KRS § 141.428 — KY Code / Title XI / Chapter 141 / Section 141.428
141.428 Kentucky Clean Coal Incentive Act -- Definitions -- Tax credit -- Administrative regulations
Status: in_force

141.428 Kentucky Clean Coal Incentive Act -- Definitions -- Tax credit --

Administrative regulations.

(1) As used in this section:

(a) "Clean coal facility" means an electric generation facility beginning

commercial operation on or after January 1, 2005, at a cost greater than one

hundred fifty million dollars ($150,000,000) that is located in the

Commonwealth of Kentucky and is certified by the Energy and Environment

Cabinet as reducing emissions of pollutants released during generation of

electricity through the use of clean coal equipment and technologies;

(b) "Clean coal equipment" means equipment purchased and installed for

commercial use in a clean coal facility to aid in reducing the level of

pollutants released during the generation of electricity from eligible coal;

(c) "Clean coal technologies" means technologies incorporated for use within a

clean coal facility to lower emissions of pollutants released during the

generation of electricity from eligible coal;

(d) "Eligible coal" means coal that is subject to the tax imposed under KRS

143.020;

(e) "Ton" means a unit of weight equivalent to two thousand (2,000) pounds; and

(f) "Taxpayer" means taxpayer as defined in KRS 131.010(4).

(2) Effective for tax years ending on or after December 31, 2006, a nonrefundable,

nontransferable credit shall be allowed for:

(a) Any electric power company subject to tax under KRS 136.120 and certified

as a clean coal facility or any taxpayer that owns or operates a clean coal

facility and purchases eligible coal that is used by the taxpayer in a certified

clean coal facility; or

(b) A parent company of an entity identified in paragraph (a) of this subsection if

the subsidiary is wholly owned.

(3) (a) The credit may be taken against the taxes imposed by:

1. KRS 136.120; or

2. KRS 141.020 or 141.040, and 141.0401.

(b) The credit shall not be carried forward and must be used on the tax return filed

for the period during which the eligible coal was purchased. The Energy and

Environment Cabinet must approve and certify use of the clean coal

equipment and technologies within a clean coal facility before any taxpayer

may claim the credit.

(c) The credit allowed under paragraph (a) of this subsection shall be applied both

to the income tax imposed under KRS 141.020 or 141.040 and to the limited

liability entity tax imposed under KRS 141.0401, with the ordering of credits

as provided in KRS 141.0205.

(4) The amount of the allowable credit shall be two dollars ($2) per ton of eligible coal

purchased that is used to generate electric power at a certified clean coal facility.

(5) Each taxpayer eligible for the credit provided under subsection (2) of this section

shall file a clean coal incentive credit claim on forms prescribed by the department.

At the time of filing for the credit, the taxpayer shall submit an electronic report

verifying the tons of coal subject to the tax imposed by KRS 143.020 purchased for

each year in which the credit is claimed. The department shall determine the amount

of the approved credit and issue a credit certificate to the taxpayer.

(6) Corporations and pass-through entities subject to the tax imposed under KRS

141.040 or 141.0401 shall be eligible to apply, subject to the conditions imposed

under this section, the approved credit against its liability for the taxes, in

consecutive order as follows:

(a) The credit shall first be applied against both the tax imposed by KRS

141.0401 and the tax imposed by KRS 141.020 or 141.040, with the ordering

of credits as provided in KRS 141.0205;

(b) The credit shall then be applied to the tax imposed by KRS 136.120.

The credit shall meet the entirety of the taxpayer's liability under the first tax listed

in consecutive order before applying any remaining credit to the next tax listed. The

taxpayer's total liability under each preceding tax must be fully met before the

remaining credit can be applied to the subsequent tax listed in consecutive order.

(7) If the taxpayer is a pass-through entity not subject to tax under KRS 141.040, the

amount of approved credit shall be applied against the tax imposed by KRS

141.0401 at the entity level, and shall also be distributed to each partner, member,

or shareholder based on the partner's, member's, or shareholder's distributive share

of the income of the pass-through entity. The credit shall be claimed in the same

manner as specified in subsection (6) of this section. Each pass-through entity shall

notify the department electronically of all partners, members, or shareholders who

may claim any amount of the approved credit. Failure to provide information to the

department in a manner prescribed by regulation may constitute the forfeiture of

available credits to all partners, members, or shareholders associated with the pass-

through entity.

(8) The taxpayer shall maintain all records associated with the credit for a period of five

(5) years. Acceptable verification of eligible coal purchased shall include invoices

that indicate the tons of eligible coal purchased from a Kentucky supplier of coal

and proof of remittance for that purchase.

(9) The department shall develop the forms required under this section, specifying the

procedure for claiming the credit, and applying the credit against the taxpayer's

liability in the order provided under subsections (6) and (7) of this section.

(10) The Office of Energy Policy within the Energy and Environment Cabinet and the

department shall promulgate administrative regulations necessary to administer this

section.

(11) This section shall be known as the Kentucky Clean Coal Incentive Act.