Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 304 - Adjustments to Computed Tax and Tax Credits › Rule 701-304.56 - Renewable Chemical Production Tax Credit Program

Current through Register Vol. 47, No. 3, July 24, 2024
An eligible business that has received a renewable chemical
				  production tax credit certificate from the economic development authority may
				  claim a tax credit against individual income tax. The credit is equal to the
				  product of five cents multiplied by the number of pounds of renewable chemicals
				  produced in Iowa from biomass feedstock by the eligible business during a given
				  production year, subject to the limitations described in Iowa Code sections
				  15.315 through
				  15.322, 261-Chapter 81, and this
				  rule. The economic development authority's rules on eligibility for the credit
				  may be found in 261-Chapter 81.
(1)
Application and agreement for the credit.
To be eligible for
				the tax credit, the eligible business must apply to and enter into an agreement
				with the economic development authority. The economic development authority's
				rules on the application and agreement process may be found in 261-Chapter
				81.
(2)
Computation of the
				amount of credit and certificate issuance.
Upon establishing that all
				requirements of the program and the agreement have been fulfilled and verifying
				the taxpayer's eligibility for the tax credit, the economic development
				authority calculates the credit. Then the economic development authority issues
				the related tax credit certificate to the eligible business stating the amount
				of the renewable chemical production tax credit that the eligible business may
				claim. A tax credit certificate shall not be issued by the economic development
				authority prior to July 1, 2018. The economic development authority's rules on
				credit certificate issuance may be found in 261-Chapter 81.
(3)
Claiming the tax credit.
a.
Claiming the credit,
				generally.
To claim the credit, a taxpayer must include one or more
				tax credit certificates with the taxpayer's tax return for the tax year during
				which the eligible business was issued the tax credit certificate or
				certificates. If the taxpayer claiming the credit has already filed a return
				for the tax year for which the credit certificate was issued, the taxpayer may
				claim the credit on an amended return. The taxpayer must file the amended
				return within the statute of limitations applicable to such amended return. No
				tax credit may be claimed under this program by a taxpayer prior to September
				1, 2018.
b.
Claiming the
				credit of a pass-through entity.
To claim the credit of an eligible
				business that is a pass-through entity, an individual taxpayer must claim the
				credit on the tax return for the tax year during which the eligible business
				received the tax credit certificate. Such tax year may be either the tax year
				of the eligible business or of the individual.
EXAMPLE: A partnership has a fiscal year of September 2017
				  through August 2018. The partnership receives a renewable chemical production
				  tax credit certificate under this program in July 2018, which is during the
				  partnership's 2017 tax year. A partner in the partnership files individual
				  returns on a calendar year basis, which means that the credit was issued in the
				  partner's 2018 tax year. That partner may file an amended 2017 tax return to
				  claim the credit based on the partnership's tax year, or that partner may claim
				  the credit on the partner's 2018 tax return based on the partner's own tax
				  year.
c.
Information required.
The tax credit certificate shall include
				the taxpayer's name, address, tax identification number, the amount of the
				credit, the name of the eligible business, and any other information required
				by the department of revenue.
d.
Allocation to the individual owners of the entity or beneficiaries of
				an estate or trust.
An individual may claim the credit of a
				partnership, limited liability company, S corporation, cooperative organized
				under Iowa Code chapter 501 and filing as a partnership for tax purposes,
				estate, or trust electing to have income taxed directly to the individual. The
				amount claimed by the individual shall be based on the pro rata share of the
				individual's earnings from the partnership, limited liability company, S
				corporation, cooperative, estate, or trust.
e.
Refundability.
Any credit
				in excess of the tax liability is refundable. In lieu of claiming a refund, the
				taxpayer may elect to have the overpayment shown on the taxpayer's final,
				completed return credited to the tax liability for the following tax
				year.
f.
Transferability.
Tax credit certificates shall not be
				transferred to any other person.
g.
Rescission and recapture.
The tax credit certificate, unless
				rescinded by the economic development authority, shall be accepted by the
				department of revenue, subject to any conditions or restrictions placed upon
				the face of the tax credit certificate by the economic development authority
				and subject to the limitations of the program. Should the economic development
				authority reduce, terminate, or rescind any tax credits issued under the
				program, the eligible business may be subject to the repayment or recapture of
				any credits already claimed. The economic development authority's rules related
				to the program may be found in 261-Chapter 81. The repayment of tax credits or
				recapture by the department of revenue shall be accomplished in the same manner
				as provided in Iowa Code section
				15.330(2).
This rule is intended to implement Iowa Code section
				  422.10B.