Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
141.010,
141.020,
141.030,
141.040,
141.0401,
141.422,
141.423,
141.424
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
141.423 establishes a nonrefundable tax
credit for biodiesel producers, biodiesel blenders, and renewable diesel
producers.
KRS
141.425 authorizes the department to
promulgate administrative regulations necessary to administer the biodiesel tax
credit.
KRS
141.424 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.
Section 1. Definitions.
(1) "Applicant" means a biodiesel producer,
biodiesel blender, or renewable diesel producer that files a tax credit claim
as provided by
KRS
141.423.
(2) "Application" or "Schedule BIO" means the
Schedule BIO, Application and Credit Certificate of Income Tax/LLET Credit
Cellulosic Ethanol (Revenue Form 41A720BIO) that is used to make a tax credit
claim with the department for gallons of biodiesel produced in this state,
gallons of biodiesel used in blended biodiesel produced in this state, or
gallons of renewable diesel produced in this state as provided by
KRS
141.423(4).
(3) "ASTM" means the American Society for
Testing and Materials.
(4)
"Biodiesel" is defined by
KRS
141.422(4).
(5) "Biodiesel blender" means an entity that
blends biodiesel with petroleum diesel as provided by
KRS
141.422(8).
(6) "Biodiesel producer" is defined by
KRS
141.422(5).
(7) "Blended biodiesel" is defined by
KRS
141.422(8).
(8) "Corporation" is defined by
KRS
141.010(4).
(9) "Department" is defined by
KRS
141.010(5).
(10) "Identification number" means the:
(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.
(11) "Individual" is defined by
KRS
141.010(13).
(12) "Limited liability pass-through entity"
is defined by
KRS
141.010(15).
(13) "Pass-through entity" is defined by
KRS
141.010(21).
(14) "Renewable diesel" is defined by
KRS
141.422(12).
(15) "Renewable diesel producer" is defined
by
KRS
141.422(13).
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 biodiesel producer or
biodiesel blender shall provide proof the biodiesel gallons reported on the
application meet ASTM standard specification D6751 for biodiesel fuel (B100)
blend stock distillate fuels.
(2) A
renewable diesel producer shall provide proof that the renewable diesel gallons
reported on the application meet ASTM standard specification D396 for fuel oils
intended for use in various types of fuel-oil-burning equipment, D975 for
diesel fuel oils suitable for various types of diesel fuel engines, or D1655
for aviation fuels.
(3) Proof
submitted by a biodiesel producer or a renewable diesel producer shall be in
the form of documentation of laboratory results that certify that the biodiesel
or renewable diesel reported on the Schedule BIO meets the ASTM standard
specification.
(4) A biodiesel
blender shall obtain from the biodiesel producer a copy of laboratory results
that certify that the biodiesel reported on the Schedule BIO meets the ASTM
standard specia-tion.
(5) An
independent ASTM certified laboratory shall be used to generate the laboratory
results that are required by this section.
(6) Failure to submit documented laboratory
results that certify that the biodiesel, renewable diesel, or the biodiesel
used in the blended biodiesel meets the ASTM standard specification with the
Schedule BIO shall result in the department disallowing the credit.
(7)
(a) A
biodiesel producer, biodiesel blender, or renewable diesel producer shall have
the biodiesel, blended biodiesel, or renewable diesel tested as provided by
subsections (1) or (2) of this section on July 1 and December 31 of each
calendar year to determine if the biodiesel, blended biodiesel, or renewable
diesel meets the ASTM standard specification, as required to be reported by
subsection (4) of this section.
(b)
A copy of the laboratory results for July 1 and December 31 of each calendar
year shall be attached to the Schedule BIO 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 claimed for
gallons of biodiesel or renewable diesel back to the previous testing date of
July 1 or December 31.
(d) If proof
is timely submitted and the proof certifies that the biodiesel or renewable
diesel does not meet the ASTM standard specification, then all credit claimed
for gallons of biodiesel, renewable diesel, or biodiesel used in the blended
biodiesel 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 its 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) 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 claiming the
biodiesel 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.
STATUTORY AUTHORITY:
KRS
131.130,
141.424,
141.425