The Rail Credit authorized under the Railroad Modernization Act must be pre-certified through My Alabama Taxes before the taxpayer can claim the credit on their Alabama income tax return.
Prerequisites for filing an online Rail Credit claim through My Alabama Taxes:
- Certification from Alabama Department of Commerce awarding the tax credit for tax years through December 31, 2022.
- Rail Credit Reservation approval letter from ALDOR for tax years beginning after December 31, 2022.
Procedures for filing an online Rail Credit claim through My Alabama Taxes:
- Log in to My Alabama Taxes.
- Once logged in, navigate to Pass-through Entity or Business Income Tax under Accounts.
- Click on the Submit a Credit Claim link under Tax incentives and complete the following required fields:
- Credit Type – Select Rail Credit from the drop-down menu.
- Filing Period – Enter the tax period in which the certified Rail Credit is placed in service.
- Credit Amount – Enter the amount of the tax credit claimed (documentation supporting this amount should be attached with the credit claim).
- Attachments – The following attachments are required:
- For all claims through tax year December 31, 2022 – Certificate from the Alabama Department of Commerce awarding the tax credit.
- For all claims beginning after December 31, 2022 –
- Rail Credit Certification of Qualified Rehabilitation Expenditure
- Rail Credit Reservation Approval Letter from ALDOR
- Supporting documentation for the qualified rehabilitation expenditure claimed, i.e., paid invoices, along with copies of checks or wire transfers.
- Please review the information in full (and print a copy for your records). Once reviewed, submit the credit claim.
Once the Rail Credit claim is submitted through My Alabama Taxes, ALDOR will review the claim. The Office of Economic Development may require additional information if the supporting documents are incomplete or not provided. Please note that lack of proper documentation to support the credit claim will delay the process. Once ALDOR approves the requested credit amount, the project owner will receive a web notice. For credit claims beginning after December 31, 2022, a Web Notice will be sent to the rail carrier from the department upon approval of the Rail Credit. The approved amount of the credit must be listed on the taxpayer’s income tax return at the time the return is filed. For more information, please email incentives@revenue.alabama.gov or call 334-242-1175.
NOTE! Transfers – In order to transfer the rail credit, the Transfer statement (Form RC-TS), an Executed transfer agreement, and a transfer fee ($1,000 per transferee) must be submitted to ALDOR. The Transfer statement (Form RC-TS) and the Executed transfer agreement may be emailed to incentives@revenue.alabama.gov. Please mail the transfer fee payment to: Alabama Department of Revenue, Commissioner’s Office, P.O. Box 327001, Montgomery, AL 36132. The transfer cannot be completed until the transfer fee has been received. The transferee will receive written notification once the transfer has been processed.
NOTE! Please make sure that the transfer agreement includes the following required information.
- Description and address of the rail carrier that has received an approved rail credit.
- The date the project was completed and placed in service.
- The amount of the credit being transferred to the transferee.
- The purchase amount of the credit.
- A statement by the eligible taxpayer agreeing to sell, transfer, convey, assign, and deliver the credit to the buyer along with an acknowledgement from the buyer agreeing to purchase, acquire, and accept the credit from the owner.