Chapter 09. State Income Tax Credit for Additional Commercial Fertilizer Costs
Regulation .01 Purpose.LinkCopy Citation
This chapter establishes the eligibility requirements for a person operating an agricultural operation to claim a State income tax credit for additional commercial fertilizer costs due to the agricultural operation's conversion to a phosphorus based nutrient management plan.
Regulation .02 Definitions.LinkCopy Citation
A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Agricultural operation” means a business or activity that:
(a)
Tills, crops, keeps, pastures, or produces an agricultural product, including livestock, poultry, plants, trees, sod, food, feed, or fiber by in-ground, out-of-ground, container, or other culture;
(b)
Has a gross annual income of $2,500 or more, or has eight or more animal units; and
(c)
Includes all land owned or managed for agricultural production by the taxpayer filing a tax credit claim.
(2)
“Base year” means the year before the agricultural operation converted to a phosphorus based nutrient management plan.
(3)
“Commercial fertilizer” means any substance containing a recognized plant nutrient used for its plant nutrient content, and designed for use or claimed to have value in promoting plant growth, except unmanipulated animal and vegetable manure, marl, lime, wood ashes, and gypsum.
(4)
“Department” means Maryland Department of Agriculture.
(5)
“Nutrient management plan” or “plan” means a plan prepared in accordance with Department requirements to manage the amount, placement, timing, and application of animal manure, fertilizer, biosolids, or other plant nutrients in order to:
(a)
Minimize nutrient loss or runoff; and
(b)
Maintain the productivity of soil when growing agricultural products.
Regulation .03 Eligibility.LinkCopy Citation
A.
A person operating an agricultural operation that incurs additional commercial fertilizer costs due to conversion of nutrient use to meet the requirements of a phosphorus based nutrient management plan is eligible for a State income tax credit under this chapter, if:
(1)
A nutrient management plan meeting the requirements of COMAR 15.20.08 has been submitted to the Department;
(2)
The conversion of nutrient use is for the purpose of complying with the requirements set forth in COMAR 15.20.08 for the implementation of nutrient recommendations;
(3)
Those costs take into account management by the taxpayer of all acreage in their agricultural operation;
(4)
Those costs are related to the purchase of additional quantities of commercial fertilizer, specialized blends, or formulations, and not due solely to product price increases; and
(5)
The Department has approved a Certificate of Additional Fertilizer Expense for Income Tax Deduction, indicating the amount of credit that may be claimed.
B.
The credit may be taken against the following types of taxes:
(1)
Personal income tax; or
(2)
Corporate income tax.
C.
The credit may be claimed by the following types of agricultural operations:
(1)
Sole proprietorships;
(2)
Corporations; and
(3)
Pass-through entities, including partnerships, S-corporations, and limited liability companies on behalf of their partners, shareholders, and members, respectively.
Regulation .04 Credit Allowances.LinkCopy Citation
A.
Allowable Credit. A person operating an agricultural operation who sustains additional, but necessary, commercial fertilizer costs converting to a phosphorus based nutrient management plan, may claim a State income tax credit in an amount equal to 50 percent of these additional costs.
B.
Amount Allowed Per Taxable Year.
(1)
For any taxable year, the maximum credit a person may claim is $4,500.
(2)
If the credit exceeds the person's liability for the taxable year, the unused credit may be carried forward for up to 5 years.
C.
Limited Time Frame. A person may claim the credit allowed under this chapter for up to 3 consecutive years.
D.
Credit End Date. A person may not claim credit for any additional costs otherwise allowed under this chapter expended on or after January 1, 2009.
Regulation .05 Requirements for Tax Credit Certification.LinkCopy Citation
To claim a tax credit, a person operating an agricultural operation shall file a Certificate of Additional Fertilizer Expense for Income Tax Deduction. To obtain this certificate, a person shall submit the following to the Department:
A.
A signed Departmental form requesting a Certificate of Additional Fertilizer Expense for Income Tax Deduction;
B.
The nutrient recommendation summary page of the nutrient management plan;
C.
The nutrient management plan reporting form, characterizing the agricultural operation;
D.
Information, including copies of receipts, describing commercial fertilizer expenses in the base year; and
E.
Information, including copies of receipts, describing commercial fertilizer expenses for the year the tax credit is being claimed.
Chapter annotations
Authority: Tax-General Article, §10-704.9, Annotated Code of Maryland
History: Effective date: September 2, 2002 (29:17 Md. R. 1382)