SENATE BILL REPORT

SB 5184

BYSenators Hansen, Barr, Gaspard and Bauer

Providing for property tax deferrals for farmers.

Senate Committee on Agriculture

Senate Hearing Date(s):January 23, 1987

Senate Staff:Tom McDonald (786-7404)

AS OF JANUARY 21, 1987

BACKGROUND:

In 1981, the Legislature restricted the ability of property owners to postpone paying property taxes.  A property owner is now allowed a three year maximum grace period to pay property taxes before the county may commence foreclosure proceedings.  All delinquent taxes must be paid to prevent foreclosure action.  Also, the 1981 legislation increased the interest on taxes, and cumulative penalties were imposed. These new restrictions and penalties have been, and continue to be, a severe hardship on farmers who are facing and trying to survive the current agricultural financial crisis.

SUMMARY:

A farmer or shareholder in a family farm corporation is allowed to defer property taxes on agricultural land up to a maximum of five years.  The farmer is required to pay interest on the late taxes, but will not be penalized.  To qualify for this program, a farmer must have a debt-to- asset ratio of greater than 50 percent, reportable adjusted gross income of less than $15,000 and receive 50 percent of the farmer's income from farming.  This deferral program is similar to the deferral program now allowed for senior citizens.

Fiscal Note:      requested