701—52.44  (422)  Solar energy system tax credit.  For tax years beginning on or after January 1, 2012, a solar energy system tax credit is available for business property located in Iowa. The solar energy system must be installed on or after January 1, 2012, to be eligible for the credit.
	   52.44(1) Property eligible for the tax credit. The following property located in Iowa is eligible for the tax credit:
	      a.    	  Equipment which uses solar energy to generate electricity, to heat or cool (or to provide hot water for use in) a structure, or to provide solar process heat (excepting property used to generate energy for the purposes of heating a swimming pool) and which is eligible for the federal energy credit as described in Section 48(a)(3)(A)(i) of the Internal Revenue Code.
	      b.    	  Equipment which uses solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight and which is eligible for the federal energy credit as described in Section 48(a)(3)(A)(ii) of the Internal Revenue Code.
	   52.44(2) Relationship between the Iowa and federal credits. As stated in subrules 52.44(3) to 52.44(5) below, the Iowa credit is a percentage of the applicable federal credit. Taxpayers who apply for the Iowa credit must also claim the corresponding federal credit. Availability of the Iowa credit for a specific type of installation in a given year is dependent upon availability of the federal credit for that type of installation. The Iowa credit is coupled with the Internal Revenue Code as amended to and including January 1, 2016. See Iowa Code section 422.11L(6); see also Public Law No.	114-113, Div.	P, Title III, §§ 302, 303, and Div.	Q, Title I, § 187.
	   52.44(3) Calculation of credit for systems installed during tax years beginning on or after January 1, 2012, but before January 1, 2014. The credit is equal to the sum of the following federal tax credits:
	      a.    	  Fifty percent of the federal energy credit provided in Section 48(a)(2)(A)(i)(II) of the Internal Revenue Code.
	      b.    	  Fifty percent of the federal energy credit provided in Section 48(a)(2)(A)(i)(III) of the Internal Revenue Code.
The amount of tax credit claimed by a taxpayer related to paragraphs 52.44(3)“a”  and  “b”  cannot exceed $15,000 for a tax year.
	   52.44(4) Calculation of credit for systems installed during tax years beginning on or after January 1, 2014, and installed before January 1, 2016. The credit is equal to the sum of the following federal tax credits:
	      a.    	  Sixty percent of the federal energy credit provided in Section 48(a)(2)(A)(i)(II) of the Internal Revenue Code.
	      b.    	  Sixty percent of the federal energy credit provided in Section 48(a)(2)(A)(i)(III) of the Internal Revenue Code.
The amount of tax credit claimed by a taxpayer related to paragraphs 52.44(4)“a”  and  “b”  cannot exceed $20,000 per separate and distinct installation. The term “separate and distinct installation” is described in subrule 52.44(7).
	   52.44(5) Calculation of credit for systems installed on or after January 1, 2016. The credit is equal to the sum of the following federal tax credits:
	      a.    	  Fifty percent of the federal energy credit provided in Section 48(a)(2)(A)(i)(II) of the Internal Revenue Code. This credit applies to property the construction of which begins before January 1, 2022, in accordance with Public Law No.	114-113 Div.	P, Title III, § 303.
	      b.    	  Fifty percent of the federal energy credit provided in Section 48(a)(2)(A)(i)(III) of the Internal Revenue Code. This credit is set to expire December 31, 2016, in accordance with Public Law No.	114-113, Div.	Q, Title I, § 187.
The amount of tax credit claimed by a taxpayer related to paragraphs 52.44(5)“a” and “b”  cannot exceed $20,000 per separate and distinct installation. “Separate and distinct installation” is described in subrule 52.44(7).
	   52.44(6) Tax credit award limitations. The following limitations apply:
	      a.    	  Aggregate tax credit award limit. No more than $5 million of tax credits will be issued for calendar years beginning on or after January 1, 2015. The annual tax credit allocation cap also includes the solar energy system tax credits provided in rule 701—42.48(422) for individual income tax and in rule 701—58.22(422) for franchise tax.
	      b.    	  Allocation for residential installations. Beginning with tax year 2014, at least $1 million of the annual tax credit allocation cap for each tax year is reserved for residential installations. If the total amount of credits for residential installations for a tax year is less than $1 million, the remaining amount below $1 million will be allowed for nonresidential installations.
	      c.    	  Rollover of unallocated credits. Beginning with calendar year 2014, if the annual tax credit allocation cap is not reached, the remaining amount below the cap will be allowed to be carried forward to the following tax year and shall not count toward the cap for that tax year.
	   52.44(7) How to apply for the credit. Timely and complete applications shall be reviewed and approved on a first-come, first-served basis. Applications for the tax credit may be submitted through the Tax Credit Award, Claim, and Transfer Administration System (CACTAS), which applicants may access through the department’s Web site.
	      a.    	  Separate and distinct installation requirement. A taxpayer may apply for one tax credit for each separate and distinct solar installation. Each separate and distinct installation requires a separate application. In order for an installation to be considered a separate and distinct solar installation, both of the following factors must be met:
	       (1)  	  Each installation must be eligible for the federal energy credit as provided in subrule 52.44(1).
	       (2)  	  Each installation must have separate metering.
	      b.    	  Application deadline. For installations completed on or after January 1, 2014, the application must be filed by May 1 following the year of installation of the solar energy system. Notwithstanding the foregoing sentence, the following extensions are applicable to installations completed in 2014 and 2015:
	       (1)  	  Solar energy systems installed during the 2014 calendar year shall be eligible for approval under Iowa Code section 422.11L even if the application is filed after May 1, 2015. Valid and complete applications shall be accepted and approved on a first-come, first-served basis and shall first be eligible for approval for the tax year during which the application is received, but not before the tax year beginning January 1, 2016.
	       (2)  	  Solar energy systems installed during the 2015 calendar year shall be eligible for approval under Iowa Code section 422.11L even if the application is filed after May 1, 2016. Valid and complete applications shall be accepted and approved on a first-come, first-served basis and shall first be eligible for approval for the tax year during which the application is received, but not before the tax year beginning January 1, 2017.
	      c.    	  Contents of the application. The application must contain the following information:
	       (1)  	  Name, address and federal identification number of the taxpayer.
	       (2)  	  Date of installation of the solar energy system.
	       (3)  	  The kilowatt capacity of the solar energy system.
	       (4)  	  Copies of invoices or other documents showing the cost of the solar energy system.
	       (5)  	  Amount of federal income tax credit for the solar energy system.
	       (6)  	  Amount of Iowa tax credit requested.
	       (7)  	  A completion sheet from a local utility company or similar documentation verifying that installation of the system has been completed. The completion sheet must indicate the date the system was placed in service. If a completion sheet from the local utility company or similar documentation is not available, a statement shall be provided that is similar to the one required to be attached to federal Form 3468 when claiming the federal energy credit and that specifies the date the system was placed in service.
	       (8)  	  For leased solar energy systems where the lessor is the applicant, the lessor should also provide a copy of the solar energy system lease that indicates the property that is the subject of the lease and the parties to the lease agreement. If the lessor is entitled to the Iowa solar energy system tax credit, the lessee will not be entitled to such a credit.
	      d.    	  Waitlist. If the department receives applications for tax credits in excess of the annual aggregate award limitation, the department shall establish a waitlist for the next year’s allocation of tax credits. The applications will be prioritized based on the date the department received the applications and shall first be funded in the order listed on the waitlist. With the exception of the extension described in subparagraphs 52.44(7)“b” (1) and (2) above, only valid applications filed by the taxpayer by May 1 of the year following the year of the installation of the solar energy property shall be eligible for the waitlist. If the annual aggregate cap is reached for the final year in which the federal credit is available, no applications will be carried over to the next year.
Placement on a waitlist shall not constitute a promise binding the state that persons placed on the waitlist will actually receive the credit in a future year. The availability of a tax credit and approval of a tax credit application pursuant to subrule 52.44(7) in a future year is contingent upon the availability of tax credits in that particular year.
	      e.    	  Certificate issuance. If the application is approved, the department will send a letter to the taxpayer including the amount of the tax credit and providing a tax credit certificate.
	      f.    	  Claiming the tax credit. The solar energy system tax credit will be claimed on Form IA 148, Tax Credits Schedule. The taxpayer must include federal Form 3468, Investment Credit, with any Iowa tax return claiming the solar energy system tax credit.
	      g.    	  Refundability. Any credit in excess of the taxpayer’s tax liability is nonrefundable.
	      h.    	  Carryforward. Any tax credit in excess of the taxpayer’s tax liability for the tax year may be credited to the taxpayer’s tax liability for the following ten years or until depleted, whichever is earlier.
	      i.    	  Transferability. The credit may not be transferred to any other person.
	   52.44(8) Unavailable to those eligible for renewable energy credit. A taxpayer who is eligible to receive a renewable energy tax credit provided in rule 701—52.27(422,476C) is not eligible for the solar energy system tax credit.
	   52.44(9) Allocation of tax credit to owners of a business entity or beneficiaries of an estate or trust. If the taxpayer claiming the tax credit based on a percentage of the federal energy credit under Section 48 of the Internal Revenue Code is a partnership, limited liability company, S corporation, estate or trust electing to have income taxed directly to the individual, the individual may claim the tax credit. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, limited liability company, S corporation, estate or trust. The maximum amount of credit available to a partnership, limited liability company, S corporation, estate or trust shall be limited to $15,000 for installations placed in service in tax years 2012 and 2013 and $20,000 for installations placed in service in tax years beginning on or after January 1, 2014.
This rule is intended to implement Iowa Code section 422.33 as amended by 2015 Iowa Acts, chapter 124, and 2016 Iowa Acts, House File 2468.
[ ARC 0361C , IAB 10/3/12, effective 11/7/12;    ARC 1303C , IAB 2/5/14, effective 3/12/14;    ARC 1666C , IAB 10/15/14, effective 11/19/14;    ARC 2925C , IAB 2/1/17, effective 3/8/17]