Iowa Administrative Code › Agency 701 - Revenue Department › Title VI - Corporation Income Tax › Chapter 501 - Filing Returns, Payment of Tax, Penalty and Interest, and Tax Credits › Rule 701-501.48 - Historic Preservation and Cultural and Entertainment District Tax Credit for Projects Registered on or After August 15, 2016

Current through Register Vol. 47, No. 3, July 24, 2024
The economic development authority is authorized by the
				  general assembly to award tax credits for a percentage of the qualified
				  rehabilitation expenditures on a qualified rehabilitation project as described
				  in the historic preservation and cultural and entertainment district tax credit
				  program, Iowa Code chapter 404A. The program is administered by the economic
				  development authority with the assistance of the department of cultural affairs
				  and the department of revenue. The general assembly has mandated that the
				  economic development authority, the department of cultural affairs and the
				  department of revenue adopt rules as necessary to administer Iowa Code chapter
				  404A. In general, the department of revenue is responsible for administering
				  tax credit transfers and processing and auditing tax returns that include tax
				  credits claimed on returns. For the economic development authority's rules on
				  the credit program, see 261-Chapter 49. For the department of cultural affairs'
				  rules on the credit program, see 223-Chapter 48.
(1)
Program transition.
2016
				Iowa Acts, House File 2443, made several changes to the credit program,
				including transferring primary responsibility for the program's administration
				from the department of cultural affairs to the economic development authority.
				Projects registered prior to August 15, 2016, remain under the purview of the
				department of cultural affairs, with assistance from the department of revenue.
				For department of revenue rules related to projects registered prior to August
				15, 2016, see rules 701-52.18 (404A,422) and
				701-52.47 (404A,422).
(2)
Application, registration, and
				agreement for the historic preservation and cultural and entertainment district
				tax credit.
For rules on the application, registration, and agreement
				process, see economic development authority rules, 261-Chapter 49.
(3)
Computation of the amount of the
				historic preservation and cultural and entertainment district tax
				credit.
The amount of the historic preservation and cultural and
				entertainment district tax credit is a maximum of 25 percent of the qualified
				rehabilitation expenditures verified by the economic development authority
				following project completion, up to the amount specified in the agreement
				between the taxpayer and the economic development authority. For more
				information on the credit computation, see economic development authority
				rules, 261-Chapter 49. The amount remains subject to audit by the department of
				revenue when the credit is claimed on the taxpayer's tax return.
(4)
Qualified rehabilitation
				expenditures.
"Qualified rehabilitation expenditures" means the same
				as defined in Iowa Code section
				404A.1(7)  and
				rule 261-49.5 (404A) of economic
				development authority rules. In the event of an audit, the department of
				revenue evaluates whether expenditures comply with the agreement between the
				economic development authority and the eligible taxpayer, as well as with
				applicable statutes and rules, including Internal Revenue Code Section 47 and
				its related regulations.
(5)
Completion of the qualified rehabilitation project and claiming the tax
				credit.
After the economic development authority verifies the
				taxpayer's eligibility for the tax credit, the economic development authority
				shall issue a tax credit certificate. For more information on credit
				certificate issuance, see economic development authority rules, 261-Chapter 49.
a.
Claiming the credit.
For
				the taxpayer to claim the credit, the certificate must be included with the
				taxpayer's corporation income tax return for the tax year in which the
				rehabilitation project is completed or the corporation income tax return for
				any year within the five years following the year of project completion.
				Taxpayers that elect to delay claiming the credit to a later year's return as
				described in this paragraph are subject to the carryforward limitations
				described in paragraph 52.48(5)
"d"
below. The credit may be
				claimed on an amended return so long as the amended return is filed within the
				statute of limitations applicable to the tax year for which the amended tax
				return is being filed.
b.
Information required.
The tax credit certificate shall include
				the taxpayer's name, the taxpayer's address, the taxpayer's tax identification
				number, the address or location of the rehabilitation project, the date the
				project was completed, the amount of the historic preservation and cultural and
				entertainment district tax credit, and, if applicable, an indication of whether
				the credit is nonrefundable (see paragraph 52.48(5)
"c"
below).
				In addition, the tax credit certificate shall include a place for the name and
				tax identification number of a transferee and the amount of the tax credit
				being transferred, as provided in subrule 52.48(6). In addition, if the
				taxpayer is a partnership, limited liability company, estate or trust, and the
				tax credit is allocated to the owners or beneficiaries of the entity, a list of
				the owners or beneficiaries and the amount of credit allocated to each owner or
				beneficiary shall be provided with the certificate.
c.
Refundability.
A historic
				preservation and cultural and entertainment district tax credit in excess of
				the taxpayer's tax liability is fully refundable with interest computed under
				Iowa Code section 422.25. In lieu of claiming the
				refund, the taxpayer may elect to have the overpayment credited to the tax
				liability for the following tax year. To receive a refundable credit, the
				taxpayer must elect to receive the credit as refundable at the Part 3 stage of
				the application process administered by the economic development authority. See
				the economic development authority's rule
				261-49.15 (404A). Once the
				taxpayer elects to receive a nonrefundable credit, the taxpayer cannot elect to
				change the credit to a refundable credit or vice versa. If the taxpayer is a
				transferee, the taxpayer may elect to receive the credit as refundable or
				nonrefundable when the taxpayer applies to the department of revenue for
				transfer of the tax credit as described in subrule 52.48(6).
d.
Carryforward.
If the
				taxpayer elects to receive a nonrefundable historic preservation and cultural
				and entertainment district tax credit as described in paragraph
				52.48(5)
"b,"
the amount in excess of the taxpayer's tax
				liability may be carried forward for five years following the tax year in which
				the project is completed, or until it is depleted, whichever is earlier. A tax
				credit shall not be carried back to a tax year prior to the tax year in which
				the taxpayer is first eligible to claim the credit. Regardless of whether the
				taxpayer elects to claim the tax credit on a tax return for a year that is
				later than the year of project completion as described in paragraph
				52.48(5)
"a,"
the taxpayer must utilize the entire credit
				within five years following the tax year of the project completion as described
				in this paragraph; any credit that is not utilized within the five-year
				carryforward period is forfeited. The five-year carryforward limitation does
				not apply if the taxpayer elects to receive a refundable credit, the excess of
				which may be credited to future tax years as an overpayment.
e.
Allocation of historic
				preservation and cultural and entertainment district tax credits to the
				individual owners of the entity or beneficiaries of an estate or
				trust.
A partnership, limited liability company or S corporation may
				designate the amount of the tax credit to be allocated to each partner, member
				or shareholder. The credit does not have to be allocated based on the pro rata
				share of earnings of the partnership, limited liability company or S
				corporation. For an individual claiming a tax credit of an estate or trust, the
				amount claimed by the individual shall be based upon the pro rata share of the
				individual's earnings from the estate or trust.