention[selling farmers] tax credit permitted by KRS 154.60-040: 7
(a) Shall be nonrefundable and nontransferable; and 8
(b) May be claimed against the taxes imposed in KRS 141.020 or 141.040 and 9
141.0401, with the ordering of the credit as provided in KRS 141.0205. 10
(2) (a) The maximum amount of credit that may be claimed by a seller[selling 11
farmer] in each taxable year is limited to: 12
1. No more than the total amount of credit approved by the Kentucky 13
Economic Development Finance Authority; 14
2. Twenty-five thousand dollars ($25,000) in any taxable year if the sale is 15
to an actively engaged farmer; [and] 16
3. Fifty thousand dollars ($50,000) in any taxable year if the sale is to a 17
beginning farmer; 18
4[3]. No more than one hundred thousand dollars ($100,000) total tax credit 19
over the lifetime of the seller made to an actively engaged farmer; 20
and[selling farmer.] 21
5. No more than two hundred thousand dollars ($200,000) total tax 22
credit over the lifetime of the seller for sales made to beginning 23
farmers. 24
(b) The credit shall be first claimed on the tax return for the taxable year during 25
which the credit was approved. 26
(c) Any unused credit in a taxable year may be carried forward for up to five (5) 27 UNOFFICIAL COPY 25 RS BR 361
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taxable years and, if not utilized within the five (5) year period, shall be lost. 1
(3) In order for the General Assembly to evaluate the fulfillment of the purpose stated 2
in KRS 154.60-040, the department shall provide the following information, on a 3
cumulative basis, for each selling farmer, for each taxable year: 4
(a) The location, by county, of the agricultural assets sold to a beginning farmer 5
and approved for a tax credit under KRS 154.60-040; 6
(b) The total amount of tax credit approved by the Kentucky Economic 7
Development Finance Authority for each selling farmer; 8
(c) The amount of tax credit claimed for each selling farmer in each taxable year; 9
and 10
(d) 1. In the case of all taxpayers other than corporations, based on ranges of 11
adjusted gross income of no larger than five thousand dollars ($5,000) 12
for the taxable year, the total amount of tax credits claimed and the 13
number of returns claiming a tax credit for each adjusted gross income 14
range; and 15
2. In the case of all corporations, based on ranges of net income no larger 16
than fifty thousand dollars ($50,000) for the taxable year, the total 17
amount of tax credit claimed and the number of returns claiming a tax 18
credit for each net income range. 19
(4) The report required by subsection (3) of this section shall be submitted to the 20
Interim Joint Committee on Appropriations and Revenue beginning no later than 21
November 1, 2021, and no later than each November 1 thereafter, as long as the 22
credit is claimed on any return processed by the department. 23
(5) The farmland retention tax credit shall sunset on December 31, 2031. New 24
applications shall not be accepted or considered on or after December 31, 2031. 25
All outstanding applications with preliminary or final approval under this 26
subchapter as of December 31, 2031 shall continue to be governed by Section 1 of 27 UNOFFICIAL COPY 25 RS BR 361
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this Act. 1
Section 3. KRS 131.190 is amended to read as follows: 2
(1) No present or former commissioner or employee of the department, present or 3
former member of a county board of assessment appeals, present or former property 4
valuation administrator or employee, present or former secretary or employee of the 5
Finance and Administration Cabinet, former secretary or employee of the Revenue 6
Cabinet, or any other person, shall intentionally and without authorization inspect 7
or divulge any information acquired by him or her of the affairs of any person, or 8
information regarding the tax schedules, returns, or reports required to be filed with 9
the department or other proper officer, or any information produced by a hearing or 10
investigation, insofar as the information may have to do with the affairs of the 11
person's business. 12
(2) The prohibition established by subsection (1) of this section shall not extend to: 13
(a) Information required in prosecutions for making false reports or returns of 14
property for taxation, or any other infraction of the tax laws; 15
(b) Any matter properly entered upon any assessment record, or in any way made 16
a matter of public record; 17
(c) Furnishing any taxpayer or his or her properly authorized agent with 18
information respecting his or her own return; 19
(d) Testimony provided by the commissioner or any employee of the department 20
in any court, or the introduction as evidence of returns or reports filed with the 21
department, in an action for violation of state or federal tax laws or in any 22
action challenging state or federal tax laws; 23
(e) Providing an owner of unmined coal, oil or gas reserves, and other mineral or 24
energy resources assessed under KRS 132.820, or owners of surface land 25
under which the unmined minerals lie, factual information about the owner's 26
property derived from third-party returns filed for that owner's property, under 27 UNOFFICIAL COPY 25 RS BR 361
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the provisions of KRS 132.820, that is used to determine the owner's 1
assessment. This information shall be provided to the owner on a confidential 2
basis, and the owner shall be subject to the penalties provided in KRS 3
131.990(2). The third-party filer shall be given prior notice of any disclosure 4
of information to the owner that was provided by the third-party filer; 5
(f) Providing to a third-party purchaser pursuant to an order entered in a 6
foreclosure action filed in a court of competent jurisdiction, factual 7
information related to the owner or lessee of coal, oil, gas reserves, or any 8
other mineral resources assessed under KRS 132.820. The department may 9
promulgate an administrative regulation establishing a fee schedule for the 10
provision of the information described in this paragraph. Any fee imposed 11
shall not exceed the greater of the actual cost of providing the information or 12
ten dollars ($10); 13
(g) Providing information to a licensing agency, the Transportation Cabinet, or 14
the Kentucky Supreme Court under KRS 131.1817; 15
(h) Statistics of gasoline and special fuels gallonage reported to the department 16
under KRS 138.210 to 138.448; 17
(i) Providing any utility gross receipts license tax return information that is 18
necessary to administer the provisions of KRS 160.613 to 160.617 to 19
applicable school districts on a confidential basis; 20
(j) Providing documents, data, or other information to a third party pursuant to an 21
order issued by a court of competent jurisdiction; 22
(k) Publishing administrative writings on its official website in accordance with 23
KRS 131.020(1)(b); or 24
(l) Providing information to the Legislative Research Commission under: 25
1. KRS 139.519 for purposes of the sales and use tax refund on building 26
materials used for disaster recovery; 27 UNOFFICIAL COPY 25 RS BR 361
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2. KRS 141.436 for purposes of the energy efficiency products credits; 1
3. KRS 141.437 for purposes of the ENERGY STAR home and the 2
ENERGY STAR manufactured home credits; 3
4. KRS 141.383 for purposes of the film industry incentives; 4
5. KRS 154.26-095 for purposes of the Kentucky industrial revitalization 5
credit[tax credits] and the job assessment fees; 6
6. KRS 141.068 for purposes of the Kentucky investment fund; 7
7. KRS 141.396 for purposes of the angel investor [tax ]credit; 8
8. KRS 141.389 for purposes of the distilled spirits credit; 9
9. KRS 141.408 for purposes of the inventory credit; 10
10. KRS 141.390 for purposes of the recycling and composting 11
credits[credit]; 12
11. KRS 141.3841 for purposes of the farmland retention[selling farmer 13
tax] credit; 14
12. KRS 141.4231 for purposes of the renewable chemical production [tax 15
]credit; 16
13. KRS 141.524 for purposes of the Education Opportunity Account 17
Program [tax ]credit; 18
14. KRS 141.398 for purposes of the development area [tax ]credit; 19
15. KRS 139.516 for the purposes of the sales and use tax exemptions 20
for[exemption on] the commercial mining of cryptocurrency; 21
16. KRS 141.419 for purposes of the decontamination [tax ]credit; 22
17. KRS 141.391 for purposes of the qualified broadband investment [tax 23
]credit; and 24
18. KRS 139.499 for purposes of the sales and use[tax] 25
exemptions[exemption] for a qualified data center project. 26
(3) The commissioner shall make available any information for official use only and on 27 UNOFFICIAL COPY 25 RS BR 361
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a confidential basis to the proper officer, agency, board or commission of this state, 1
any Kentucky county, any Kentucky city, any other state, or the federal 2
government, under reciprocal agreements whereby the department shall receive 3
similar or useful information in return. 4
(4) Access to and inspection of information received from the Internal Revenue Service 5
is for department use only, and is restricted to tax administration purposes. 6
Information received from the Internal Revenue Service shall not be made available 7
to any other agency of state government, or any county, city, or other state, and 8
shall not be inspected intentionally and without authorization by any present 9
secretary or employee of the Finance and Administration Cabinet, commissioner or 10
employee of the department, or any other person. 11
(5) Statistics of crude oil as reported to the department under the crude oil excise tax 12
requirements of KRS Chapter 137 and statistics of natural gas production as 13
reported to the department under the natural resources severance tax requirements 14
of KRS Chapter 143A may be made public by the department by release to the 15
Energy and Environment Cabinet, Department for Natural Resources. 16
(6) Notwithstanding any provision of law to the contrary, beginning with mine-map 17
submissions for the 1989 tax year, the department may make public or divulge only 18
those portions of mine maps submitted by taxpayers to the department pursuant to 19
KRS Chapter 132 for ad valorem tax purposes that depict the boundaries of mined-20
out parcel areas. These electronic maps shall not be relied upon to determine actual 21
boundaries of mined-out parcel areas. Property boundaries contained in mine maps 22
required under KRS Chapters 350 and 352 shall not be construed to constitute land 23
surveying or boundary surveys as defined by KRS 322.010 and any administrative 24
regulations promulgated thereto. 25
Section 4. KRS 154.60-005 is amended to read as follows: 26
This subchapter shall be known as the Small Business Tax Credit and Farmland 27 UNOFFICIAL COPY 25 RS BR 361
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Retention [Selling Farmer] Tax Credit Programs. 1
Section 5. KRS 154.60-020 is amended to read as follows: 2
(1) The authority shall develop a Small Business Development Credit Program in 3
consultation with the Office of Entrepreneurship and Innovation to assist new or 4
existing small businesses operating in the Commonwealth. The nonrefundable 5
credit shall be allowed against the taxes imposed by KRS 141.020 or 141.040, and 6
141.0401. The ordering of credits shall be as provided in KRS 141.0205. 7
(2) The authority shall determine the terms, conditions, and requirements for 8
application for the credit, in consultation with the Office of Entrepreneurship and 9
Innovation, subject to the provisions of subsection (3) of this section. The 10
application shall contain identification information about the number of eligible 11
positions created and filled, a calculation of the base employment of the small 12
business, verification of investment of five thousand dollars ($5,000) or more in 13
qualifying equipment or technology, and other information the authority may 14
specify to determine eligibility for the credit. 15
(3) (a) The maximum amount of credits that may be committed in each fiscal year by 16
the authority and shared between the small business tax credit program and 17
the Farmland Retention [Selling Farmer] Tax Credit Program shall be capped 18
at three million dollars ($3,000,000). 19
(b) In order to be eligible to receive final approval for a credit, a small business 20
shall, within the twenty-four (24) month period immediately preceding the 21
application submission date: 22
1. Create and fill one (1) or more eligible positions over the base 23
employment; and 24
2. Invest five thousand dollars ($5,000) or more in qualifying equipment or 25
technology. 26
(c) Each eligible position that is created and filled shall be maintained for twelve 27 UNOFFICIAL COPY 25 RS BR 361
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(12) months. If a full-time employee filling a newly created eligible position 1
ceases to be employed by the small business for any reason, that employee 2
shall be replaced within forty-five (45) days in order for the eligible position 3
to maintain its eligible status, in addition to meeting all other applicable 4
requirements. 5
(d) The small business shall submit all information necessary for the authority to 6
determine credit eligibility for each year, and the amount of credit for which 7
the small business is eligible. 8
(e) The maximum amount of credit for each small business for each year shall not 9
exceed twenty-five thousand dollars ($25,000). 10
(f) The credit shall be claimed on the tax return for the year during which the 11
credit was approved. Unused credits may be carried forward for up to five (5) 12
years. 13