Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 304 - Adjustments to Computed Tax and Tax Credits › Rule 701-304.27 - Wind Energy Production Tax Credit

Current through Register Vol. 47, No. 3, July 24, 2024
Effective for tax years beginning on or after July 1, 2006,
				  an owner of a qualified wind energy production facility that has been approved
				  by the Iowa utilities board may claim a wind energy production tax credit for
				  qualified electricity sold by the owner or used for on-site consumption against
				  a taxpayer's Iowa individual income tax liability. The administrative rules for
				  the certification of eligibility for the wind energy production tax credit for
				  the Iowa utilities board may be found in rule
				  199-15.18 (476B).
(1)
Application and review process
				for the wind energy production tax credit.
An owner of a wind energy
				production facility must be approved by the Iowa utilities board in order to
				qualify for the wind energy production tax credit. The facility must be an
				electrical production facility that produces electricity from wind, that is
				located in Iowa, and that is placed in service on or after July 1, 2005, but
				before July 1, 2012. For applications filed on or after March 1, 2008, a
				facility must consist of one or more wind turbines which have a combined
				nameplate generating capacity of at least 2 megawatts and no more than 30
				megawatts. For applications filed on or after July 1, 2009, by a private
				college or university, community college, institution under the control of the
				state board of regents, public or accredited nonpublic elementary and secondary
				school, or public hospital as defined in Iowa Code section
				249J.3, the facility must have a
				combined nameplate generating capacity of no less than ¾ of a megawatt.
The maximum amount of nameplate generating capacity for all
				  qualified wind energy production facilities cannot exceed 50 megawatts. An
				  owner shall not own more than two qualified facilities. A facility that is not
				  operational within 18 months after issuance of the approval from the Iowa
				  utilities board will no longer be considered a qualified facility. However, a
				  facility that is not operational within 18 months due to the unavailability of
				  necessary equipment shall be granted an additional 12 months to become
				  operational.
An owner of the qualified facility must apply to the Iowa
				  utilities board for the wind energy production tax credit. The application for
				  the tax credit must be filed no later than 30 days after the close of the tax
				  year for which the credit is applied. The information to be included in the
				  application is set forth in 199-subrule 15.20(1).
(2)
Computation of the
				credit.
The wind energy production credit equals one cent multiplied
				by the number of kilowatt-hours of qualified electricity sold or used for
				on-site consumption by the owner during the tax year. For the first tax year in
				which the credit is applied, the kilowatt-hours of qualified electricity sold
				may exceed 12 months.
EXAMPLE: A qualified facility was placed in service on April
				  1, 2006, and the taxpayer files on a calendar-year basis. The first year for
				  which the credit can be claimed is the period ending December 31, 2007, since
				  that is the first tax year that began on or after July 1, 2006. The credit for
				  the 2007 tax year can include electricity sold between April 1, 2006, and
				  December 31, 2007.
The credit is not allowed for any kilowatt-hours of
				  electricity sold to a related person. The definition of "related person" uses
				  the same criteria set forth in Section 45(e)(4) of the Internal Revenue Code
				  relating to the federal renewable electricity production credit. Persons shall
				  be treated as related to each other if such persons are treated as a single
				  employer under Treasury Regulation §1.52 -1. In the case of a
				  corporation that is a member of an affiliated group of corporations filing a
				  federal consolidated return, such corporation shall be treated as selling
				  electricity to an unrelated person if such electricity is sold to the person by
				  another member of the affiliated group.
The utilities board will notify the department of the number
				  of kilowatt-hours of electricity sold by the qualified facility or generated
				  and used on site by the qualified facility during the tax year. The department
				  will calculate the credit and issue a tax credit certificate to the owner. The
				  tax credit certificate will include the taxpayer's name, address and federal
				  identification number, the tax type for which the credit will be claimed, the
				  amount of the credit and the tax year for which the credit may be claimed. In
				  addition, the tax credit certificate will include a place for the name and tax
				  identification number of a transferee and the amount of the tax credit
				  certificate, as provided in subrule 42.27(3). If the department refuses to
				  issue the tax credit certificate, the taxpayer shall be notified in writing and
				  the taxpayer will have 60 days from the date of denial to file a protest in
				  accordance with rule 701-7.8 (17A). The department
				  will not issue a tax credit certificate if the facility is not operational
				  within 18 months after approval was given by the utilities board, unless a
				  12-month extension is granted by the utilities board as provided in subrule
				  42.27(1).
If the taxpayer is a partnership, limited liability company,
				  S corporation, or estate or trust requesting a credit for individual or
				  corporation income tax, the tax credit certificate will be issued to the
				  partners, members, shareholders or beneficiaries based on the partner's,
				  member's, shareholder's or beneficiary's pro rata share of earnings of the
				  partnership, limited liability company, S corporation, or estate or trust,
				  except when the taxpayer is eligible to receive renewable electricity
				  production tax credits authorized under Section 45 of the Internal Revenue
				  Code. In cases where the taxpayer is eligible to receive renewable electricity
				  production tax credits under Section 45 of the Internal Revenue Code, the
				  partnership, limited liability company or S corporation may designate the
				  amount of the tax credit to be allocated to each partner, member or
				  shareholder. In addition, if a taxpayer is a partnership, limited liability
				  company, S corporation, or estate or trust that is eligible to receive
				  renewable electricity production tax credits under Section 45 of the Internal
				  Revenue Code, the taxpayer may distribute the tax credit to an equity holder or
				  beneficiary as a liquidating distribution, or portion thereof, of an equity
				  holder's interest in the partnership, limited liability company or S
				  corporation, or the beneficiary's interest in the estate or trust.
The credit can be allowed for a ten-year period beginning on
				  the date the qualified facility was originally placed in service. For example,
				  if a facility was placed in service on April 1, 2006, the credit can be claimed
				  for kilowatt-hours of electricity sold between April 1, 2006, and March 31,
				  2016.
To claim the tax credit, the taxpayer must include the tax
				  credit certificate with the tax return for the tax year set forth on the
				  certificate. Any tax credit in excess of the tax liability may be carried
				  forward for seven years or until it is used, whichever is the earlier.
(3)
Transfer of the wind
				energy production tax credit certificate.
The wind energy production
				tax credit certificate may be transferred to any person or entity.
Within 30 days of transfer of the tax credit certificate, the
				  transferee must submit the transferred tax credit certificate to the
				  department, along with a statement which contains the transferee's name,
				  address and tax identification number and the amount of the tax credit being
				  transferred. Within 30 days of receiving the transferred tax credit certificate
				  and the statement from the transferee, the department will issue a replacement
				  tax credit certificate to the transferee. If the transferee is a partnership,
				  limited liability company, S corporation, or estate or trust claiming the
				  credit for individual or corporation income tax, the transferee shall provide a
				  list of the partners, members, shareholders or beneficiaries and information on
				  how the wind energy production tax credit should be divided among the partners,
				  members, shareholders or beneficiaries. The transferee shall also provide the
				  tax identification numbers and addresses of the partners, members, shareholders
				  or beneficiaries. The replacement tax credit certificate must contain the same
				  information as that on the original tax credit certificate and must have the
				  same effective taxable year and the same expiration date as the original tax
				  credit certificate. The replacement tax credit certificate may reflect a
				  different tax type than the original tax credit certificate.
The transferee may use the amount of the tax credit for any
				  tax year for which the original transferor could have claimed the tax credit.
				  Any consideration received for the transfer of the tax credit certificate shall
				  not be included in Iowa taxable income for individual income, corporation
				  income or franchise tax purposes. Any consideration paid for the transfer of
				  the tax credit certificate shall not be deducted from Iowa taxable income for
				  individual income, corporation income or franchise tax purposes.
This rule is intended to implement Iowa Code section
				  422.11J and Iowa Code chapter
				  476B as amended by 2011 Iowa Acts, House File 672.