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 701-501.36 - Ethanol Promotion Tax Credit

Current through Register Vol. 47, No. 3, July 24, 2024
Effective for tax years beginning on or after January 1,
				  2009, a retail dealer of gasoline may claim an ethanol promotion tax credit.
				  For purposes of this rule, tank wagon sales are considered retail sales. The
				  ethanol promotion tax credit is computed on Form IA 137.
(1)
Definitions.
The
				following definitions are applicable to this rule:
"Biodiesel gallonage"
means the total number
				  of gallons of biodiesel which the retail dealer sells from motor fuel pumps
				  during a determination period. For example, 5,000 gallons of biodiesel blended
				  fuel with a 2 percent by volume of biodiesel sold during a determination period
				  results in a biodiesel gallonage of 100 (5,000 times 2%).
"Biofuel distribution percentage"
means the
				  sum of the retail dealer's total ethanol gallonage plus the retail dealer's
				  total biodiesel gallonage expressed as a percentage of the retail dealer's
				  total gasoline gallonage.
"Biofuel threshold percentage"
is dependent
				  on the aggregate number of gallons of motor fuel sold by a retail dealer during
				  a determination period, as set forth below:
Determination Period
More than 200,000 Gallons Sold by Retail
							 Dealer
200,000 Gallons or Less Sold by Retail Dealer
2009
10%
6%
2010
11%
6%
2011
12%
10%
2012
13%
11%
2013
14%
12%
2014
15%
13%
2015
17%
14%
2016
19%
15%
2017
21%
17%
2018
23%
19%
2019
25%
21%
2020
25%
25%
"Biofuel threshold percentage disparity"
means the positive percentage difference between the retail dealer's biofuel
				  threshold percentage and the retail dealer's biofuel distribution percentage.
				  For example, if a retail dealer that sells more than 200,000 gallons of motor
				  fuel in 2009 has a biofuel distribution percentage of 8 percent, the biofuel
				  threshold percentage disparity equals 2 percent (10% minus 2%).
"Determination period"
means any 12-month
				  period beginning on January 1 and ending on December 31.
"Ethanol gallonage"
means the total number
				  of gallons of ethanol which the retail dealer sells from motor fuel pumps
				  during a determination period. For example, 10,000 gallons of ethanol blended
				  gasoline formulated with a 10 percent by volume of ethanol sold during a
				  determination period results in an ethanol gallonage of 1,000 (10,000 gallons
				  times 10%).
"Gasoline gallonage"
means the total number
				  of gallons of gasoline sold by the retail dealer during a determination
				  period.
(2)
Calculation of tax credit.
a. The tax credit is calculated by
				multiplying the retail dealer's total ethanol gallonage by the tax credit rate,
				which is adjusted based upon the retail dealer's biofuel threshold percentage
				disparity. The tax credit rate is set forth below:
Biofuel Threshold Percentage Disparity
Tax Credit Rate per Gallon 2009-2010
Tax Credit Rate per Gallon 2011
Tax Credit Rate per Gallon 2012-2020
0%
6.5 cents
8 cents
8 cents
0.01% to 2.00%
4.5 cents
6 cents
6 cents
2.01% to 4.00%
2.5 cents
2.5 cents
4 cents
4.01% or more
0 cents
0 cents
0 cents
b.
				For use in calculating a retail dealer's total ethanol gallonage, the
				department is required to establish a schedule regarding the average amount of
				ethanol contained in E-85 gasoline.
c. A taxpayer may claim the ethanol promotion
				tax credit even if the taxpayer also claims the E-85 gasoline promotion tax
				credit provided in rule
				701-52.30 (422) or the E-15 plus
				gasoline promotion tax credit provided in rule
				701-52.43 (422) for the same tax
				year for the same ethanol gallons.
d. The tax credit must be calculated
				separately for each retail motor fuel site operated by the taxpayer for tax
				years beginning prior to January 1, 2011. The biofuel threshold percentage
				disparity of the taxpayer is computed on a statewide basis based on the total
				ethanol gallonage sold in Iowa. The taxpayer must determine the ethanol
				gallonage sold at each retail motor fuel site and multiply this ethanol
				gallonage by the applicable tax credit rate based on the biofuel threshold
				percentage disparity to calculate the ethanol promotion tax credit.
e. For tax years beginning on or after
				January 1, 2011, the taxpayer may elect to compute the biofuel threshold
				percentage disparity and the tax credit on either a site-by-site basis or on a
				company wide basis. The election made on the first return beginning on or after
				January 1, 2011, for either the site-by-site method or the companywide method
				is binding on the taxpayer for subsequent tax years unless the taxpayer
				petitions the department for a change in the method. Any petition for a change
				in the method should be made within a reasonable period of time prior to the
				due date of the return for which the change is requested. For example, if a
				change is requested for the tax return beginning January 1, 2012, the petition
				should be made by January 31, 2013, which is 90 days prior to the due date of
				the return.
The mere fact that a change in the method will result in a
				  larger tax credit for subsequent years is not, of itself, sufficient grounds
				  for changing the method for computing the credit. An example of a case for
				  which the department may grant a change in the method is if the taxpayer has a
				  significant change in the type of fuel sold at the taxpayer's retail sites in
				  Iowa. For example, if a retail dealer opted to start selling E-85 gasoline at
				  all the taxpayer's retail sites in Iowa for a subsequent tax year, the
				  department may grant a change in the method.
If a taxpayer chooses the site-by-site method to compute the
				  biofuel threshold percentage disparity, the gallons sold at all sites in Iowa
				  must be considered in determining if the biofuel threshold percentage as
				  defined in subrule 52.36(1) is based on more than 200,000 gallons, or 200,000
				  gallons or less. For example, if a taxpayer operates three motor fuel sites in
				  Iowa and each site sells 80,000 gallons of motor fuel during 2011, the biofuel
				  threshold percentage of 12 percent must be used for each retail site if the tax
				  credit is computed on a site-by-site basis, even though each retail site sold
				  less than 200,000 gallons of motor fuel.
f. Any tax credit in excess of the taxpayer's
				tax liability is refundable. In lieu of claiming a refund, the taxpayer may
				elect to have the overpayment credited to the tax liability for the following
				tax year.