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66. OTHER REFUNDABLE CREDITS. Enter the total of these refundable credits.
New form IA 148 Tax Credits Schedule must be completed.
a. Assistive Device Tax Credit:
For tax years beginning on or after January 1, 2001, eligible small businesses can take an assistive device tax credit for purchasing, renting or modifying an assistive device or making workplace modifications for employees with disabilities. The credit is limited to 50% of the first $5,000 paid for the assistive device or workplace modification. The certificate for entitlement to the credit, issued by the Iowa Department of Economic Development, must be attached to the Iowa return. The certificate is valid only for the tax year in which the assistive device was installed or workplace modifications were completed.
422.11E and 422.33(9)
See Rule 701-42.14.
b. Biodiesel Blended Fuel Tax Credit:
This is not a motor fuel tax credit or refund. It is an income tax credit. Attach a copy of form IA 8864 to your Iowa income tax return.
This credit is available to retail dealers who sell biodiesel blended fuel through motor fuel pumps during the tax year. Of the total gallons of diesel fuel sold by the retail dealer during the tax year, 50 percent or more must be biodiesel fuel to be eligible for the credit. The credit applies to biodiesel blended fuel formulated with a minimum percentage of 2 percent by volume of biodiesel, if the formulation meets the standards of Code section 214A.2.
The tax credit equals 3 cents multiplied by the total number of gallons of biodiesel blended fuel gallons sold during the retail dealer's tax year. For retail dealers of gasoline whose tax year ends before December 31, 2006, the retail dealer may compute the tax credit on the gallons of biodiesel blended fuel sold during the period from January 1, 2006, through the end of the tax year, provided that 50 percent of all diesel fuel sold during that period was biodiesel. Similarly, a retail dealer of gasoline whose tax year ends prior to December 31, 2011, can continue to claim the tax credit in the following tax year for any gallons of biodiesel blended fuel sold through December 31, 2011. This section is repealed on January 1, 2012 .
Any credit in excess of the tax liability may be refunded or, in the alternative, credited to the tax liability for the following year. If the biodiesel blended fuel tax credit is earned by partnerships, limited liability companies, S corporations, estates or trusts where income is taxed directly to the individual, the credit can be claimed by the individual based on the pro rata share of the individual's earnings in the entity.
422.11P and 422.33(11C)
A credit may be taken if there was income repaid in the 2005 tax year that was reported and taxed on a prior Iowa return. To calculate the credit, recompute the tax in the prior year without the repaid income. Enter the tax reduction that was calculated as a credit on this line. However, it may be to your advantage to take an income adjustment on line 24. You may take either the credit on this line or a deduction of the amount repaid on line 24, but not both.
Example of Claim of Right Credit: A taxpayer received a $5,000 bonus in 2005 and reported it on the 2005 Iowa return. In 2006 the taxpayer’s employer advised that the bonus was awarded in error and was to be repaid. The bonus was repaid by the end of 2006. After recomputing the 2005 Iowa return, there is a $440 reduction in tax. The taxpayer may claim a credit of $440 on line 66 of the 2006 Iowa return.
422.5(10)
d. E85 Gasoline Promotion Tax Credit:
This is not a motor fuel tax credit or refund. It is an income tax credit. Attach a copy of form IA 135 to your Iowa income tax return.
An income tax credit is available to retail dealers of gasoline who sell E85 gasoline through motor fuel pumps during the tax year.
A retail dealer of gasoline will be able to claim the E85 gasoline promotion tax credit even if the dealer claims an ethanol blended gasoline tax credit for the same tax year for the same ethanol gallons sold for 2006-2008. In addition, a taxpayer whose tax year ends before December 31, 2006, can claim the credit for gasoline sold between January 1, 2006, and the end of the fiscal year. Any credit in excess of the tax liability is refundable. The credit can be claimed on form IA 135.
The amount of the credit is determined by multiplying the total number of E85 gallons sold by the following rate:
- Calendar years 2006, 2007 and 2008: 25 cents
- Calendar years 2009 and 2010: 20 cents
- Calendar year 2011: 10 cents
- Calendar year 2012: 9 cents
- Calendar year 2013: 8 cents
- Calendar year 2014: 7 cents
- Calendar year 2015: 6 cents
- Calendar year 2016: 5 cents
- Calendar year 2017: 4 cents
- Calendar year 2018: 3 cents
- Calendar year 2019: 2 cents
- Calendar year 2020: 1 cent
- Calendar year 2021 and subsequent : 0 cents
For retail dealers of gasoline whose tax year is not on a calendar year basis, the retail dealer may compute the tax credit on the gallons of E85 gallons sold using the year using the applicable credit amounts as shown above. A retail dealer of gasoline whose tax year ends prior to December 31, 2020, can continue to claim the tax credit in the following tax year for any E85 gallons sold through December 31, 2020. For a retail dealer whose tax year is not on a calendar year basis and who did not claim the E85 credit on the previous return, the dealer may claim the credit for the current tax year for the period beginning on January 1 of the previous tax year to the last day of the previous tax year. This section is repealed on January 1, 2021.
A retail dealer of gasoline will be able to claim the E85 gasoline promotion tax credit even if the dealer claims an ethanol blended gasoline tax credit for the same tax year for the same ethanol gallons sold.
Any credit in excess of the tax liability may be refunded or, in the alternative, credited to the tax liability for the following year. If the E85 gasoline promotion tax credit is earned by partnerships, limited liability companies, S corporations, estates or trusts where income is taxed directly to the individual, the credit can be claimed by the individual based on the pro rata share of the individual's earnings in the entity.
422.11O and 422.33(11B)
e. Ethanol Blended Gasoline Tax Credit – form IA 6478:
This is not a motor fuel tax credit or refund. It is an income tax credit. Attach a copy of form IA 6478 to your Iowa income tax return.
Effective for tax years beginning on or after January 1, 2002 , a retail gasoline dealer may claim an ethanol blended gasoline tax credit against that taxpayer's individual income tax liability. The taxpayer must operate at least one retail motor fuel site at which more than 60 percent of the total gallons of gasoline sold and dispensed through one or more motor fuel pumps by the taxpayer in the tax year is ethanol blended gasoline. The tax credit shall be calculated separately for each retail motor fuel site operated by the taxpayer. The amount of the credit for each eligible retail motor fuel site is two and one-half cents multiplied by the total number of gallons of ethanol blended gasoline sold and dispensed through all motor fuel pumps located at that retail motor fuel site during the tax year in excess of 60 percent of all gasoline sold and dispensed through motor fuel pumps at that retail motor fuel site during the tax year.
EXAMPLE: A taxpayer sold 100,000 gallons of gasoline at the taxpayer's retail motor fuel site during the tax year, 70,000 gallons of which was ethanol blended gasoline. The taxpayer is eligible for the credit since more than 60 percent of the total gallons sold were ethanol blended gasoline. The number of gallons in excess of 60 percent of all gasoline sold is 70,000 less 60,000, or 10,000 gallons. Two and one-half cents multiplied by 10,000 equals a $250 credit available.
The credit may be calculated on Form IA6478. The credit must be calculated separately for each retail motor fuel site operated by the taxpayer. Therefore, if the taxpayer operates more than one retail motor fuel site, it is possible that one retail motor fuel site may be eligible for the credit while another retail motor fuel site may not. The credit may be taken only for those retail motor fuel sites for which more than 60 percent of gasoline sales involve ethanol blended gasoline.
Any credit in excess of the taxpayer's tax liability is refundable. In lieu of claiming the refund, the taxpayer may elect to have the overpayment credited to the tax liability for the following tax year.
Starting with the 2006 calendar tax year, a taxpayer may claim the ethanol blended gasoline tax credit even if the taxpayer also claims the E-85 gasoline promotion tax credit provided in rule 42.31(422) for the same tax year for the same ethanol gallons.
EXAMPLE: A taxpayer sold 200,000 gallons of gasoline at a retail motor fuel site in 2006, of which 160,000 gallons was ethanol blended gasoline. Of these 160,000 gallons, 1,000 gallons was E-85 gasoline. Taxpayer is entitled to claim the ethanol blended gasoline tax credit of two and one-half cents multiplied by 40,000 gallons, since this constitutes the gallons in excess of 60 percent of the total gasoline gallons sold. Taxpayer may also claim the E-85 gasoline promotion tax credit on the 1,000 gallons of E-85 gasoline sold.
42.16(1) Definitions. The following definitions are applicable to this rule:
"Ethanol blended gasoline" means the same as defined in Iowa Code section 214A.1 as amended by 2006 Iowa Acts, House File 2754, section 3.
"Gasoline" means any liquid product prepared, advertised, offered for sale or sold for use as, or commonly and commercially used as, motor fuel for use in a spark-ignition, internal combustion engine, and which meets the specifications provided in Iowa Code section 214A.2.
"Motor fuel pump" means a pump, meter, or similar commercial weighing and measuring device used to measure and dispense motor fuel for sale on a retail basis.
"Retail dealer" means a person engaged in the business of storing and dispensing motor fuel from a motor fuel pump for sale on a retail basis, regardless of whether the motor fuel pump is located at a retail motor fuel site including a permanent or mobile location.
"Retail motor fuel site" means a geographic location in this state where a retail dealer sells and dispenses motor fuel on a retail basis. For example, tank wagons are considered retail motor fuel sites.
"Sell" means to sell on a retail basis.
Iowa Administrative Rule 42.16
Allocation of credit to owners of a business entity. If the taxpayer that was entitled to the ethanol blended gasoline tax credit is a partnership, limited liability company, S corporation, estate, or trust, the business entity shall allocate the allowable credit to each of the individual owners of the entity on the basis of each owner's pro-rata share of the earnings of the entity to the total earnings of the entity. Therefore, if a partnership has an ethanol blended gasoline tax credit of $3,000 and one partner of the partnership receives 25 percent of the earnings of the partnership, that partner would receive an ethanol blended gasoline tax credit for the tax year of $750 or 25 percent of the total ethanol blended gasoline tax credit of the partnership.422.11C and 422.33(11)
f. Historic Preservation and Cultural and Entertainment District Tax Credit:
Any credit in excess of the tax liability is subject to a refund at a discounted amount.
For a more detailed description of this credit, see line 54.
This information is based on rule 701-42.15.
422.11D, 422.33(10), 422.60(4) and 404A.2
g.
Investment
Tax Credits - refundable (IA3468)
(value-added agricultural projects or biotechnology-related
processes)
Eligible businesses involved in the production of value-added agricultural products or biotechnology-related processes may elect to refund all or a portion of the unused credit by applying for a tax credit certificate from the Department of Economic Development. The credit amount shown on the tax credit certificate may be claimed on line 66.
For a more detailed description of this credit, see line 54.
h. Research Activities Credit:
Starting in 1985, a credit became available for 6.5% of Iowa 's apportioned share of qualifying expenditures for increasing research activities. The Iowa research credit is based on the federal research activities credit, with the Iowa credit based on the ratio of Iowa research expenditures over total research expenditures.
Staring in 2000, taxpayers may choose to take the alternative incremental research credit in a manner consistent with the federal alternative incremental research credit. This credit is claimed on form IA 128A. A taxpayer may choose each year whether to take the alternative credit or the “regular” research credit for Iowa tax purposes.
Taxpayers who are approved by the Iowa Department of Economic Development under the New Jobs and Income Program or the Enterprise Zone program can double their research credit claimed on either form IA 128 or IA 128A. The research credit can also be doubled under the High Quality Job Creation Program for taxpayers approved by the Department of Economic Development if certain criteria is met.
Effective July 1, 2005, an additional $1 million in research activities credit is available for expenses related to the development and deployment of innovative renewable energy generation components manufactured or assembled in Iowa. These expenses are not eligible for the federal research activities credit. A business eligible for this credit must be approved by the Department of Economic Development.
Sections 422.10 and 422.33(5) and 15.335 and 15A.9(8)
i. Soy-Based Cutting Tool Oil Credit
This credit is available for individual and corporation income tax.
A manufacturer is eligible to receive a credit equal to the costs incurred during the tax year for the purchase and replacement costs relating to the transition from using nonsoy-based cutting tool oil to using soy-based cutting tool oil. The costs must be incurred after June 30, 2005, and before January 1, 2007, and the costs must be incurred during the first 12 months of the transition. The costs of the purchase and replacement cannot exceed $2 per gallon of soy-based cutting tool oil, and the number of gallons eligible for the credit cannot exceed 2,000 gallons.
If the manufacturer elects to take the tax credit, any costs incurred in the transition that are deductible for federal income tax purposes cannot be deducted for Iowa tax purposes. Any credit in excess of the tax liability can be refunded or credited to the next year’s estimated tax. Any credit earned by a partnership, limited liability company, S corporation, estate or trust can be claimed by an individual based on the pro rata share of earnings of the partnership, limited liability company, S corporation, estate or trust.
Sections 422.11I and 422.33(15)
j. Soy-Based Transformer Fluid Tax Credit:
A soy-based transformer fluid tax credit is available for individual income and corporation income tax.
This credit can be claimed by an electric utility equal to the costs incurred by the utility during the tax year for the purchase and replacement costs relating to the transition from using nonsoy-based transformer fluid to using soy-based transformer fluid. The costs must be incurred after June 30, 2006, and before January 1, 2008, and the costs must be incurred during the first 18 months of the transition. The cost of the purchase and replacement cannot exceed $2 per gallon of soy-based transformer fluid, and the number of gallons eligible for the credit cannot exceed 20,000 gallons per electric utility. The total amount of soy-based transformer fluid eligible for a tax credit cannot exceed 60,000 gallons in the aggregate.
If the electric utility elects to take the tax credit, any costs incurred in the transition that are deductible for federal income tax purposes cannot be deducted for Iowa tax purposes. Any credit in excess of the tax liability can be refunded, or credited to the next year's estimated tax. Any credit earned by a partnership, limited liability company, S corporation, estate, or trust can be claimed by an individual based on the pro rata share of earnings of the partnership, limited liability company, S corporation, estate, or trust.
The electric utility must apply for the tax credit by submitting an application and a copy of a signed purchase agreement or other agreement to purchase soy-based transformer fluid to the department of revenue. The department will calculate the amount of the credit and issue a tax credit certificate to the applicant. The tax credit shall contain the taxpayer's name, address, tax identification number, the amount of credit, the first year the certificate may be used, the type of tax to which the credit will apply, and any other information required by the department. The certificate shall only list one type of tax for which the credit may be applied.
If the application for the tax credit is denied, the applicant has 60 days from the date of the denial to file an appeal with the department.
Sections 422.11M and 422.33(20)
For new jobs created on or after June 9, 2005, a wage-benefit tax credit is available to non-retail, non-services businesses which create new jobs related to the location or expansion of a business in Iowa. This will affect tax years ending on or after June 9, 2006. If the annual wage and benefits equals at least 130% of the average county wage, but less than 160%, the tax credit equals 5% of the wages and benefits paid. If the annual wage and benefits is 160% of greater of the average county wage, the tax credit equals 10% of the wages and benefits paid.
Businesses must apply to the Iowa Department of Revenue for this credit, and the amount of credit is limited to $10 million. The credits are issued on a “first-come, first-serve” basis. If the business retains the job, the tax credit will be allowed for the subsequent four years. Any tax credit in excess of the tax liability can be refunded.
Sections 422.11L, 422.33(18) and 422.60(10)