2012 -- S 2172

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LC00329

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO TAXATION -- ESTATE AND TRANSFER TAXES -- LIABILITY AND

COMPUTATION

     Introduced By: Senators Felag, and Walaska

     Date Introduced: January 18, 2012

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 44-22 of the General Laws entitled "Estate and Transfer Taxes -

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Liability and Computation" is hereby amended by adding thereto the following section:

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     44-22-1.2. Estate tax and transfer tax on farms. – (a) The general assembly finds that

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escalating land values significantly impair the ability to maintain agricultural uses in the state and

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that imposition of taxes by the state upon the transfer of the estates, especially those that include

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large parcels of farmland of decedent farmers, create substantial pressures to convert farmland to

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non-farm uses and declares that it is the purpose of this section to mitigate such tax burdens on

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farmlands and other real and tangible property associated with agricultural operations in order to

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provide for continuing agricultural use of lands in Rhode Island.

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     (b) The total value of farmland and other real and tangible property, including crops and

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livestock, associated with the agricultural operations on farmlands subject to the tax imposed by

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this chapter, shall be limited to two million five hundred thousand dollars ($2,500,000) for

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decedents after July 1, 2012; provided that:

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     (1) For the five (5) tax years preceding the death, the farmlands and agricultural

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operations, subject to the limitation herein provided, produced an aggregate annual gross sales

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from commercial farming of fifty thousand dollars ($50,000) per year or greater, and the operator

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of the commercial farm held a Level II certificate of exemption for each of those years;

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     (2) The decedent has or those to whom the estate is transferred have entered into a

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binding agreement with the state that the farmlands will remain in commercial farming, with a

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Level II certificate of exemption, for a period of ten (10) years after his or her death, subject to

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the following requirements:

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     (i) Not more than twenty percent (20%) of the total acreage can be converted during said

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ten (10) year period to a use that is not farm, forest or open space; and

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     (ii) There shall be a lien on the farmland in the amount of the tax that would have been

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due on the value of the farmlands and tangible property associated with the agricultural

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operations above two million five hundred thousand dollars ($2,500,000), which lien shall be

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extinguished if commercial farming continues on the farmlands at the level specified by this

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section for ten (10) years.

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     (c) When used in this section:

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     (1) "Agricultural operations" shall have the meaning set forth in section 2-23-4.

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     (2) "Commercial farming" shall have the meaning set forth in section 44-18-30.

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     (3) "Farmland" shall have the meaning set forth in section 44-27-2.

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     (d) The tax administrator, in consultation with the chief of the division of agriculture in

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the department of environmental management, shall promulgate by March 1, 2012, such rules,

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regulations and procedures as may be necessary to effectuate the purposes and provisions of this

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section.

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     SECTION 2. This act shall take effect upon passage.

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LC00329

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION -- ESTATE AND TRANSFER TAXES -- LIABILITY AND

COMPUTATION

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     This act would limit the valuation of farmland and other real and tangible property

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associated with the agricultural operations on such farmlands to $2,500,000 for purposes of

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imposition of taxes by the state upon transfer of the estates of decedent farmers after July 1, 2012.

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     This act would take effect upon passage.

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LC00329

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