HB1148: HB1148 Income tax; donation of real property for conservation purposes; revise tax credits

26 LC 44 3491S House Bill 1148 (COMMITTEE SUBSTITUTE) By: Representatives Cannon of the 172nd, Dickey of the 134th, Corbett of the 174th, Rhodes of the 124th, Meeks of the 178th, and others A BILL TO BE ENTITLED AN ACT To amend Article 2 of Chapter 7 of Title 48 of the Official Cod e of Georgia Annotated,1 relating to income tax imposition, rate, computation, exemptions, and credits, so as to revise2 tax credits for donation of real property for conservation purposes; to revise required filings;3 to repeal provisions regarding the State Properties Commission; to revise the aggregate4 amount of tax credits allowed; to extend the date for acceptanc e of new applications; to5 repeal penalty provisions; to repeal a definition; to provide for related matters; to provide for6 an effective date; to repeal conflicting laws; and for other purposes.7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:8 SECTION 1.9 Article 2 of Chapter 7 of Title 48 of the Official Code of Geor gia Annotated, relating to10 income tax imposition, rate, computation, exemptions, and credits, is amended by revising11 Code Section 48-7-29.12, relating to tax credits for donation of real property for conservation12 purposes, as follows:13 "48-7-29.12.14 (a) As used in this Code section, the term:15 H. B. 1148 (SUB) - 1 - 26 LC 44 3491S (1) 'Conservation easement' means a nonpossessory interest in real property imposing16 limitations or affirmative obligations, the purposes of which are consistent with at least17 two conservation purposes.18 (2) 'Conservation purpose' means any of the following:19 (A) Water quality protection for wetlands, rivers, streams, or lakes;20 (B) Protection of wildlife habitat consistent with state wildlife conservation policies;21 (C) Protection of outdoor recreation consistent with state outdoor recreation policies;22 (D) Protection of prime agricultural or forestry lands; and23 (E) Protection of cultural sites, heritage corridors, or arche ological and historic24 resources.25 (3) 'Donated property' means the real property of which a qual ified donation is made26 pursuant to this Code section.27 (4) 'Eligible donor' means any person who owns an interest in a qualified donation.28 (5) 'Fair market value' means the value of the donated property as determined pursuant29 to subsections (c.1) (d) and (c.2) (e) of this Code section.30 (6) 'Qualified donation' means the fee simple conveyance to th e state; a county, a31 municipality, or a consolidated government of this state; the f ederal government; or a32 bona fide charitable nonprofit organization qualified under the Internal Revenue Code33 and, beginning on January 1, 2014, accredited by the Land Trust Accreditation34 Commission of 100 percent of all right, title, and interest in the entire parcel of donated35 real property, and the donation is accepted by such state, coun ty, municipality,36 consolidated government, federal government, or bona fide chari table nonprofit37 organization for use in a manner consistent with at least two conservation purposes. Such38 term shall also include the donation to and acceptance by the s tate; a county, a39 municipality, or a consolidated government of this state; the f ederal government; or a40 bona fide charitable nonprofit organization qualified under the Internal Revenue Code41 and, beginning on January 1, 2014, accredited by the Land Trust Accreditation42 H. B. 1148 (SUB) - 2 - 26 LC 44 3491S Commission of a conservation easement. Any real property which is otherwise required43 to be dedicated pursuant to local government regulations or ord inances or to increase44 building density levels shall not be eligible as a qualified do nation under this Code45 section. Any real property which is used for or associated with the playing of golf or is46 planned to be so used or associated shall not be eligible as a qualified donation under this47 Code section.48 (7) 'Related person' has the meaning provided by shall have the same meaning as set49 forth in Code Section 48-7-28.3.50 (8) 'Substantial valuation misstatement' means a valuation such that the claimed value51 of any property on the appraisal as submitted to the State Prop erties Commission52 Department of Natural Resources is 150 percent or more of the amount determined to be53 the correct amount of such valuation pursuant to subsections (c.1) and (c.2) of this Code54 section by the Department of Natural Resources.55 (b)(1) A taxpayer shall be allowed a state income tax credit against the tax imposed by56 Code Section 48-7-20 or 48-7-21 for each qualified donation under this Code section.57 (2) Except as otherwise provided in paragraph (3) of this subs ection and in58 subsection (d) (f) of this Code section, such credit shall be limited to an amoun t not to59 exceed the lesser of $500,000.00, 25 percent $1 million, 50 percent of the fair market60 value of the donated real property as fair market value is established for the year in which61 the donation occurred, or 25 50 percent of the difference between the fair market value62 and the amount paid to the donor if the donation is effected by a sale of property for less63 than fair market value as established for the year in which the donation occurred.64 (3) Except as otherwise provided in subsection (d) (f) of this Code section, in the case65 of a taxpayer whose net income is determined under Code Section 48-7-23, the aggregate66 total credit allowed to all partners in a partnership shall be limited to an amount not to67 exceed the lesser of $500,000.00, 25 percent $1 million, 50 percent of the fair market68 value of the donated real property as fair market value is established for the year in which69 H. B. 1148 (SUB) - 3 - 26 LC 44 3491S the donation occurred, or 25 50 percent of the difference between the fair market value70 and the amount paid to the donor if the donation is effected by a sale of property for less71 than fair market value as established for the year in which the donation occurred.72 (c) No tax credit shall be allowed under this Code section unl ess the taxpayer files with73 the taxpayer's income tax return a copy of the State Property Commission's determination74 and a copy of a certification issued by the Department of Natural Resources that the75 donated property is suitable for conservation purposes and meets the following additional76 requirements, where applicable:77 (1) Subdivision is prohibited for a donated property of less than 500 acres and limited78 to one subdivision for a donated property of 500 acres or more;79 (2) New construction on donated property of structures, roads, impoundments, ditches,80 dumping, or any other activity that would harm the protected conservation values of such81 donation is prohibited on such property;82 (3) New construction on donated property within 150 feet of an y perennial or83 intermittent stream is prohibited;84 (4) A buffer of at least 100 feet on each side of any perennia l streams on donated85 property which ensures at least 75 percent tree canopy evenly distributed after harvest is86 maintained and a buffer of at least 50 feet on each side of any intermittent streams on87 donated property which ensures at least 75 percent tree canopy evenly distributed after88 harvest is maintained;89 (5) Timber and agricultural activities undertaken on the donated property are prohibited90 unless in accordance with best management practices published b y the State Forestry91 Commission or the Soil and Water Conservation Commission, as the case may be;92 (6) New construction on donated property causing more than 1 percent of such property's93 total surface area to be covered by impervious surfaces is prohibited;94 (7) Mining on the property is prohibited; and95 H. B. 1148 (SUB) - 4 - 26 LC 44 3491S (8) Planting on the donated property of non-native invasive species listed in Category 1,96 Category 1 Alert, or Category 2 of the 'List of Non-Native Inva sive Plants in Georgia'97 developed by the Georgia Exotic Pest Council is prohibited.98 (c.1)(d) For each application for certification, the Department of Natural Resources shall99 require submission of an appraisal of the qualified donation by the taxpayer along with a100 nonrefundable $5,000.00 application fee; provided, however, tha t the nonrefundable101 application fee for property donated to the state shall be 1 percent of the total value of the102 donation, unless such donation is being made to qualify the state for a federal or state grant. 103 The appraisal required by this subsection shall be a full narrative appraisal and include:104 (1) A certification page, as established by the Uniform Standa rds of Professional105 Appraisal Practice, signed by the appraiser; and106 (2) An affidavit signed by the appraiser which includes a statement specifying:107 (A) The value of the unencumbered property, the total value of the qualified donation108 in gross, and an accompanying statement identifying the methods used to determine109 such values;110 (B) Whether a subdivision analysis was used in the appraisal;111 (C) Whether the landowner or related persons own any other pro perty, the value of112 which is increased as a result of the donation; and113 (D) That the appraiser is certified pursuant to Chapter 39A of Title 43.114 Appraisals received by the Department of Natural Resources shal l be reviewed by the115 Department of Natural Resources to determine whether the appraisal contains a substantial116 valuation misstatement. If the Department of Natural Resources determines that an117 appraisal contains a substantial valuation misstatement, the De partment of Natural118 Resources shall report the appraiser who prepared the appraisal to the Georgia Real Estate119 Commission for investigation and, if warranted, disciplinary action forwarded to the State120 Properties Commission for review. The State Properties Commiss ion shall approve the121 appraisal amount submitted or recommend a lower amount based on its review and inform122 H. B. 1148 (SUB) - 5 - 26 LC 44 3491S the Department of Natural Resources of its determination. The State Properties123 Commission shall be authorized to promulgate any rules and regu lations necessary to124 administer the provisions of this subsection. Any appraisal deemed to contain a substantial125 valuation misstatement shall be submitted to the Georgia Real E state Commission for126 further investigation and disciplinary action. Upon receipt of the State Properties127 Commission's determination, the Department of Natural Resources may proceed with the128 certification process.129 (c.2)(e) The Board of Natural Resources shall promulgate any rules and regulations130 necessary to implement and administer subsections (c) and (c.1) (d) of this Code section. 131 A final determination by the Department of Natural Resources or the State Properties132 Commission shall be subject to review and appeal under Chapter 13 of Titl e 50, the133 'Georgia Administrative Procedure Act.'134 (d)(f)(1) In no event shall the total amount of any tax credit under this Code section for135 a taxable year exceed the taxpayer's income tax liability. In no event shall the total136 amount of the tax credit allowed to a taxpayer under subsection (b) of this Code section137 exceed $250,000.00 $500,000.00 with respect to tax liability determined under Code138 Section 48-7-20 or $500,000.00 $1 million with respect to tax liability determined under139 Code Section 48-7-21. Any unused tax credit shall be allowed to be carried forward to140 apply to the taxpayer's succeeding five years' tax liability. However, the amount in141 excess of such annual dollar limits shall not be eligible for c arryover to the taxpayer's142 succeeding years' tax liability nor shall such excess amount be claimed by or reallocated143 to any other taxpayer. No such tax credit shall be allowed the taxpayer against prior144 years' tax liability.145 (2) Only one qualified donation may be made with respect to any real property that was,146 in the five years prior to donation, within the same tax parcel of record, except that a147 subsequent donation may be made by a person who is not a related person with respect148 to any prior eligible donors of any portion of such tax parcel.149 H. B. 1148 (SUB) - 6 - 26 LC 44 3491S (3)(A) Beginning on January 1, 2016, and ending on December 31, 2021, the aggregate150 amount of tax credits allowed under this Code section shall not exceed $30 million per151 calendar year. For the period beginning on June 1, 2022, and ending on December 31,152 2026, the aggregate amount of tax credits allowed under this Co de section shall not153 exceed $4 million per calendar year. For the period beginning on June 1, 2026, and154 ending on December 31, 2031, the aggregate amount of tax credits allowed under this155 Code section shall not exceed $30 million per calendar year. The Department of156 Natural Resources shall accept no new applications for the tax credits allowed under157 this Code section after December 31, 2026 2031.158 (B) Prior to any renewal of the exemption for donations of rea l property beyond the159 date authorized by subparagraph (A) of this paragraph, the Depa rtment of Natural160 Resources shall provide a report to the Governor, the President of the Senate, the161 Speaker of the House of Representatives, and the chairpersons of the House Committee162 on Ways and Means and the Senate Finance Committee on the activity of the program163 occurring during the preceding years. The report shall include, but not be limited to:164 (i) The number of applications and the total number of acres donated;165 (ii) The value of the qualified donations accepted into the program and which two of166 the five conservation purposes contained in paragraph (2) of su bsection (a) of this167 Code section were the basis for the qualification of the property;168 (iii) The aggregate amount of income tax credits granted pursu ant to this Code169 section; and170 (iv) A listing of the direct and indirect benefits to the state due to the donation of land171 for conservation purposes.172 (d.1)(g) Any tax credits under this Code section earned by a taxpayer in the taxable years173 beginning on or after Ja nuary 1, 2013, and previously claimed b ut not used by such174 taxpayer against such taxpayer's income tax may be transferred or sold in whole or in part175 by such taxpayer to another Georgia taxpayer, subject to the following conditions:176 H. B. 1148 (SUB) - 7 - 26 LC 44 3491S (1) The transferor may make only a single transfer or sale of tax credits earned in a177 taxable year; however, the transfer or sale may involve one or more transferees;178 (2) The transferor shall submit to the department a written notification of any transfer or179 sale of tax credits within 30 days after the transfer or sale o f such tax credits. The180 notification shall include such transferor's tax credit balance prior to transfer, the181 remaining balance after transfer, all tax identification number s for each transferee, the182 date of transfer, the amount transferred, and any other informa tion required by the183 department;184 (3) Failure to comply with this subsection shall result in the disallowance of the tax185 credit until the taxpayer is in full compliance;186 (4) Any unused credit may be carried forward to subsequent taxable years provided that187 the transfer or sale of this tax credit does not extend the time in which such tax credit can188 be used. The carry-forward period for tax credit that is transferred or sold shall begin on189 the date on which the tax credit was originally earned; and190 (5) A transferee shall have only such rights to claim and use the tax credit that were191 available to the transferor at the time of the transfer. To the extent that such transferor192 did not have rights to claim and use the tax credit at the time of the transfer, the193 department shall either disallow the tax credit claimed by the transferee or recapture the194 tax credit from the transferee. The transferee's recourse is against the transferor.195 (e)(1) Whenever:196 (A) Any person prepares an appraisal of the value of property and knows, or197 reasonably should have known, that the appraisal would be used in connection with a198 return or a claim for refund claiming a tax credit under this Code section; and199 (B) The claimed value of the property on such appraisal as sub mitted to the State200 Properties Commission results in a substantial valuation misstatement with respect to201 such property for purposes of claiming a tax credit under this Code section,202 H. B. 1148 (SUB) - 8 - 26 LC 44 3491S then such person shall pay a penalty in the amount determined under paragraph (2) of this203 subsection.204 (2) The amount of the penalty imposed under paragraph (1) of t his subsection on any205 person with respect to an appraisal shall be equal to the lesser of:206 (A) The greater of:207 (i) Twenty-five percent of the difference between the amount o f the tax credit208 claimed on the taxpayer's return or claim for refund and the amount of the tax credit209 to which the taxpayer is actually entitled, to the extent the difference is attributable210 to the misstatement described in paragraph (1) of this subsection; or211 (ii) Ten thousand dollars; or212 (B) One hundred twenty-five percent of the gross income receiv ed by the person213 described in paragraph (1) of this subsection for the preparation of the appraisal.214 (3) No penalty shall be imposed under paragraph (1) of this su bsection if the person215 establishes to the satisfaction of the commissioner that the va lue established in the216 appraisal was more likely than not the proper value.217 (4) Except as otherwise provided, the penalty provided by this subsection shall be in218 addition to any other penalties provided by law. The amount of any penalty under this219 subsection shall be assessed within three years after the return or claim for refund with220 respect to which the penalty is assessed was filed, and no proc eeding in court without221 assessment for the collection of such penalty shall be begun after the expiration of such222 period. Any claim for refund of an overpayment of the penalty assessed under this223 subsection shall be filed within three years from the time the penalty was paid.224 (f)(h) No credit shall be allowed under this Code section with respe ct to any amount225 deducted from taxable net income by the taxpayer as a charitable contribution.226 (g)(i) The commissioner shall promulgate any rules and regulations n ecessary to227 implement and administer this Code section."228 H. B. 1148 (SUB) - 9 - 26 LC 44 3491S SECTION 2.229 This Act shall become effective upon its approval by the Governor or upon its becoming law230 without such approval.231 SECTION 3.232 All laws and parts of laws in conflict with this Act are repealed.233 H. B. 1148 (SUB) - 10 -