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19 RS BR 387

1

AN ACT relating to the renewable chemicals production tax credit program.

2

Be it enacted by the General Assembly of the Commonwealth of Kentucky:

3

SECTION 1.

4

READ AS FOLLOWS:

5(1)

A NEW SECTION OF KRS CHAPTER 141 IS CREATED TO

As used in this section:

6(a)"Biomass feedstock" has the same meaning as in Section 4 of this Act;

7(b)

"Eligible business" has the same meaning as in Section 4 of this Act;

8(c)"Pre-eligibility production threshold" has the same meaning as in Section 4

9of this Act;

10

(d)

11

"Renewable chemical" has the same meaning as in Section 4 of this Act;
and

12

(e)

"Successful tax credit applicant" includes, with respect to each calendar

13

year, an eligible business that:

14

1.

15

Was issued a tax credit certificate by the Department of Agriculture
for the production of renewable chemicals for the taxable year; or

162.

Successfully applied for a tax credit for the production of renewable17

chemicals during that calendar year, but was not issued a tax credit

18

and was instead placed on a wait list as provided in subsection (12) of

19

Section 4 of this Act.

20

(2)

(a)

An eligible business that has entered into an agreement under subsection21(8) of Section 4 of this Act, and received a tax credit certificate under22

subsection (10) of Section 4 of this Act, may claim a tax credit equal to the23amount presented on the tax credit certificate.

24

(b)

The renewable chemical production tax credit shall not be available for any

25

renewable chemical produced before January 1, 2020, or after December

26

31, 2023.

27

(3)

(a)

The renewable chemical production tax credit shall be allowed against taxes
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imposed by KRS 141.020 or 141.040 and 141.0401, with the ordering of the2credits as provided in Section 2 of this Act.

3(b)

The tax credit shall be claimed for the taxable year within which the eligible

4business was issued the tax credit certificate by the Department of

5Agriculture.

6(c)

If the eligible business is a pass-through entity, the eligible business may

7

apply the credit against the limited liability entity tax imposed by KRS

8141.0401, and shall pass the credit through to its members, partners, or

9shareholders in the same proportion as the distributive share of income or

10loss is passed through.

11

(d)

Any tax credit in excess of the tax liability for the taxable year is refundable.

12

(e)

Any tax credit certificate issued according to this section shall not be

13transferred to any other person.

14

(f)

1.

To claim a tax credit under this section, a taxpayer shall include the15

tax credit certificate issued by the Department of Agriculture with the

16

taxpayer’s tax return.

17

2.

The tax credit certificate shall contain the taxpayer’s name, address,

18

tax identification number, the amount of the credit, the name of the19

eligible business, and any other information required by the20

department to ensure compliance of all taxing statutes.

21

3.

22
23

The Department of Agriculture and the department shall jointly
design the tax credit certificate.

(4)

(a)

By November 30, 2021, and by the same date each year thereafter, the24department, in cooperation with the Department of Agriculture, shall25

submit to the Interim Joint Committee on Appropriations and Revenue a

26

cumulative report describing the activities of the program by taxable year.

27

(b)

The report shall, at a minimum, include:
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1.

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The aggregate number of pounds, by each type, of renewable2chemicals produced in this state by all successful tax credit applicants3during the calendar year immediately preceding the calendar year for4which the successful applicants first applied for a tax credit under the5

program;

6

2.

The aggregate number of pounds, by each type, of renewable7chemicals produced in this state by all successful tax credit applicants8during each calendar year;

9

3.

10

The aggregate gross receipts from sales of all renewable chemicals
produced by all successful tax credit applicants in each calendar year;

11

4.

The aggregate number of pounds, by each type, of biomass feedstock

12

used in the production of renewable chemicals in this state by all

13

successful tax credit applicants during the calendar year immediately

14

preceding the calendar year for which the successful applicants first

15

applied for a tax credit under the program;

16

5.

The aggregate number of pounds, by each type, of biomass feedstock

17

used in the production of renewable chemicals in this state by all

18

successful tax credit applicants during each calendar year;

19

6.

The number of employees located in this state of all successful tax

20

credit applicants during the calendar year immediately preceding the21

calendar year for which the successful applicants first applied for a

22

tax credit under the program;

23

7.

The number of employees located in this state of all successful tax

24

credit applicants during each calendar year that the tax credit is25

claimed;

26

8.

27

The number and aggregate amount of tax credits issued under the
program for each calendar year;
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9.

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The number of eligible businesses placed on the wait list for each2calendar year, and the total number of eligible businesses remaining

3

on the wait list at the end of that calendar year;

410.

The dollar amount of pending tax credits placed on the wait list for5each calendar year, and the total dollar amount of pending tax credits

6

remaining on the wait list at the end of that calendar year; and7

11.

For each eligible business issued a renewable chemical production tax

8credit during each taxable year:

9a.

The name of the eligible business;

10b.

The county within which the eligible business is producing the11

renewable chemical;

12c.

The amount of the tax credit claimed by the eligible business;

13d.

The manner in which the eligible business first qualified as an

14

eligible business, whether by organizing, expanding, or locating15

in this state;

16e.

The amount of renewable chemical production tax credit

17

claimed during each taxable year, and the portion of the claim

18

issued as a refund; and

19

f.

20

The repayment of incentives by the business if the business does
not meet the requirements of the agreement.

Section 2. KRS 141.0205 is amended to read as follows:

21
22

If a taxpayer is entitled to more than one (1) of the tax credits allowed against the tax

23

imposed by KRS 141.020, 141.040, and 141.0401, the priority of application and use of24

the credits shall be determined as follows:

25

(1)

The nonrefundable business incentive credits against the tax imposed by KRS

26

141.020 shall be taken in the following order:

27

(a)

The limited liability entity tax credit permitted by KRS 141.0401;
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1(b)

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The economic development credits computed under KRS 141.347, 141.381,

2

141.384, 141.400, 141.401, 141.403, 141.407, 141.415, 154.12-207, and3

154.12-2088;

4(c)

The qualified farming operation credit permitted by KRS 141.412;

5(d)

The certified rehabilitation credit permitted by KRS 171.397(1)(a);6(e)

The health insurance credit permitted by KRS 141.062;

7(f)

The tax paid to other states credit permitted by KRS 141.070;

8(g)

The credit for hiring the unemployed permitted by KRS 141.065;

9(h)

The recycling or composting equipment credit permitted by KRS 141.390;

10

(i)

The tax credit for cash contributions in investment funds permitted by KRS

11154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS

12154.20-258;

13

(j)

The research facilities credit permitted by KRS 141.395;

14

(k)

The employer High School Equivalency Diploma program incentive credit

15

permitted under KRS 164.0062;

16

(l)

The voluntary environmental remediation credit permitted by KRS 141.418;17(m) The biodiesel and renewable diesel credit permitted by KRS 141.423;

18

(n)

The clean coal incentive credit permitted by KRS 141.428;

19

(o)

The ethanol credit permitted by KRS 141.4242;

20

(p)

The cellulosic ethanol credit permitted by KRS 141.4244;

21

(q)

The energy efficiency credits permitted by KRS 141.436;

22

(r)

The railroad maintenance and improvement credit permitted by KRS 141.385;

23

(s)

The Endow Kentucky credit permitted by KRS 141.438;

24

(t)

The New Markets Development Program credit permitted by KRS 141.434;

25

(u)

The distilled spirits credit permitted by KRS 141.389;

26

(v)

The angel investor credit permitted by KRS 141.396;

27(w) The film industry credit permitted by KRS 141.383 for applications approved
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on or after April 27, 2018; and2
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(x)
(2)

The inventory credit permitted by KRS 141.408.

After the application of the nonrefundable credits in subsection (1) of this section,4

the nonrefundable personal tax credits against the tax imposed by KRS 141.020

5shall be taken in the following order:

6(a)

The individual credits permitted by KRS 141.020(3);7(b)

The credit permitted by KRS 141.066;

8(c)

The tuition credit permitted by KRS 141.069; and9(d)The household and dependent care credit permitted by KRS 141.067.

10

(3)

After the application of the nonrefundable credits provided for in subsection (2) of

11

this section, the refundable credits against the tax imposed by KRS 141.020 shall be

12taken in the following order:

13

(a)

The individual withholding tax credit permitted by KRS 141.350;

14

(b)

The individual estimated tax payment credit permitted by KRS 141.305;

15

(c)

The certified rehabilitation credit permitted by KRS 171.3961 and

16

171.397(1)(b);[ and]

17

(d)

18

approved prior to April 27, 2018; and

19

(e)

20
21

The renewable chemical production credit permitted by Section 1 of this
Act.

(4)

22
23

The film industry tax credit permitted by KRS 141.383 for applications

The nonrefundable credit permitted by KRS 141.0401 shall be applied against the
tax imposed by KRS 141.040.

(5)

The following nonrefundable credits shall be applied against the sum of the tax

24

imposed by KRS 141.040 after subtracting the credit provided for in subsection (4)25of this section, and the tax imposed by KRS 141.0401 in the following order:

26

(a)

27

The economic development credits computed under KRS 141.347, 141.381,
141.384, 141.400, 141.401, 141.403, 141.407, 141.415, 154.12-207, andPage 6 of 20

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19 RS BR 387

154.12-2088;

2(b)

The qualified farming operation credit permitted by KRS 141.412;

3(c)

The certified rehabilitation credit permitted by KRS 171.397(1)(a);4(d)

The health insurance credit permitted by KRS 141.062;

5(e)

The unemployment credit permitted by KRS 141.065;

6(f)

The recycling or composting equipment credit permitted by KRS 141.390;

7(g)

The coal conversion credit permitted by KRS 141.041;8(h)

The enterprise zone credit permitted by KRS 154.45-090, for taxable periods

9ending prior to January 1, 2008;

10

(i)

The tax credit for cash contributions to investment funds permitted by KRS

11154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS

12154.20-258;

13

(j)

The research facilities credit permitted by KRS 141.395;

14

(k)

The employer High School Equivalency Diploma program incentive credit

15

permitted by KRS 164.0062;

16

(l)

17

(m) The biodiesel and renewable diesel credit permitted by KRS 141.423;

18

(n)

The clean coal incentive credit permitted by KRS 141.428;

19

(o)

The ethanol credit permitted by KRS 141.4242;

20

(p)

The cellulosic ethanol credit permitted by KRS 141.4244;

21

(q)

The energy efficiency credits permitted by KRS 141.436;

22

(r)

The ENERGY STAR home or ENERGY STAR manufactured home credit23

The voluntary environmental remediation credit permitted by KRS 141.418;

permitted by KRS 141.437;

24

(s)

The railroad maintenance and improvement credit permitted by KRS 141.385;

25

(t)

The railroad expansion credit permitted by KRS 141.386;

26

(u)

The Endow Kentucky credit permitted by KRS 141.438;

27

(v)

The New Markets Development Program credit permitted by KRS 141.434;
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1(w) The distilled spirits credit permitted by KRS 141.389;

2

(x)

3

on or after April 27, 2018; and4
5

The film industry credit permitted by KRS 141.383 for applications approved

(y)
(6)

The inventory credit permitted by KRS 141.408.

After the application of the nonrefundable credits in subsection (5) of this section,6

the refundable credits shall be taken in the following order:

7(a)

The corporation estimated tax payment credit permitted by KRS 141.044;

8(b)

The certified rehabilitation credit permitted by KRS 171.3961 and

9

171.397(1)(b);[ and]

10

(c)

11

approved prior to April 27, 2018; and

12

(d)

13

The renewable chemical production credit permitted by Section 1 of thisAct.

Section 3. KRS 131.190 is amended to read as follows:

14
15

The film industry tax credit permitted by KRS 141.383 for applications(1)

No present or former commissioner or employee of the department, present or16

former member of a county board of assessment appeals, present or former property

17

valuation administrator or employee, present or former secretary or employee of the18

Finance and Administration Cabinet, former secretary or employee of the Revenue

19

Cabinet, or any other person, shall intentionally and without authorization inspect or

20

divulge any information acquired by him of the affairs of any person, or information

21

regarding the tax schedules, returns, or reports required to be filed with the22

department or other proper officer, or any information produced by a hearing or23

investigation, insofar as the information may have to do with the affairs of the24

person's business.

25

(2)

26

The prohibition established by subsection (1) of this section shall not extend to:(a)27

Information required in prosecutions for making false reports or returns ofproperty for taxation, or any other infraction of the tax laws;
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(b)

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19 RS BR 387

Any matter properly entered upon any assessment record, or in any way madea matter of public record;

3

(c)

4

Furnishing any taxpayer or his properly authorized agent with information
respecting his own return;5(d)Testimony provided by the commissioner or any employee of the department

6

in any court, or the introduction as evidence of returns or reports filed with the7department, in an action for violation of state or federal tax laws or in any

8action challenging state or federal tax laws;

9(e)Providing an owner of unmined coal, oil or gas reserves, and other mineral or

10energy resources assessed under KRS 132.820, or owners of surface land

11

under which the unmined minerals lie, factual information about the owner's

12property derived from third-party returns filed for that owner's property, under13

the provisions of KRS 132.820, that is used to determine the owner's

14

assessment. This information shall be provided to the owner on a confidential

15

basis, and the owner shall be subject to the penalties provided in KRS

16

131.990(2). The third-party filer shall be given prior notice of any disclosure

17

of information to the owner that was provided by the third-party filer;

18

(f)

Providing to a third-party purchaser pursuant to an order entered in a

19

foreclosure action filed in a court of competent jurisdiction, factual

20

information related to the owner or lessee of coal, oil, gas reserves, or any

21other mineral resources assessed under KRS 132.820. The department may

22

promulgate an administrative regulation establishing a fee schedule for the23

provision of the information described in this paragraph. Any fee imposed

24

shall not exceed the greater of the actual cost of providing the information or25

ten dollars ($10);

26

(g)

27

Providing information to a licensing agency, the Transportation Cabinet, or
the Kentucky Supreme Court under KRS 131.1817;
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(h)

2

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Statistics of gasoline and special fuels gallonage reported to the department
under KRS 138.210 to 138.448;

3(i)Providing any utility gross receipts license tax return information that is4

necessary to administer the provisions of KRS 160.613 to 160.617 to

5

applicable school districts on a confidential basis; or

6

(j)

7

Providing information to the Legislative Research Commission under:1.

8

KRS 139.519 for purposes of the sales and use tax refund on building
materials used for disaster recovery;

92.

KRS 141.436 for purposes of the energy efficiency products credits;

103.

KRS 141.437 for purposes of the ENERGY STAR home and the11

ENERGY STAR manufactured home credits;

12

4.

KRS 148.544 for purposes of the film industry incentives;

13

5.

KRS 154.26-095 for purposes of the Kentucky industrial revitalization

14

tax credits and the job assessment fees;

15

6.

KRS 141.068 for purposes of the Kentucky investment fund;16

7.

KRS 141.396 for purposes of the angel investor tax credit;

17

8.

KRS 141.389 for purposes of the distilled spirits credit;[ and]18

9.

KRS 141.408 for purposes of the inventory credit; and

19

10.

Section 1 of this Act for purposes of the renewable chemical

20
21

production credit.
(3)

The commissioner shall make available any information for official use only and on

22

a confidential basis to the proper officer, agency, board or commission of this state,

23

any Kentucky county, any Kentucky city, any other state, or the federal government,

24

under reciprocal agreements whereby the department shall receive similar or useful25

information in return.

26

(4)

27

Access to and inspection of information received from the Internal Revenue Service
is for department use only, and is restricted to tax administration purposes.
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Information received from the Internal Revenue Service shall not be made available

2

to any other agency of state government, or any county, city, or other state, and shall3

not be inspected intentionally and without authorization by any present secretary or

4

employee of the Finance and Administration Cabinet, commissioner or employee of5

the department, or any other person.

6(5)

Statistics of crude oil as reported to the Department of Revenue under the crude oil

7

excise tax requirements of KRS Chapter 137 and statistics of natural gas production

8

as reported to the Department of Revenue under the natural resources severance tax

9requirements of KRS Chapter 143A may be made public by the department by

10

release to the Energy and Environment Cabinet, Department for Natural Resources.

11

(6)

Notwithstanding any provision of law to the contrary, beginning with mine-map

12submissions for the 1989 tax year, the department may make public or divulge only

13

those portions of mine maps submitted by taxpayers to the department pursuant to14

KRS Chapter 132 for ad valorem tax purposes that depict the boundaries of mined-15

out parcel areas. These electronic maps shall not be relied upon to determine actual

16boundaries of mined-out parcel areas. Property boundaries contained in mine maps

17

required under KRS Chapters 350 and 352 shall not be construed to constitute land

18

surveying or boundary surveys as defined by KRS 322.010 and any administrative

19

regulations promulgated thereto.

20

SECTION 4.

21

READ AS FOLLOWS:

22

As used in this section:

23

(1)

(a)

A NEW SECTION OF KRS CHAPTER 246 IS CREATED TO"Biobased content percentage" means, with respect to any renewable24

chemical, the amount, expressed as a percentage, of renewable organic

25

material present as determined by testing representative samples using the26

American Society for Testing and Materials standard D6866;

27

(b)

"Biomass feedstock" means sugar, polysaccharide, crude glycerin, lignin,
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19 RS BR 387

1fat, grease, or oil derived from a plant or animal, or a protein capable of2

being converted to a building block chemical by means of a biological or

3chemical conversion process;4(c)"Building block chemical" means a molecule converted from biomass

5

feedstock as a first product or a secondarily derived product that can be

6further refined into a higher-value chemical, material, or consumer product7

and includes:

8

1.

3-hydroxybutyrolactone;

92.

3-hydroxypropionate;

103.

5-hydroxymethylfurfural;

11

4.

Acetoin;12

5.

Aconitic acid;13

6.

Arabitol;

14

7.

Arabonic acid;15

8.

Aspartic acid;16

9.

Butyric acid;

17

10.

Citric acid;

18

11.

Erythonic acid;

19

12.

Ferulic acid;

20

13.

Fumaric acid;

21

14.

Furfural;

22

15.

Gallic acid;

23

16.

Glucaric acid;

24

17.

Gluconic acid;

25

18.

Glutamic acid;

26

19.

Glyceric acid;

27

20.

Glycolic acid;
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21.

High-purity glycerol;2

22.

Itaconic acid;323.

Lactic acid;424.

Lauric acid;5

25.

Levulinic acid;6

26.

Lysine;7

27.

Malic acid;8

28.

Malonic acid;929.

Methanoic or formic acid;

10

30.

Nonfuel butanol;

11

31.

Nonfuel ethanol;

12

32.

Oleic acid;

13

33.

Propionic acid;

14

34.

Serine;15

35.

Sorbitol;

16

36.

Succinic acid;

17

37.

Threonine;

18

38.

Xylaric acid;

19

39.

Xylitol;

2040.

Xylonic acid; or

21

41.

Any additional molecules included in an administrative regulation

22

promulgated by the department;

23

(d)

24

"Crude glycerin" means glycerin with a purity level below ninety-five
percent (95%);

25

(e)

26

"Eligible business" means a business meeting the requirements ofsubsection (3) of this section;

27

(f)

"Food additive" means a building block chemical that is not primarily
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consumed as food but which, when combined with other components,2

improves the taste, appearance, odor, texture, or nutritional content of food.

3

The department, in its discretion, shall determine whether a building block4

chemical is primarily consumed as food;

5

(g)

6

"High-purity glycerol" means glycerol with a purity level of ninety-five
percent (95%) or higher;

7(h)"Pre-eligibility production threshold" means, with respect to each eligible

8business, the number of pounds of renewable chemicals produced, if any, by

9an eligible business during the calendar year immediately preceding the10

calendar year in which the business first qualified as an eligible business,11

as certified under subsection (5) of this section;

12

(i)

13

"Program" means the renewable chemical production tax credit programadministered under this section;

14

(j)

15

1.

"Renewable chemical" means:a.

A building block chemical with a biobased content percentage of

16

at least fifty percent (50%) and includes:

17i.

Cellulosic ethanol;

18

ii.

Starch ethanol; or

19

iii.

Other ethanol derived from biomass feedstock, fatty acid20

methyl esters, or butanol;

21

but only to the extent that the molecules are produced and sold22

for uses other than food, feed, or fuel;23b.

A building block chemical that can be a food additive as long as

24

the building block chemical is not primarily consumed as food25

and is also sold for uses other than food; or

26

c.

27

Supplements, vitamins, nutraceuticals, and pharmaceuticals, but
only to the extent that the molecules do not provide caloric value
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so as to be considered sustenance as food or feed;but

2

2.

3

"Renewable chemical" does not include a chemical sold or used forthe production of food, feed, or fuel; and

4

(k)

5
6

19 RS BR 387"Sugar" means the organic compound glucose, fructose, xylose, arabinose,
lactose, sucrose, starch, cellulose, or hemicellulose.

(2)

(a)

The department shall create and administer the renewable chemical

7

production tax credit program by promulgating administrative regulations

8

under KRS Chapter 13A.

9(b)

The department may consult with the chemical engineering departments of

10

the University of Louisville or the University of Kentucky to create and11administer the renewable chemical production tax credit program.

12

(3)

To be eligible to receive the renewable chemical production tax credit under

13

Section 1 of this Act, a business shall:

14

(a)

Be physically located in this state;

15

(b)

Operate for profit and under single management;

16

(c)

Not provide professional services, health care services, or medical

17

treatments or engage in retail operations;

18

(d)

Organize, expand, or locate in this state on or after April 1, 2019;

19

(e)

1.

Create new jobs and retain those jobs for at least four (4) years; or2.

Invest a substantial amount of new capital in the Commonwealth and20
21

maintain that capital for at least four (4) years;

22

(f)

Not relocate operations from another area of the state or reduce operations

23

in another area of the state while seeking this incentive. To determine

24

whether a project meets the requirement under this paragraph, the25

department shall:

26

1.

27

Consider a project that does not create new jobs or invest a substantial
amount of new capital a relocation or reduction in operations; andPage 15 of 20

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2.

19 RS BR 387

Require sufficient data from the business related to jobs created and2

the amount of substantial capital investment before the business3

applies for this incentive and for four (4) years following the approval

4of this incentive to ensure that new jobs or substantial capital5

investment have occurred and remain productive in this state; and

6

(g)

7

Certify:
1.

8That the business:a.

Has not applied for and will not receive economic development

9

incentives under KRS Chapter 154 for the jobs created, capital

10

investment made, or taxable year for which this tax credit is11

claimed; and

12

b.

13

program or other programs administered by the department; and

14

2.

15
16

To the department the date that the business first qualified as aneligible business.

(4)

17
18

Is in compliance with all agreements entered into under thisThe business shall not receive a tax credit for renewable chemicals produced
before the date the business first qualified as an eligible business.

(5)

Upon certification that the business is qualified as an eligible business, the19eligible business may apply to the department for participation in the program

20

and approval for the tax credit permitted by Section 1 of this Act, if the eligible

21

business produces a renewable chemical in this state from biomass feedstock22

during a calendar year.

23

(6)

(a)

An eligible business shall apply for participation in the program. The

24

application shall be made to the department, in the manner prescribed by25

the department. The application shall be made during the calendar year

26

immediately following the calendar year in which the renewable chemicals

27

are produced.
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1(b)

19 RS BR 387

The application shall include the following information:

2

1.

A description of the renewable chemicals produced in this state;

3

2.

The amount of renewable chemicals produced in the immediately

4

preceding calendar year;

5

3.

The amount of renewable chemicals produced in this state from6biomass feedstock by the eligible business during the calendar year,

7

measured in pounds; and

8

4.

9

and verify eligibility under the program.

10

(c)

11
12

Any other information required by the depatment in order to establish

The department may accept applications on a continuous basis or may
establish, by administrative regulation, an annual application deadline.

(7)

13

The department may impose:(a)

A nonrefundable compliance cost fee of five hundred dollars ($500),

14collected by the department at the time a business applies for participation15

in the program under subsection (5) of this section; and

16

(b)

A nonrefundable fee equal to one-half of one percent (0.5%) of the total tax

17

credit approved by the department, collected by the department prior to the18

issuance of the tax certificate under subsection (10) of this section.

19

(8)

(a)

Before being approved for the tax credit permitted by Section 1 of this Act,

20

an eligible business shall enter into an agreement with the department for21

the successful completion of all requirements of the program.

22

(b)

As part of the agreement, the eligible business shall agree to collect and23

provide all information required by the department, allowing the24

department and the Department of Revenue to fulfill each of the reporting25

obligations under this section and Section 1 of this Act.

26

(9)

27

(a)

An eligible business shall fulfill all the requirements of the program and theagreement before receiving a tax credit or entering into a subsequent
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agreement under this section.

2(b)

The department may decline to enter into a subsequent agreement under3

this section or issue a tax credit certificate if an agreement is not

4

successfully fulfilled.

5(10) (a)Upon establishing that all requirements of the program and the agreement

6

have been fulfilled, the department shall issue a tax credit certificate to the7

successful tax credit applicant stating the amount of renewable chemical

8

production tax credit that may claimed.

9(b)

The department shall work with the Department of Revenue to provide all

10

information necessary to ensure compliance with KRS Chapter 141 by the11

successful tax credit applicant.

12(11) (a)The maximum amount of tax credits issued under this section shall not

13

exceed ten million dollars ($10,000,000) for each calendar year, beginning

14

on January 1, 2020, and ending on December 31, 2023.

15

(b)

16

The department shall issue tax credit certificates under the program on afirst-come, first-served basis.

17

(c)

The maximum amount of tax credit that may be issued under this section to18

an eligible business for the production of renewable chemicals in a19calendar year shall not exceed:20

1.

In the case of an eligible business that has been in operation in the21

state for five (5) years or less at the time of application, one million

22

dollars ($1,000,000); or

23

2.

In the case of an eligible business that has been in operation in the24state for more than five (5) years at the time of application, five25

hundred thousand dollars ($500,000).

26

(d)

27

The tax credit shall be an amount equal to the product of five cents ($0.05)
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1

this state from biomass feedstock by the eligible business during the2calendar year in excess of the eligible business’s pre-eligibility production

3

threshold.

4

(e)

5

An eligible business shall:
1.

Only receive a tax credit for renewable chemicals produced in a6calendar year to the extent the production exceeds the eligible

7

business’s pre-eligibility production threshold;

82.

Not receive a tax credit for the production of a secondarily derived

9

building block chemical if that chemical is also the subject of a credit

10

at the time of production as a first product; and

11

3.

12
13

Not receive a tax credit for more than two (2) calendar years of
production under the program.

(12) (a)The department shall maintain a list of successful applicants under the

14

program, so that if the maximum aggregate amount of tax credits is reached15

in a given calendar year, eligible businesses that successfully applied but for

16

which tax credits were not issued shall be placed on a wait list in the order17

the eligible businesses applied and shall be given priority for receiving tax

18

credits in succeeding fiscal years.

19

(b)

20

Placement on a wait list shall not constitute a promise binding theCommonwealth.

21

(c)

The availability of a tax credit and issuance of a tax credit certificate in a22

future calendar year is contingent upon the availability of tax credits in that23particular calendar year.

24(13) (a)The failure by an eligible business to fulfill any requirement of the program

25

or any of the terms and obligations of an agreement entered into under this26

section shall:

27

1.

Result in the rescission of the tax credit permitted by Section 1 of thisPage 19 of 20

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Act by the department; and

2

2.

3

Subject the eligible business to the repayment of any tax credits
claimed.

4

(b)

5

The repayment of any tax credits claimed under this subsection shall be:
1.

6Considered a tax payment due and payable to the Kentucky State
Treasurer; and72.

Collected by the Department of Revenue in the same manner as

8

failure to pay the tax shown due or required to be shown due with the9filing of a return.

10

(c)

The department shall report to the Department of Revenue within thirty (30)11days of the rescission of the tax credit all information necessary by the12

Department of Revenue to ensure compliance with KRS Chapter 141.

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