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.
	   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) Calculation of credit. 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(2)“a” and “b” cannot exceed $15,000 for a tax year.
The federal energy tax credit for solar energy systems is currently allowed for installations that are placed in service on or before December 31, 2016. Therefore, the Iowa tax credit will be available for the 2012 to 2016 tax years for systems placed in service on or before December 31, 2016. The solar energy system must be placed in service on or after January 1, 2012, to qualify for the Iowa credit. If the taxpayer installed a solar energy system and initially reported the federal tax credit for a tax year beginning prior to January 1, 2012, no Iowa credit will be allowed.
Example: A taxpayer reported a $9,000 energy credit on the 2011 federal return due to an installation of a solar energy system that was placed in service in 2011. The taxpayer applied $4,000 of the credit on the taxpayer’s 2011 federal return since the federal tax liability was $4,000. The remaining $5,000 of federal credit was applied on the 2012 federal return. No credit will be allowed on the 2012 Iowa return since the installation was placed in service before January 1, 2012.
	   52.44(3) Application for the tax credit. No more than $1.5 million of tax credits for solar energy systems are allowed for each of the tax years 2012 to 2016. The $1.5 million cap also includes the solar energy system tax credits provided in rule 701—42.48(422) for individual income tax. Credits will be reserved on a first-come, first-served basis.
	      a.    	 In order to reserve the tax credit, a taxpayer must complete an application for the solar energy tax credit. 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)  	 Copies of invoices or other documents showing the cost of the solar energy system.
	       (4)  	 Amount of federal income tax credit for the solar energy system.
	       (5)  	 Amount of Iowa tax credit to be reserved.
	      b.    	 If the application is approved, the department will send a letter to the taxpayer reserving the amount of the tax credit and providing a tax credit certificate number. The solar energy system tax credit will be claimed on Form IA 148, Tax Credit Schedule. Any tax credit in excess of the tax liability for the tax year may be credited to the tax liability for the following ten years or until used, whichever is the earlier. The taxpayer must attach federal Form 3468, Investment Credit, to any Iowa tax return claiming the solar energy system tax credit.
If the department receives applications for tax credits in excess of the $1.5 million available, the applications will be prioritized by the date the department received the applications. If the number of applications exceeds the $1.5 million of tax credits available, the department shall establish a wait list for the next year’s allocation of tax credits and the applications shall first be funded in the order listed on the wait list. However, if the $1.5 million cap of tax credit is reached for 2016, no applications in excess of the $1.5 million cap will be carried over to the next year.
Example: A taxpayer submitted an application for a $2,500 tax credit on December 1, 2012, for an installation that occurred in 2012. The application was denied on December 15, 2012, because the $1.5 million cap had already been reached for 2012. The taxpayer will be placed on a wait list and will receive priority for receiving the tax credit for the 2013 tax year. However, if the application was submitted on December 1, 2016, for an installation that occurred in 2016 and the $1.5 million cap had already been reached for 2016, no tax credit will be allowed for the 2017 tax year.
	      c.    	 A taxpayer who is eligible to receive a renewable energy tax credit provided in rule 701—52.27(422) is not eligible for the solar energy system tax credit.
	   52.44(4) Allocation of tax credit to owners of a business entity. 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 a single tax year.
This rule is intended to implement Iowa Code section 422.33 as amended by 2012 Iowa Acts, Senate File 2342, section 8.
[ARC 0361C, IAB 10/3/12, effective 11/7/12; ARC 1303C, IAB 2/5/14, effective 3/12/14]