1Establishing the Agricultural Capital Investment Tax Credit
2Program for the modernization or expansion of agricultural 
3operations in this Commonwealth; establishing a sponsorship 
4program; authorizing the transferability of tax credits; and 
5imposing powers and duties on the Department of Agriculture.

6The General Assembly of the Commonwealth of Pennsylvania
7hereby enacts as follows:

8Section 1. Short title.

9This act shall be known and may be cited as the Agricultural
10Capital Investment Tax Credit Act.

11Section 2. Definitions.

12The following words and phrases when used in this act shall
13have the meanings given to them in this section unless the
14context clearly indicates otherwise:

15"Agricultural erosion and sediment control plan." A site-
16specific plan that does all of the following:

17(1) Meets the requirements of the act of June 22, 1937

1(P.L.1987, No.394), known as The Clean Streams Law, and 25
2Pa. Code Ch. 102 (relating to erosion and sediment control).

3(2) Identifies best management practices to minimize
4accelerated erosion and sediment from an agricultural
5operation.

6"Agricultural operation." A normal agricultural operation as
7defined under section 2 of the act of June 10, 1982 (P.L.454,
8No.133), referred to as the Right-to-Farm Law.

9"Agricultural operation modernization and expansion." Any of
10the following:

11(1) The construction, improvement or acquisition of
12buildings or facilities used exclusively for an agricultural
13operation.

14(2) The acquisition of equipment for animal housing,
15confinement, feeding, ventilation or animal comfort and well-
16being acquired and placed in service on an agricultural
17operation.

18(3) The construction or acquisition of equipment or
19other technology used in any of the following:

20(i) Projects that will generate energy from on-farm
21resources of the agricultural operation.

22(ii) Conserve the use of energy by the agricultural
23operation.

24"Agricultural operation modernization or expansion plan." A
25comprehensive document that summarizes the operational and
26financial objectives of a business and contains detailed plans
27and budgets showing how the objectives are to be realized
28through investment in modernization or expansion of the
29agricultural operation.

30"Business firm." An entity authorized to do business in this

1Commonwealth and subject to the taxes imposed under Article III,
2IV, VI, VII, VIII, IX or XV of the act of March 4, 1971 (P.L.6,
3No.2), known as the Tax Reform Code of 1971.

4"Conservation plan." A plan, including a schedule for
5implementation, that identifies site-specific conservation best
6management practices on an agricultural operation.

7"Department." The Department of Agriculture of the
8Commonwealth.

9"Eligible applicant." A business firm or an individual who
10is subject to taxation under Article III of the act of March 4,
111971 (P.L.6, No.2), known as the Tax Reform Code of 1971.

12"Individual." A natural person.

13"Nutrient management plan." As defined under 3 Pa.C.S. Ch. 5
14(relating to nutrient management and odor management).

15"Pass-through entity." A partnership or Pennsylvania S
16corporation as defined under section 301(n.0) and (s.2) of the
17act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
18of 1971.

19"Program." The Agricultural Capital Investment Tax Credit
20Program.

21"Project." Each component of an agricultural modernization
22or expansion plan included in an application for tax credits
23under this act.

24"Qualified tax liability." The liability for taxes imposed
25upon an eligible applicant under Article III, IV, VI, VII, VIII,
26IX or XV of the act of March 4, 1971 (P.L.6, No.2), known as the
27Tax Reform Code of 1971.

28Section 3. Agricultural Capital Investment Tax Credit Program.

29(a) Establishment.--The Agricultural Capital Investment Tax
30Credit Program is established to encourage private investment in

1the modernization of the Commonwealth's agricultural industry.

2(b) Limits.--The following limits shall apply:

3(1) Except as set forth under paragraph (5), an eligible
4applicant may be granted a maximum of $250,000 in tax credits
5under the program.

6(2) No more than $250,000 in tax credits shall be
7granted for projects on an agricultural operation under the
8program.

9(3) An eligible applicant may submit an application for
10a single project or multiple applications for multiple
11projects within the limits of this section.

12(4) There shall be no limit on the amount of tax credits
13that may be purchased or assigned from an eligible applicant.

14(5) Notwithstanding paragraph (1), there shall be no
15limit on the amount of tax credits granted to a sponsor under
16subsection (f).

17(c) Carryover.--

18(1) If an eligible applicant cannot use the entire
19amount of the tax credit for the taxable year in which the
20tax credit is first granted, the excess may be carried over
21to succeeding taxable years and used as a credit against the
22qualified tax liability of the eligible applicant for those
23taxable years. Each time that the tax credit is carried over
24to a succeeding taxable year, it is to be reduced by the
25amount that was used as a credit during the immediately
26preceding taxable year. The tax credit provided under this
27act may be carried over and applied to succeeding taxable
28years for no more than 15 taxable years following the first
29taxable year for which the eligible applicant was entitled to
30claim the credit.

1(2) A tax credit granted by the Department of Revenue
2shall be applied against the taxpayer's qualified tax
3liability for the current taxable year as of the date on
4which the credit was granted before the tax credit is applied
5against any tax liability under paragraph (1).

6(3) A tax credit granted under this section may not be
7carried back or refunded.

8(d) Sale or assignment of credit.--

9(1) An eligible applicant, upon application to and
10approval by the department, may sell or assign, in whole or
11in part, a tax credit granted to the eligible applicant under
12this act. The department, in consultation with the Department
13of Revenue, shall establish guidelines for the approval of
14applications under this subsection.

15(2) The purchaser or assignee of a portion of a tax
16credit under this subsection shall immediately claim the
17credit in the taxable year in which the purchase or
18assignment is made. The amount of the credit that a purchaser
19or assignee may use against a qualified tax liability may not
20exceed 75% of the qualified tax liability for the taxable
21year. The purchaser or assignee may not carry over, carry
22back, obtain a refund of or sell or assign the tax credit.
23The purchaser or assignee shall notify the Department of
24Revenue of the seller or assignor of the tax credit in
25compliance with procedures specified by the Department of
26Revenue.

27(3) Before an application is approved, the Department of
28Revenue must make a finding that the applicant has filed all
29required State tax reports and returns for all applicable
30taxable years and paid any balance of State tax due as

1determined at settlement, assessment or determination by the
2Department of Revenue.

3(4) Notwithstanding any other provision of law, the
4Department of Revenue shall settle, assess or determine the
5tax of an applicant under this subsection within 90 days of
6the filing of all required final returns or reports in
7accordance with section 806.1(a)(5) of the act of April 9,
81929 (P.L.343, No.176), known as The Fiscal Code.

9(e) Sponsorship.--An eligible applicant may become a sponsor
10by applying for a tax credit for a project authorized under
11section 6 if a written contract between the eligible applicant
12and the owner of an agricultural operation on which the project
13will be completed is submitted to the department, certifying
14that the owner of the agricultural operation will comply with
15all provisions of this act.

16(f) Tax credits for pass-through entities.--

17(1) If a pass-through entity has any unused tax credit
18under section 4, it may elect in writing, according to
19procedures established by the Department of Revenue, to
20transfer all or a portion of the credit to shareholders,
21members or partners in proportion to the share of the
22entity's distributive income to which the shareholder, member
23or partner is entitled.

24(2) The credit provided under paragraph (1) shall be in
25addition to any tax credit to which the shareholder, member
26or partner is otherwise entitled under The Fiscal Code,
27except that a pass-through entity and its shareholders,
28members or partners may not claim a tax credit under this
29section for the same project authorized under section 4.

30(3) A shareholder, member or partner of a pass-through

1entity to whom credit is transferred under paragraph (1)
2shall immediately claim the credit in the taxable year in
3which the transfer is made. The shareholder, member or
4partner may not carry forward, carry back, obtain a refund of
5or sell or assign the credit.

6Section 4. Tax credits.

7(a) General eligibility.--Projects shall be eligible for a
8tax credit as follows:

9(1) Only eligible project costs incurred after the
10effective date of this section shall be eligible for a tax
11credit.

12(2) An agricultural operation shall have in place a
13current conservation plan, a current agricultural erosion and
14sediment control plan if engaged in plowing and tilling and,
15if required, a current nutrient management plan and
16Concentrated Animal Feeding Operation National Pollutant
17Discharge Elimination System permit or the costs of
18development of the plans shall be included in the
19agricultural modernization or expansion plan submitted with
20the application.

21(3) A project shall meet the design and construction
22standards acceptable to the department.

23(b) Amount of tax credit.--A tax credit equal to 25% of the
24eligible costs under subsection (c) of a project authorized
25under section 6 shall be granted.

26(c) Eligible costs of a project.--

27(1) All purchases of depreciable property related to the
28agricultural operation modernization or expansion shall be
29considered eligible costs of a project to which a tax credit
30may be applied.

1(2) In addition to the eligible costs under paragraph
2(1), the following shall be considered eligible costs to
3which a tax credit may be applied:

4(i) Project design, engineering and associated
5planning.

6(ii) Project management costs, including
7contracting, document preparation and applications.

8(iii) Project construction or installation.

9(iv) Required post-construction inspections.

10(v) Interest payments on loans for project
11implementation for up to one year prior to the award of
12the tax credit.

13(3) A tax credit may not be applied to that portion of a
14project cost under this section for which public funding was
15received.

16Section 5. Project maintenance.

17(a) Time period.--The owners of an agricultural operation
18receiving a tax credit under this act shall maintain each
19component of a project receiving a tax credit for the
20depreciable life of the component.

21(b) Failure.--If the project is not maintained for the time
22period required under subsection (a), the owner of the property
23upon which the project exists shall return to the Department of
24Revenue the amount of the tax credit originally granted. Any
25amount paid to the Department of Revenue under this subsection
26shall be deposited in the General Fund.

27(c) Exception.--If the recipient of a tax credit provides
28prior written notification to the department that the recipient
29will be unable to maintain all components of an agricultural
30operation modernization or expansion due to sale of the

1property, cessation of an agricultural operation or other
2factors, the department may direct the Department of Revenue to
3prorate the amount of the tax credit that shall be returned
4based on the remaining lifespan of the component of the
5agricultural operation modernization or expansion in question.

6Section 6. Application, review and authorization by department.

7(a) Application process.--An eligible applicant shall apply
8to the department for authorization that a project is eligible
9for a tax credit under the program. An application shall be
10developed by the department and shall include all of the
11following:

12(1) An agricultural operation modernization or expansion
13plan acceptable to the department.

14(2) A description and total cost of the components of
15the agricultural operation modernization and expansion plan
16for which a tax credit is being applied.

17(3) Verification of eligibility under section 4(a).

18(b) Review, notification and authorization.--The department
19shall, within 30 days of receipt, review each application and
20notify an eligible applicant whether or not the eligible
21applicant meets the requirements and is authorized to receive a
22tax credit under this act.

23(c) Authorization of tax credit.--The department shall not
24authorize tax credits that exceed the limits under sections 3(b)
25and 9. The department shall authorize tax credits on a first-
26come-first-served basis.

27(d) Completion of project.--Upon completion of a project
28authorized under this section, an eligible applicant shall
29submit to the department written notice of project completion.
30The notice shall include all of the following:

1(1) Documentation satisfactory to the department that
2the project is complete.

3(2) Documentation of the final eligible costs included
4in the initial application.

5(3) Any other documentation as may be required by the
6department.

7(e) Notification to Department of Revenue.--Upon
8determination that a project authorized under this section is
9complete, the department shall provide notification to the
10Department of Revenue of all of the following:

11(1) That the eligible applicant has completed a project
12which meets the criteria for a tax credit under this act.

13(2) The amount of tax credit for the eligible applicant.

14(f) Inspection.--Projects authorized under this section may
15be subject to inspection by the department or an agent of the
16department.

17Section 7. Grant of tax credit.

18The Department of Revenue shall grant a tax credit authorized
19under section 6. The department shall, within 60 days of receipt
20of the notice under section 6(e), issue a notice of grant of a
21tax credit to the eligible applicant.

22Section 8. Annual cap of tax credits.

23Tax credits shall be granted to the extent that funds are
24appropriated by the General Assembly. The total amount of tax
25credits granted by the department shall not exceed the
26following:

27(1) For fiscal year 2012-2013, $50,000,000.

28(2) For fiscal years 2013-2014, 2014-2015, 2015-2016 and
292016-2017, $50,000,000 per fiscal year.

30Section 9. Report.

1The department, in consultation with the Department of
2Revenue, shall annually report to the General Assembly on the
3program as follows:

4(1) The number of tax credits granted under the program.

5(2) The types and locations of projects.

6(3) The estimated benefits of the projects.

7Section 30. Effective date.

8This act shall take effect July 1, 2013, or immediately,
9whichever is later.