For tax years beginning on or after January 1, 2019, a
geothermal heat pump tax credit is available for residential property located
in Iowa as provided in Iowa Code section
422.12N
and this rule. Information relating to Iowa geothermal tax credits available
for tax years prior to January 1, 2019, can be found in prior versions of this
rule. Prior versions of the Iowa Administrative Code are located here:www.legis.iowa.gov/law/administrativeRules/agencies.
(1)
Eligibility for the
credit. To be eligible for the credit described in this rule, all of
the following requirements must be met:
a.
The geothermal heat pump must be eligible for the federal residential energy
efficient property tax credit provided in Section 25D(a)(5) of the Internal
Revenue Code.
b. The taxpayer must
claim the federal residential energy efficient property tax credit provided in
Section 25D(a)(5) of the Internal Revenue Code.
c. The geothermal heat pump must be installed
on residential property located in Iowa and placed in service on or after
January 1, 2019. In determining whether this requirement is met, the term
"placed in service" has the same meaning as used in Section 25D of the Internal
Revenue Code.
d. The taxpayer must
submit a timely and complete application to the department in accordance with
subrule 42.47(4).
(2)
Calculation of the credit.
a. The credit is equal to 20 percent of the
federal residential energy efficient property tax credit allowed for geothermal
heat pumps provided in Section 25D(a)(5) of the Internal Revenue Code. Thus,
the Iowa credit rate equals the following percentage of the qualified
geothermal heat pump property expenditures:
(1) For property placed in service during
calendar year 2019, 6 percent.
(2)
For property placed in service during calendar years 2020 through 2022, 5.2
percent.
(3) For property placed in
service during calendar year 2023, 4.4 percent.
b. This credit is set to expire on January 1,
2024, in accordance with Public Law No. 116-260, Div. EE, Title I, Subtitle C,
ยง148. If the federal residential energy efficient property tax credit for
geothermal heat pumps provided in Section 25D(a)(5) of the Internal Revenue
Code is extended by federal legislation into additional tax years, the Iowa
credit will continue to be available for each year in which the corresponding
federal credit is available, absent action by the Iowa general
assembly.
(3)
Tax
credit award program limitations. No more than $1 million in
geothermal heat pump tax credits will be issued per calendar year. If the
annual tax credit allocation cap is not reached, the remaining amount below the
cap shall be made available for the following tax year in addition to, and
cumulated with, the cap for that year.
(4)
How to apply for the
credit-waitlist.
a.
In
general. Timely and complete applications shall be reviewed and
approved on a first-come, first-served basis. Applications for the tax credit
shall be submitted through the tax credit submission system, which applicants
may access through the department's website.
b.
Application deadline. The
application must be filed by May 1 of the year following the year of the
installation of the geothermal heat pump.
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 geothermal heat pump. This is the same as the date the
installation was placed in service by the taxpayer.
(3) Copies of invoices or other documents
showing the cost of the geothermal heat pump.
(4) Amount of federal income tax credit
claimed for the geothermal heat pump.
(5) Amount of Iowa tax credit
requested.
(6) Any other
information requested by the department in order to verify eligibility for or
amount of the Iowa tax credit requested.
d.
Waitlist.
(1) 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. Valid and complete applications will be placed on the waitlist in the
order they are received by the department.
However, in the event the department denies an application or
part of an application, and upon appeal by the taxpayer a previously denied tax
credit amount is allowed, the date the appeal is closed will be used to
determine the placement of the allowed tax credit amount on the waitlist.
Waitlisted applications are reviewed and, if approved, funded in the order they
are listed on the waitlist. Only valid applications filed by the taxpayer by
May 1 of the year following the year the geothermal heat pump was installed
shall be eligible for the waitlist.
(2) 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. Therefore, any geothermal heat pump tax
credit request related to an installation completed prior to January 1, 2024,
that does not receive a tax credit award by the time the 2023 aggregate award
limitation is met shall expire and shall not be carried over on the waitlist to
any future year.
(3) 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 this rule in a future year is contingent upon the availability of tax
credits in that particular year.
(5)
Claiming the tax credit.
a.
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.
b.
Claiming
the tax credit. The geothermal heat pump tax credit will be claimed on
Form IA 148, Tax Credits Schedule. The taxpayer must include with any Iowa tax
return claiming the geothermal heat pump tax credit federal Form 5695,
Residential Energy Credits.
c.
Nonrefundable. Any credit in excess of the taxpayer's tax
liability is nonrefundable.
d.
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.
e.
Nontransferable. The tax
credit may not be transferred to any other person.
This rule is intended to implement Iowa Code section
422.12N
and 2019 Iowa Acts, House File 779.
Notes
Iowa Admin. Code r.
701-42.47
ARC 0361C, lAB 10/3/12,
effective 11/7/12
Amended by
IAB
November 26, 2014/Volume XXXVII, Number 11, effective
12/31/2014
Amended by
IAB
December 7, 2016/Volume XXXIX, Number 12, effective
1/11/2017
Amended by
IAB
April 21, 2021/Volume XLIII, Number 22, effective
5/26/2021
