Senate Bill No. 173
(By Senator Unger)
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[Introduced January 10, 2008; referred to the Committee
on Agriculture; and then to the Committee on Finance.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §8A-13-1, §8A-13-2,
§8A-13-3, §8A-13-4, §8A-13-5 and §8A-13-6, all relating to
creating the Food Security Act; providing a tax credit for a
qualified donation, including, but not limited to, a fee
interest in real property and conservation or preservation
easement, located in West Virginia, by a landowner taxpayer to
a public or private conservation agency; and addressing its
administration, applicability, limitations and renewal.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §8A-13-1, §8A-13-2,
§8A-13-3, §8A-13-4, §8A-13-5 and §8A-13-6, all to read as follows:
ARTICLE 8A. FOOD SECURITY ACT.
§8A-13-1. Short title.
This article may be known and cited as the "Food Security
Act."
§8A-13-2. Findings.
The Legislature finds:
(1) The lands of the State of West Virginia provide a variety
of important public benefits, including, but not limited to,
protection of farmland to ensure food security for the citizens of
the state, the protection of drinking water supplies, recreational
opportunities, archaeological and historical resources and scenic
and cultural values, but these privately-owned lands are being
permanently developed at an alarming rate;
(2) Private landowners should be encouraged to be stewards of
their lands for the protection of public benefits, including, but
not limited to, protection of farmland to ensure food security for
the citizens of the state, drinking water supplies, recreational
opportunities, archaeological and historical resources and scenic
and cultural values;
(3) The state should provide private landowners with
incentives to encourage the conservation of such lands to provide
a source for the securing of food within the State of West Virginia
both now and into the future.
§8A-13-3. Definitions.
The following definitions apply to this article:
"Authority" means the West Virginia Agricultural Land Protection Authority created by section seven, article twelve of
this chapter, acting as a granting agency for the purposes of the
awarding of tax credits. This section is not intended to usurp the
powers or abilities, nor intended to regulate, the county farmland
protection boards created under the Voluntary Farmland Protection
Act.
"Bargain sale" means the sale of an interest in real property
by a taxpayer at a cost below appraised market value, when a
portion of the value of the interest in real property is a
qualified donation, as these terms are defined in this section, and
which meets the requirements of Section 1011(b) of the Internal
Revenue Code of 1986, as amended.
"Interest in real property" means any right in real property
in the State of West Virginia, including improvements on the real
property, or water, including, but not limited to, a fee simple
easement, including conservation easement, provided the interest
complies with the requirements of the U.S. Internal Revenue Code
Section 170(h), life estate, restriction, covenant, condition,
partial interest, remainder or future interest, lease, license,
mineral right, riparian right or other interest or right in real
property that may be conveyed concerning the power to transfer
property.
"Public or private conservation agency" means any government
body empowered to hold an interest in real property under the laws of this state or the United States, including the West Virginia
Agricultural Land Protection Authority; a county farmland
protection board created under section two, article twelve, chapter
eight-a of this code; or a private nonprofit corporation organized
for the purposes of land conservation, which is authorized to do
business in West Virginia, and which has tax-exempt status as a
nonprofit charitable organization as described in Section 501(c)(3)
of the Internal Revenue Code of 1986, as amended, and having the
power to acquire, hold and maintain land or interests in land for
conservation purposes.
"Qualified donation" means a donation, or the donated portion
of a bargain sale, made in perpetuity of a fee interest in real
property or a less-than-fee interest in real property, including a
conservation or preservation easement, if the less-than-fee
interest qualifies as a charitable contribution deduction under
Section 170(h) of the U.S. Internal Revenue Code of 1986.
"Taxpayer" means a taxpayer subject to income tax under the
laws of the State of West Virginia.
§8A-13-4. Tax credit available.
(a) There is allowed as a credit against a taxpayer's tax
liability under the taxes imposed by articles twenty-one and
twenty-four, chapter eleven of this code, a percent, to be
determined by the authority, of the fair market value of any
qualified donation located in West Virginia, by a landowner taxpayer to a public or private conservation agency, subject to:
(1) Approval of the tax credit by the authority; and
(2) The recording of a deed for a fee interest in real
property or a perpetual conservation or preservation easement.
(b) The fair market value of certified land shall be
substantiated by a qualified appraisal, as defined in United States
Treasury Regulation Section 1.1 70A-13(c)(3), and shall be prepared
by a qualified appraiser, as defined in United States Treasury
Regulation Section 1.1 70A-13(c)(5). For any taxpayer to claim the
credit provided in subsection (a) of this section, the taxpayer
shall file with the Department of Revenue at the same time as the
taxpayer files a return for the taxable year in which the credit is
claimed. The form must contain signatory approvals of the
authority and public or private agency to which the conservation or
preservation easement was donated.
(c) In any one tax year the credit used may not exceed the
amount of personal or corporate net income tax otherwise due by the
taxpayer either directly or through transferability. Credits may
be transferred or carried over to subsequent years consistent with
rules proposed by the authority for legislative approval in
accordance with the provisions of article three, chapter
twenty-nine-a of this code promulgated and approved by the
Legislature.
§8A-13-5. Administration.
(a) The authority shall propose rules for legislative approval
in accordance with the provisions of article three, chapter
twenty-nine-a of this code that govern the awarding of the tax
credits under this article, after consultation with the commission
established in (d) below, including:
(1) A system of ranking applications for qualified donations
in order to award the tax credits including, but not limited to,
the factors in section fifteen, article twelve of this chapter and
the U.S. Internal Revenue Code Section 170(h). For the purposes of
awarding the tax credits, the authority shall consider all lands in
West Virginia;
(2) The percent of the appraised value of the qualified
donation to be used as a tax credit;
(3) The carry-over period over which the tax credits may be
used;
(4) Forms to indicate the awarding of the tax credit and use
by fiscal year; and
(5) Approval of the qualified appraisal by the authority.
(b) The Tax Commissioner shall propose rules for legislative
approval in accordance with the provisions of article three,
chapter twenty-nine-a of this code to prevent the generation of
multiple credits with respect to the same property.
(c) The authority shall monitor the use of awarded tax credits
by fiscal year.
(d)(1) A commission to study the development and
implementation of this tax credit program including, but not
limited to, the transferability of tax credits under this article,
as well as propose rules under subsection (a) of this section,
shall be appointed by the authority. The authority shall appoint
representatives from the authority, county farmland protection
boards, and members of 501(c)(3) land conservation organizations
operating in the state to the commission. The commission shall
examine all aspects of transferability, including, but not limited
to:
(A) The status and operation of tax credits in other states;
(B) Facilitation of the transfer by government entities;
(C) Value to transferring and recipient taxpayers; and
(D) Procedures, forms, monitoring and reporting of transfers.
(2) The commission shall file a report of its findings and
recommendations, including proposed legislative rules necessary to
put its recommendations into effect prior to any tax credits being
transferred.
§8A-13-6. Applicability, fiscal limitation and renewal.
(a) The tax credits provided by this article apply to
transfers of interests in real property in taxable years beginning
on or after the first day of January, two thousand nine, and
taxable years after that.
(b) The tax credits fiscal cap imposed by the Legislature during the fiscal year carry forward to future years until used by
West Virginia taxpayers. The authority shall monitor and annually
report the use of the tax credits within the state by year to the
Joint Committee on Government and Finance.
(c) Any taxpayer claiming a tax credit under this article may
not claim additional credits during any one tax year for costs
related to the same interest in certified lands.
(d) Any tax credits which arise under this article from the
qualified donation of such land by a pass-through tax entity such
as a trust, estate, partnership, corporation, limited partnership,
limited liability partnership, limited liability corporation,
Subchapter S organization or other fiduciary, may be used either by
that entity in the event it is the taxpayer on behalf of the entity
or by the member, partner, shareholder or beneficiary, as the case
may be, in proportion to their interest in the entity in the event
that income, deductions and tax liability passes through the entity
to the member, partner, shareholder or beneficiary. The tax
credits may not be claimed by both the entity and the member,
partner, shareholder or beneficiary, for the same conveyance.
(e) Any tax credits which arise under this article from the
qualified donations of such land by a married couple may be used
only if the spouses file a joint return, if both spouses are
required to file West Virginia income tax returns. If only one
spouse is required to file a West Virginia income tax return, that spouse may claim the credit allowed by this article on a separate
return.
NOTE: The purpose of this bill is to enact the Food Security
Act. It will provide a tax credit for a qualified donation or
bargain sale of a fee interest in real property or a conservation
or preservation easement located in West Virginia, by a landowner
taxpayer to a public or private conservation agency.
This article is new; therefore, strike-throughs and
underscoring have been omitted.