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2023 - 2024 LEGISLATURE
2023 ASSEMBLY BILL 1124
March 6, 2024 - Introduced by Representatives JACOBSON, CONSIDINE, TRANEL,
BARE, BEHNKE, C. ANDERSON, CONLEY, DRAKE, EMERSON, HONG, JOERS,
OHNSTAD, PALMERI, RATCLIFF, SHANKLAND, STUBBS, SUBECK and NOVAK,
cosponsored by Senators SPREITZER, AGARD, ROYS and SMITH. Referred to
Committee on Ways and Means.
***AUTHORS SUBJECT TO CHANGE***
AN ACT to amend 71.05 (6) (a) 15., 71.10 (4) (i), 71.21 (4) (a), 71.26 (2) (a) 4., 71.30
(3) (f), 71.34 (1k) (g), 71.45 (2) (a) 10. and 71.49 (1) (f); and to create 20.835 (2)
(dp), 71.07 (8s), 71.28 (8s), 71.47 (8s) and 93.521 of the statutes; relating to:
income tax credits for beginning farmers and owners of farm assets and making
an appropriation.
Analysis by the Legislative Reference Bureau
This bill creates an income tax credit for a beginning farmer who leases or
purchases agricultural assets from an asset owner and uses the assets for farming
and for a person whose assets are leased or sold to a beginning farmer. Under the
bill, a beginning farmer is a person who has a net worth of less than $200,000 and
who has farmed for fewer than 10 years. The bill defines “agricultural assets” as land
assessed for property tax purposes as agricultural land or machinery, equipment,
facilities, or livestock that is used in farming. The amount of the credit is equal to
5 percent of the lease amount or sales price paid by the beginning farmer to an asset
owner for agricultural assets for the taxable year and 5 percent of the lease amount
or sales price received by the asset owner from a beginning farmer for agricultural
assets for the taxable year. The beginning farmer may also claim a credit equal to
5 percent of the amount the farmer paid for improvements on agricultural assets
consisting of land and facilities. The maximum amount that a claimant may receive
in any taxable year is $75,000 and maximum amount of the credit for all claimants
in any taxable year is $5,000,000.
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Under the bill, in order to claim the credit, both the beginning farmer and the
asset owner must submit an application to the Department of Agriculture, Trade and
Consumer Protection. The beginning farmer must submit a business plan with the
beginning farmer's application and provide a description of the beginning farmer's
education, training, and experience in the type of farming in which the beginning
farmer uses the leased or purchased agricultural assets.
For further information see the state 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:
SECTION 1. 20.835 (2) (dp) of the statutes is created to read:
20.835 (2) (dp) Beginning farmer and farm asset owner tax credit. A sum
sufficient to pay the claims approved under ss. 71.07 (8s), 71.28 (8s), and 71.47 (8s).
SECTION 2. 71.05 (6) (a) 15. of the statutes is amended to read:
71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dm),
(2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n), (5e), (5i), (5j),
(5k), (5r), (5rm), (6n), (8s), and (10) and not passed through by a partnership, limited
liability company, or tax-option corporation that has added that amount to the
partnership's, company's, or tax-option corporation's income under s. 71.21 (4) or
71.34 (1k) (g).
SECTION 3. 71.07 (8s) of the statutes is created to read:
71.07 (8s) BEGINNING FARMER AND FARM ASSET OWNER TAX CREDIT. (a) Definitions.
In this subsection:
1. “Agricultural assets" means agricultural land or machinery, equipment,
facilities, or livestock that is used in farming.
2. “Agricultural land” has the meaning given in s. 70.32 (2) (c) 1g.
3. “Asset owner" means a person who meets the conditions specified in s. 93.521
(3).
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4. “Beginning farmer" means a person who meets the conditions specified in s.
93.521 (2).
5. “Claimant" means a beginning farmer who files a claim under this subsection
or an asset owner who files a claim under this subsection, except that, for a beginning
farmer, “claimant” means the following:
a. For partnerships, except publicly traded partnerships treated as
corporations under s. 71.22 (1k), “claimant" means each separate partner.
b. For tax-option corporations, “claimant" means each separate shareholder.
c. For limited liability companies, except limited liability companies treated as
corporations under s. 71.22 (1k), “claimant" means each separate member.
6. “Farming" has the meaning given in section 464 (e) of the Internal Revenue
Code.
7. “Lease amount" is the amount of the cash payment paid by a beginning
farmer to an asset owner each year for leasing the asset owner's agricultural assets,
including amounts paid under a lease agreement that results in the beginning
farmer owning the agricultural assets.
(b) Filing claims. 1. Subject to the limitations provided in this subsection, for
taxable years beginning after December 31, 2025, a beginning farmer may claim as
a credit against the tax imposed under s. 71.02 an amount equal to 5 percent of the
lease amount or sales price paid by the beginning farmer to an asset owner for the
lease or purchase of agricultural assets for the taxable year to which the claim
relates. The beginning farmer may also claim an amount equal to 5 percent of the
amount the beginning farmer paid in the taxable year for improvements to
agricultural assets consisting of land and facilities.
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2. Subject to the limitations provided in this subsection, for taxable years
beginning after December 31, 2025, an asset owner may claim as a credit against the
tax imposed under s. 71.02 an amount equal to 5 percent of the lease amount or sales
price received by the asset owner from a beginning farmer for agricultural assets for
the taxable year to which the claim relates.
(c) Limitations. 1. With regard to credit claimed on the basis of a lease amount,
a claimant may only claim the credit under this subsection for the first 3 years of any
lease of an asset owner's agricultural assets to a beginning farmer.
2. No credit may be allowed under this subsection unless it is claimed within
the time period under s. 71.75 (2).
3. A claimant shall submit with the claimant's income tax return the certificate
of eligibility provided under s. 93.521 (5) (b).
4. No credit may be claimed under this subsection by a part-year resident or
a nonresident of this state.
5. The maximum credit that a claimant may claim under this subsection for any
taxable year is $75,000.
6. a. Partnerships, limited liability companies, and tax-option corporations
may not claim the credit under this subsection, but the eligibility for, and the amount
of, the credit are based on the amounts paid under par. (b). A partnership, limited
liability company, or tax-option corporation shall compute the amount of credit that
each of its partners, members, or shareholders may claim and shall provide that
information to each of them.
b. In order to claim the credit computed under par. (b) 1., partners, members
of limited liability companies, and shareholders of tax-option corporations shall
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meet the requirements under s. 93.521 (2) and claim the credit in proportion to their
ownership interests.
(d) Administration. 1. Section 71.28 (4) (e), (g), and (h), to the extent that it
applies to the credit under that subsection, applies to the credit under this
subsection.
2. If the allowable amount of the claim under this subsection exceeds the
income taxes otherwise due on the claimant's income, the amount of the claim not
used as an offset against those taxes shall be certified by the department of revenue
to the department of administration for payment to the claimant by check, share
draft, or other draft from the appropriation under s. 20.835 (2) (dp).
SECTION 4. 71.10 (4) (i) of the statutes is amended to read:
71.10 (4) (i) The total of claim of right credit under s. 71.07 (1), farmland
preservation credit under ss. 71.57 to 71.61, farmland preservation credit, 2010 and
beyond under s. 71.613, homestead credit under subch. VIII, jobs tax credit under s.
71.07 (3q), business development credit under s. 71.07 (3y), research credit under s.
71.07 (4k) (e) 2. a., veterans and surviving spouses property tax credit under s. 71.07
(6e), enterprise zone jobs credit under s. 71.07 (3w), electronics and information
technology manufacturing zone credit under s. 71.07 (3wm), beginning farmer and
farm asset owner tax credit under s. 71.07 (8s), earned income tax credit under s.
71.07 (9e), estimated tax payments under s. 71.09, and taxes withheld under subch.
X.
SECTION 5. 71.21 (4) (a) of the statutes is amended to read:
71.21 (4) (a) The amount of the credits computed by a partnership under s.
71.07 (2dm), (2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n),
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(5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and passed through to partners
shall be added to the partnership's income.
SECTION 6. 71.26 (2) (a) 4. of the statutes is amended to read:
71.26 (2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dm),
(1dx), (1dy), (3g), (3h), (3n), (3q), (3t), (3w), (3wm), (3y), (5e), (5g), (5i), (5j), (5k), (5r),
(5rm), (6n), (8s), and (10) and not passed through by a partnership, limited liability
company, or tax-option corporation that has added that amount to the partnership's,
limited liability company's, or tax-option corporation's income under s. 71.21 (4) or
71.34 (1k) (g).
SECTION 7. 71.28 (8s) of the statutes is created to read:
71.28 (8s) BEGINNING FARMER AND FARM ASSET OWNER TAX CREDIT. (a) Definitions.
In this subsection:
1. “Agricultural assets" means agricultural land or machinery, equipment,
facilities, or livestock that is used in farming.
2. “Agricultural land” has the meaning given in s. 70.32 (2) (c) 1g.
3. “Asset owner" means a person who meets the conditions specified in s. 93.521
(3).
4. “Beginning farmer" means a person who meets the conditions specified in s.
93.521 (2).
5. “Claimant" means a beginning farmer who files a claim under this subsection
or an asset owner who files a claim under this subsection, except that, for a beginning
farmer, “claimant” means the following:
a. For partnerships, except publicly traded partnerships treated as
corporations under s. 71.22 (1k), “claimant" means each separate partner.
b. For tax-option corporations, “claimant" means each separate shareholder.
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c. For limited liability companies, except limited liability companies treated as
corporations under s. 71.22 (1k), “claimant" means each separate member.
6. “Farming" has the meaning given in section 464 (e) of the Internal Revenue
Code.
7. “Lease amount" is the amount of the cash payment paid by a beginning
farmer to an asset owner each year for leasing the asset owner's agricultural assets,
including amounts paid under a lease agreement that results in the beginning
farmer owning the agricultural assets.
(b) Filing claims. 1. Subject to the limitations provided in this subsection, for
taxable years beginning after December 31, 2025, a beginning farmer may claim as
a credit against the tax imposed under s. 71.23 an amount equal to 5 percent of the
lease amount or sales price paid by the beginning farmer to an asset owner for the
lease or purchase of agricultural assets for the taxable year to which the claim
relates. The beginning farmer may also claim an amount equal to 5 percent of the
amount the beginning farmer paid in the taxable year for improvements to
agricultural assets consisting of land and facilities.
2. Subject to the limitations provided in this subsection, for taxable years
beginning after December 31, 2025, an asset owner may claim as a credit against the
tax imposed under s. 71.23 an amount equal to 5 percent of the lease amount or sales
price received by the asset owner from a beginning farmer for agricultural assets for
the taxable year to which the claim relates.
(c) Limitations. 1. With regard to credit claimed on the basis of a lease amount,
a claimant may only claim the credit under this subsection for the first 3 years of any
lease of an asset owner's agricultural assets to a beginning farmer.
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2. No credit may be allowed under this subsection unless it is claimed within
the time period under s. 71.75 (2).
3. A claimant shall submit with the claimant's income tax return the certificate
of eligibility provided under s. 93.521 (5) (b).
4. No credit may be claimed under this subsection by a part-year resident or
a nonresident of this state.
5. The maximum credit that a claimant may claim under this subsection for any
taxable year is $75,000.
6. a. Partnerships, limited liability companies, and tax-option corporations
may not claim the credit under this subsection, but the eligibility for, and the amount
of, the credit are based on the amounts paid under par. (b). A partnership, limited
liability company, or tax-option corporation shall compute the amount of credit that
each of its partners, members, or shareholders may claim and shall provide that
information to each of them.
b. In order to claim the credit computed under par. (b) 1., partners, members
of limited liability companies, and shareholders of tax-option corporations shall
meet the requirements under s. 93.521 (2) and claim the credit in proportion to their
ownership interests.
(d) Administration. 1. Subsection (4) (e), (g), and (h), to the extent that it
applies to the credit under that subsection, applies to the credit under this
subsection.
2. If the allowable amount of the claim under this subsection exceeds the
income taxes otherwise due on the claimant's income, the amount of the claim not
used as an offset against those taxes shall be certified by the department of revenue
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to the department of administration for payment to the claimant by check, share
draft, or other draft from the appropriation under s. 20.835 (2) (dp).
SECTION 8. 71.30 (3) (f) of the statutes is amended to read:
71.30 (3) (f) The total of farmland preservation credit under subch. IX, jobs
credit under s. 71.28 (3q), enterprise zone jobs credit under s. 71.28 (3w), electronics
and information technology manufacturing zone credit under s. 71.28 (3wm),
business development credit under s. 71.28 (3y), research credit under s. 71.28 (4) (k)
1., beginning farmer and farm asset owner tax credit under s. 71.28 (8s), and
estimated tax payments under s. 71.29.
SECTION 9. 71.34 (1k) (g) of the statutes is amended to read:
71.34 (1k) (g) An addition shall be made for credits computed by a tax-option
corporation under s. 71.28 (1dm), (1dx), (1dy), (3), (3g), (3h), (3n), (3q), (3t), (3w),
(3wm), (3y), (4), (5), (5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and passed
through to shareholders.
SECTION 10. 71.45 (2) (a) 10. of the statutes is amended to read:
71.45 (2) (a) 10. By adding to federal taxable income the amount of credit
computed under s. 71.47 (1dm) to (1dy), (3g), (3h), (3n), (3q), (3w), (3y), (5e), (5g), (5i),
(5j), (5k), (5r), (5rm), (6n), (8s), and (10) and not passed through by a partnership,
limited liability company, or tax-option corporation that has added that amount to
the partnership's, limited liability company's, or tax-option corporation's income
under s. 71.21 (4) or 71.34 (1k) (g) and the amount of credit computed under s. 71.47
(3), (3t), (4), (4m), and (5).
SECTION 11. 71.47 (8s) of the statutes is created to read:
71.47 (8s) BEGINNING FARMER AND FARM ASSET OWNER TAX CREDIT. (a) Definitions.
In this subsection:
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1. “Agricultural assets" means agricultural land or machinery, equipment,
facilities, or livestock that is used in farming.
2. “Agricultural land” has the meaning given in s. 70.32 (2) (c) 1g.
3. “Asset owner" means a person who meets the conditions specified in s. 93.521
(3).
4. “Beginning farmer" means a person who meets the conditions specified in s.
93.521 (2).
5. “Claimant" means a beginning farmer who files a claim under this subsection
or an asset owner who files a claim under this subsection, except that, for a beginning
farmer, “claimant” means the following:
a. For partnerships, except publicly traded partnerships treated as
corporations under s. 71.22 (1k), “claimant" means each separate partner.
b. For tax-option corporations, “claimant" means each separate shareholder.
c. For limited liability companies, except limited liability companies treated as
corporations under s. 71.22 (1k), “claimant" means each separate member.
6. “Farming" has the meaning given in section 464 (e) of the Internal Revenue
Code.
7. “Lease amount" is the amount of the cash payment paid by a beginning
farmer to an asset owner each year for leasing the asset owner's agricultural assets,
including amounts paid under a lease agreement that results in the beginning
farmer owning the agricultural assets.
(b) Filing claims. 1. Subject to the limitations provided in this subsection, for
taxable years beginning after December 31, 2025, a beginning farmer may claim as
a credit against the tax imposed under s. 71.43 an amount equal to 5 percent of the
lease amount or sales price paid by the beginning farmer to an asset owner for the
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lease or purchase of agricultural assets for the taxable year to which the claim
relates. The beginning farmer may also claim an amount equal to 5 percent of the
amount the beginning farmer paid in the taxable year for improvements to
agricultural assets consisting of land and facilities.
2. Subject to the limitations provided in this subsection, for taxable years
beginning after December 31, 2025, an asset owner may claim as a credit against the
tax imposed under s. 71.43 an amount equal to 5 percent of the lease amount or sales
price received by the asset owner from a beginning farmer for agricultural assets for
the taxable year to which the claim relates.
(c) Limitations. 1. With regard to credit claimed on the basis of a lease amount,
a claimant may only claim the credit under this subsection for the first 3 years of any
lease of an asset owner's agricultural assets to a beginning farmer.
2. No credit may be allowed under this subsection unless it is claimed within
the time period under s. 71.75 (2).
3. A claimant shall submit with the claimant's income tax return the certificate
of eligibility provided under s. 93.521 (5) (b).
4. No credit may be claimed under this subsection by a part-year resident or
a nonresident of this state.
5. The maximum credit that a claimant may claim under this subsection for any
taxable year is $75,000.
6. a. Partnerships, limited liability companies, and tax-option corporations
may not claim the credit under this subsection, but the eligibility for, and the amount
of, the credit are based on the amounts paid under par. (b). A partnership, limited
liability company, or tax-option corporation shall compute the amount of credit that
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each of its partners, members, or shareholders may claim and shall provide that
information to each of them.
b. In order to claim the credit computed under par. (b) 1., partners, members
of limited liability companies, and shareholders of tax-option corporations shall
meet the requirements under s. 93.521 (2) and claim the credit in proportion to their
ownership interests.
(d) Administration. 1. Section 71.28 (4) (e), (g), and (h), to the extent that it
applies to the credit under that subsection, applies to the credit under this
subsection.
2. If the allowable amount of the claim under this subsection exceeds the
income taxes otherwise due on the claimant's income, the amount of the claim not
used as an offset against those taxes shall be certified by the department of revenue
to the department of administration for payment to the claimant by check, share
draft, or other draft from the appropriation under s. 20.835 (2) (dp).
SECTION 12. 71.49 (1) (f) of the statutes is amended to read:
71.49 (1) (f) The total of farmland preservation credit under subch. IX, jobs
credit under s. 71.47 (3q), enterprise zone jobs credit under s. 71.47 (3w), business
development credit under s. 71.47 (3y), research credit under s. 71.47 (4) (k) 1.,
beginning farmer and farm asset owner tax credit under s. 71.47 (8s), and estimated
tax payments under s. 71.48.
SECTION 13. 93.521 of the statutes is created to read:
93.521 Beginning farmer and farm asset owner tax credit eligibility.
(1) DEFINITIONS. In this section:
(a) “Agricultural assets" means agricultural land or machinery, equipment,
facilities, or livestock that is used in farming.
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(b) “Agricultural land” has the meaning given in s. 70.32 (2) (c) 1g.
(c) “Asset owner" means a person who meets the conditions specified in sub. (3).
(d) “Beginning farmer" means a person who meets the conditions specified in
sub. (2).
(e) “Claimant” has the meaning given in ss. 71.07 (8s) (a) 5., 71.28 (8s) (a) 5.,
and 71.47 (8s) (a) 5.
(f) “Farming" has the meaning given in section 464 (e) of the Internal Revenue
Code.
(2) BEGINNING FARMER. A person is a beginning farmer for the purposes of s.
71.07 (8s), 71.28 (8s), or 71.47 (8s) if, at the time that the person submits an
application under sub. (4), all of the following apply:
(a) The person is not a part-year resident or a nonresident of this state.
(b) The person has a net worth of less than $200,000.
(c) The person has farmed for fewer than 10 years at the date on which the
person submits an application under sub. (4).
(d) The person has entered into a lease or sales transaction with an asset owner,
directly or indirectly through ownership interest in a partnership, limited liability
company, or tax-option corporation, for the use or purchase of the asset owner's
agricultural assets by the beginning farmer.
(e) The person uses the leased or purchased agricultural assets for farming.
(3) ASSET OWNER. A person is an asset owner for the purposes of s. 71.07 (8s),
71.28 (8s), or 71.47 (8s) if, at the time that the person submits an application under
sub. (4), all of the following apply:
(a) The person owns agricultural assets.
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(b) The person has entered into a lease or sales transaction with a beginning
farmer for the use or purchase of the person's agricultural assets by the beginning
farmer.
(4) APPLICATIONS. (a) In order for an asset owner to claim the farm asset owner
tax credit under s. 71.07 (8s) (b) 2., 71.28 (8s) (b) 2., or 71.47 (8s) (b) 2., the asset owner
and the beginning farmer who is leasing or purchasing the agricultural assets from
the asset owner shall each submit an application to the department.
(b) An asset owner shall include in the application under this subsection the
asset owner's name and address, information showing that the asset owner satisfies
the conditions specified in sub. (3), a description of the leased or purchased
agricultural assets and their location, a copy of the lease or sales transaction, the
number of acres of agricultural land leased or sold to the beginning farmer, and any
other information required by the department.
(c) A beginning farmer shall include all of the following in an application under
this subsection:
1. The beginning farmer's name and address.
2. Information showing that the beginning farmer satisfies the conditions
specified in sub. (2).
3. A business plan that includes a current balance sheet and projected balance
sheets for the lease term or sales transaction, cash flow statements, and income
statements along with a detailed description of all significant accounting
assumptions used in developing the financial projections.
4. A description of the beginning farmer's education, training, and experience
in the type of farming in which the beginning farmer uses the leased or purchased
agricultural assets.
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5. A copy of the beginning farmer's completed federal profit or loss from farming
form, schedule F, or other documentation approved by the department under sub. (6).
6. Any other information required by the department.
(5) EVALUATION AND CERTIFICATION. (a) The department shall review
applications submitted under sub. (4) (a), and make its certification determinations,
in the order in which the applications are received.
(b) The department shall provide the beginning farmer claimant and the asset
owner with a certificate of eligibility for the tax credit under s. 71.07 (8s), 71.28 (8s),
or 71.47 (8s), and allocate the amount of the credit for each such applicant, if all of
the following apply:
1. The asset owner's application complies with sub. (4) (b).
2. The beginning farmer's application complies with sub. (4) (c).
3. The department determines that the business plan submitted under sub. (4)
(c) 3. and the education, training, or experience described under sub. (4) (c) 4. show
that the beginning farmer has sufficient resources and education, training, or
experience for the type of farming in which the beginning farmer uses the leased or
purchased agricultural assets.
4. The department verifies all expenses included with the asset owner's
application under sub. (4) (b) and the beginning farmer's application under sub. (4)
(c).
(c) The department shall certify a beginning farmer's eligibility for the tax
credit under s. 71.07 (8s), 71.28 (8s), or 71.47 (8s) no later than January 1 of the year
following the taxable year for which the claim relates.
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23 - 16 -2023 - 2024 Legislature LRB-5758/1
JK:amn
SECTION 13 ASSEMBLY BILL 1124
(d) The maximum amount of the credits that the department may certify to all
persons claiming the credits under ss. 71.07 (8s), 71.28 (8s), and 71.47 (8s) in a
taxable year is $5,000,000.
(6) DEPARTMENT AUTHORITY. (a) The department may approve alternative
documentation for the purposes of sub. (4) (c) 5.
(b) The department may assist beginning farmers to develop business plans for
the purposes of sub. (4) (c) 3. and may assist in the negotiation of leases or purchases
of farm assets that may enable persons to qualify for tax credits under s. 71.07 (8s),
71.28 (8s), or 71.47 (8s).
(c) The department may, at the request of the beginning farmer, review any
proposal by a beginning farmer to make improvements to agricultural assets
consisting of land or facilities for purposes of claiming the additional credit under s.
71.07 (8s), 71.28 (8s), or 71.47 (8s).
(7) REPORTS. Annually, beginning in 2027, the department shall submit a
report to the legislature, as provided under s. 13.172 (2), specifying the number of the
persons submitting applications under this section, the type of farming the
applicants are engaged in, the number of certificates of eligibility issued to the
applicants, and the amount of the credits awarded to each applicant.
(END)
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