OLR Bill Analysis

HB 6375

AN ACT ESTABLISHING A VETERANS TO AGRICULTURE PROGRAM.

SUMMARY:

This bill creates incentives for veterans who have never engaged in farming or have done so for less than two years to become farmers. It does this by extending an exemption from the sales and use tax on personal property sold for use in agricultural production to such veterans.

The bill also requires the departments of Agriculture, Labor, and Veterans' Affairs to collaborate to (1) encourage and help veterans to start or expand an agricultural business and (2) provide education and training opportunities to veterans in farming and agricultural operations. By law, the Department of Agriculture, under the Connecticut Farm Link program, must maintain a database of farmers and land owners who intend to sell their farm operations or agricultural land and provide certain educational information about the program on its website (see BACKGROUND).

By law, a “veteran” is an individual honorably discharged or released from active service in the U.S. Armed Forces or their reserve components, including the Connecticut National Guard performing duty under Title 32 of federal law (e.g., certain Homeland Security missions).

EFFECTIVE DATE: Upon passage

FARMERS TAX EXEMPTION

State law grants farmers engaged in agricultural production (see BACKGROUND) as a trade or business an exemption from the sales and use tax for tangible personal property they use or otherwise consume exclusively for this purpose. In general, to qualify, a farmer must have 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 the Department of Revenue Services to waive this income requirement for someone who purchases an agricultural trade or business from a seller holding a valid farmer tax exemption permit. 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, subject to the same terms that apply under current law to other purchasers.

By law, any applicant may be eligible for a farmer tax exemption permit if the applicant establishes, to the commissioner's satisfaction, that 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

Agricultural Production

Under the law, “agricultural production” means engaging, as a trade or business, in:

1. raising and harvesting any agricultural or horticultural commodity;

2. dairy farming;

3. forestry;

4. raising, feeding, caring for, shearing, training or management of livestock, including horses, bees, poultry, fur-bearing animals or wildlife; or

5. raising and harvesting of fish, oysters, clams, mussels or other molluscan shellfish.

Farm Link Program

The law requires the Department of Agriculture to establish, administer, and maintain a database 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

Veterans' Affairs Committee

Joint Favorable

Yea

14

Nay

0

(03/05/2015)