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66. OTHER REFUNDABLE CREDITS. Enter the total of these refundable credits.
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 certificate for entitlement of 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. If the credit is taken for Iowa purposes, the small business shall not deduct on the Iowa return the cost of assistive devices or workplace modifications deducted on the Federal return. Any credit in excess of the tax liability can be refunded.
b. Claim of Right Credit:
A refundable credit may be taken if there was income repaid in the 2002 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 1998 and reported it on the 1998 Iowa return. In 2002 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 2002. After recomputing the 1998 Iowa return, there is a $440 reduction in tax. The taxpayer may claim a credit of $440 on line 66 of the 2002 Iowa return.
c. Enterprise Zone Income Tax Credits for Cooperatives:
Eligible businesses approved by the Department of Economic Development may claim an investment tax credit up to 10% of their new investment. Eligible businesses involved in the production of value-added agricultural products, including cooperatives described in Section 521 of the Internal Revenue Code which are required to file an Iowa income tax return and whose project primarily involves the production of ethanol, could receive a refund of all or a portion of an unused investment tax credit. For tax years beginning on or after January 1, 2002, the Section 521 cooperatives who are required to file an Iowa income tax return may elect to transfer all or a portion of its unused investment tax credit to its members.
The amount of tax credit transferred and claimed by a member shall be based upon the pro rata share of the member’s earnings in the cooperative. The tax credit certificates could be issued to either the members of the cooperative or directly to the cooperative, and can be claimed on either the member’s Iowa income tax return or the tax return of the cooperative. The total refunds of unused credits are limited to $4 million per year. A provision was also included which specifically states that a cooperative organized under section 501 of the Iowa Code and filing as a partnership for Federal tax purposes can have the investment tax credit claimed by the individual partners based on the partner’s share of income in the partnership.
d. Ethanol Blended Gasoline Tax Credit – form IA 6478
This is not a motor fuel tax credit or refund form. It is an income tax form. Attach a copy of this form to your Iowa individual or corporation 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 service station at which more than 60 percent of the total gallons of gasoline sold and dispensed through one or more metered pumps by the taxpayer in the tax year is ethanol blended gasoline. The tax credit shall be calculated separately for each service station site operated by the taxpayer. The amount of the credit for each eligible service station is two and one-half cents multiplied by the total number of gallons of ethanol blended gasoline sold and dispensed through all metered pumps located at that service station during the tax year in excess of 60 percent of all gasoline sold and dispensed through metered pumps at that service station during the tax year.
Example: A taxpayer sold 100,000 gallons of gasoline at the taxpayer’s service station site during the tax year, 70,000 gallons of which were 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 IA 6478. The credit must be calculated separately for each service station operated by the taxpayer. Therefore, if the taxpayer operates more than one service station site, it is possible that one station may be eligible for the credit while another station may not. The credit can be taken only for those service station 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.
The following definitions are applicable:
“Ethanol blended gasoline” means the same as defined in Iowa Code section 452A.2.
“Gasoline” means gasoline that meets the specifications required by the department of agriculture and land stewardship pursuant to Iowa Code section 214A.2 that is dispensed through a metered pump.
“Metered pump” means a motor vehicle fuel pump licensed by the department of agriculture and land stewardship pursuant to Iowa Code chapter 214.
“Retail dealer” means a retail dealer as defined in Iowa Code section 214A.1 who operates a metered pump at a service station.
“Sell” means to sell on a retail basis.
“Service station” means each geographic location in this state where a retail dealer sells and dispenses gasoline 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.
e. Property Rehabilitation Tax Credit:
For tax years beginning on or after January 1, 2001, eligible businesses can take a property rehabilitation tax credit for qualifying rehabilitation costs for eligible property. “Eligible businesses” has been expanded retroactive to January 1, 2001, for tax years beginning on or after that date to include taxpayers who are subject to the franchise tax on financial institutions and taxpayers who are subject to the premiums receipt tax for insurance companies. The property rehabilitation tax credit certificate issued by the Iowa Department of Cultural Affairs must be attached to the Iowa return. The credit is limited to the tax shown on the return. However, the credit in excess of the tax liability is eligible for refund at a discounted amount.
This information is based on rule 701-42.15.
f. Research Activities Credit:
You may be eligible for this credit or alternative research credit if you increased Iowa research activities in 2002 over the activities for the base period. For details on qualification for the credit and how to compute the credit see form IA 128 or IA 128A.