Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 52 - Filing Returns, Payment of Tax, Penalty and Interest, and Tax Credits › Rule 701-52.48 - 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
				701-5218.
				(404A,422) and
				701-5247.
				(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
				404A1(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
				42225..
				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.