OLR Bill Analysis

SB 313

AN ACT CONCERNING START-UP FARMERS WHO ARE VETERANS OF THE ARMED FORCES.

SUMMARY:

This bill creates incentives for veterans to become farmers or involved with agricultural business. It does this by extending an exemption from the sales and use tax on personal property sold for use in agricultural production to veterans who are newly or recently engaged in the practice of farming.

The bill also requires the departments of Agriculture, Veterans' Affairs, and Labor to collaborate to (1) encourage and assist veterans to start or expand an agricultural business and (2) provide education and training opportunities to them in farming and agricultural operations (see BACKGROUND).

By law, a “veteran” is an individual honorably discharged or released under honorable conditions from active service in the U. S. armed forces. The statutes define “armed forces” to mean the U. S. Army, Navy, Marine Corps, Coast Guard, Air Force, their reserve components, and the state's National Guard under federal service (CGS 27-103).

EFFECTIVE DATE: Upon passage

FARMER TAX EXEMPTION

State law grants a farmer engaged in agricultural production as a trade or business an exemption (through a farmer tax exemption permit) from the sales and use tax for tangible personal property he or she uses or consumes exclusively for this production. In general, to qualify, the farmer must apply to the Department of Revenue Services (DRS) and show that he or she had a gross income from agricultural production during the preceding tax year of at least $ 2,500, or an average of at least $ 2,500 over the preceding two tax years, as reported for federal income tax purposes.

Existing law authorizes DRS to waive this income requirement for someone who purchases an agricultural trade or business from a seller who was issued and held a valid farmer tax exemption permit at the time of the sale. The exemption is valid for two years after the purchase. A person with an exemption permit under these circumstances who does not work in agricultural production for two years after the purchase is liable for the tax.

The bill extends the waiver to include veterans who never engaged in the practice of farming or did so for less than two years.

By law, any applicant may be eligible for a farmer tax exemption permit if the applicant establishes, to the commissioner's satisfaction, that the he or she intends to carry on agricultural production as a trade or business for at least two years (Conn. Agencies Reg. 12-412 (63)-1). If a person issued the permit under this condition does not work in agricultural production for two years after the permit is issued, or does not earn and spend more than $ 2,500 in the preceding year or on average over the preceding two years, he or she must pay the tax. If the person must pay under either of these conditions, he or she is ineligible for another income-requirement-waived farmer tax exemption permit.

BACKGROUND

Farm Link Program

The law requires the Department of Agriculture to establish, administer, and maintain a database (“Farm Link”) of farmers and agricultural land owners who intend to sell their farm operations or agricultural land. People interested in starting or expanding an agricultural business may authorize the department to enter their names, contact information, and business intentions into the database. The department must make reasonable efforts to link people with similar interests. It must also post educational materials about the program on its website. The material must include information about farm transfer and succession planning, family farm estate planning, farm transfer strategies, farm leasing, forming farm partnerships, and starting a farm business.

COMMITTEE ACTION

Select Committee on Veterans' Affairs

Joint Favorable Change of Reference

Yea

10

Nay

0

(03/13/2012)

Environment Committee

Joint Favorable

Yea

27

Nay

0

(03/23/2012)