103 KAR 15:120. Cellulosic ethanol tax credit.

 

      RELATES TO: KRS 141.010, 141.020, 141.030,

141.040, 141.0401, 141.422, 141.4244, 141.4246, 141.4248

      STATUTORY AUTHORITY: KRS 131.130(1),

141.4246

      NECESSITY, FUNCTION, AND CONFORMITY: KRS

141.4244 provides a nonrefundable tax credit to producers of cellulosic ethanol.

KRS 131.130(1) authorizes the department to promulgate administrative

regulations necessary to administer and enforce Kentucky’s tax laws. KRS

141.4246(2) requires the department to promulgate an administrative regulation

to establish the manner in which a pass-through entity shall electronically

notify the department of who may claim the approved tax credit. This

administrative regulation establishes guidelines and filing requirements for a cellulosic

ethanol producer filing a tax credit claim for gallons of cellulosic ethanol

produced in this state.

 

      Section 1. Definitions. (1)

"Applicant" means a cellulosic ethanol producer that files a tax

credit claim as provided by KRS 141.4244.

      (2) "Application" or

"Schedule CELL" means the Schedule CELL, Application, and Credit

Certificate of Income Tax/LLET Credit Cellulosic Ethanol (Revenue Form

41A7220CELL), incorporated by reference in 103 KAR 3:040, that is used to make a

cellulosic ethanol tax credit claim with the department for gallons of

cellulosic ethanol produced in this state as provided by KRS 141.4244(3).

      (3) "ASTM" means the American

Society for Testing and Materials.

      (4) "Cellulosic ethanol" is

defined by KRS 141.422(6).

      (5) "Cellulosic ethanol producer"

is defined by KRS 141.422(7).

      (6) "Corporation" is defined by

KRS 141.010(24).

      (7) "Department" is defined by

KRS 141.010(2).

      (8) "Identification number" the

means:

      (a) Social Security number for

individuals;

      (b) Federal Employer Identification

Number for general partnerships, estates, and trusts; and

      (c) Kentucky corporation income tax and

limited liability entity tax account number for corporations and limited

liability pass-through entities.

      (9) "Individual" is defined by

KRS 141.010(7).

      (10) "Limited liability pass-through

entity" is defined by KRS 141.010(28).

      (11) "Pass-through entity" is

defined by KRS 141.010(26).

      (12) "Tax credit" means the

cellulosic ethanol tax credit authorized by KRS 141.4244.

 

      Section 2. Application for Tax Credit. An

applicant shall mail to the department a completed application on or before January

15 for the preceding calendar year.

 

      Section 3. Proof of ASTM standard specification.

(1) A cellulosic ethanol producer shall provide proof that the cellulosic ethanol

gallons reported on the application meet ASTM standard specification D4806 for

ethanol that is produced from cellulosic biomass materials.

      (2) Proof submitted by a cellulosic ethanol

producer shall be in the form of documentation of laboratory results that certify

that the cellulosic ethanol reported on the Schedule CELL meets the ASTM

standard specification.

      (3) An independent ASTM certified

laboratory shall be used to generate the laboratory results that are required

by this section.

      (4) Failure to submit documented

laboratory results that certify that the cellulosic ethanol meets the ASTM

standard specification with the Schedule CELL shall result in the department

disallowing the credit.

      (5)(a) A cellulosic ethanol producer

shall have the cellulosic ethanol tested as provided by subsection (2) of this

section on July 1 and December 31 of each calendar year to determine if the cellulosic

ethanol meets the ASTM standard specification.

      (b) A copy of the laboratory results for July

1 and December 31 of each calendar year shall be attached to the application,

Schedule CELL, submitted to the department as provided by Section 2 of this

administrative regulation.

      (c) Failure to provide proof of meeting

the ASTM standard specification on July 1 and December 31 of each calendar year

with the application shall result in the denial of the credit for gallons of cellulosic

ethanol back to the previous testing date of July 1 or December 31.

      (d) If proof is timely submitted and the

proof certifies that the cellulosic ethanol does not meet the ASTM standard specification,

then all credit claimed for gallons of cellulosic ethanol back to the previous

testing date of July 1 or December 31 shall be disallowed.

 

      Section 4. Filing Requirements. (1) An applicant

claiming the tax credit shall attach the credit certificate issued by the

department to the tax return on which the tax credit is claimed.

      (2) A partner, member, or shareholder

claiming the tax credit shall attach a copy of Schedule K-1: Form 720S, Form

number 41A720S(K-1); Form 765, Form number 41A765(K-1): or Form 765GP, Form

number 42A765GP(K-1), incorporated by reference in 103 KAR 3:040, to the

partner’s, member’s or shareholder’s tax return on which the credit is claimed.

 

      Section

5. Electronic Filings for Pass-through Entities. (1) Each pass-through entity or

agricultural cooperative association organized under KRS Chapter 272 claiming

the cellulosic ethanol tax credit shall file a report with the department by

electronic mail at KRC.WEBResponseEconomicDevelopmentCredits@ky.gov.

      (2) The electronic mail shall contain a

separate attachment in plain format text or plain ASCII format that includes

each partner's, member's, or shareholder's:

      (a) Name;

      (b) Address;

      (c) Telephone number;

      (d) Identification number; and

      (e) Distributive share of the tax credit.

(36 Ky.R. 1554; Am. 2043-M; eff. 4-2-2010.)