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Investment Credit Allocation Schedules

PROCEDURES FOR SUBMITTING AN ALLOCATION SCHEDULE FOR THE INVESTMENT CREDIT

 

 

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Preeti Gratz
Kelly Graham


334-242-1175

Beginning January 21, 2020, the incentivized company must file an online allocation schedule with the Alabama Department of Revenue (ADOR) to allocate the annual Investment Credit. The incentivized company must allocate the portion of the credit to be utilized against the income tax liability and/or the utility taxes paid of the incentivized company, and to each taxpayer entitled to receive the credit pursuant to the State Project Agreement. Any business entity that has been allocated an Investment Credit, in whole or in part, will also be required to file the allocation schedule. The allocation schedule must be submitted annually based on the annual certification received from the Alabama Department of Commerce.

The allocation schedule must be submitted through My Alabama Taxes (MAT) before the Investment Credit can be claimed on the income tax return or for utility taxes paid.

 

Individuals receiving an allocation will be notified by the business entity making the allocation and will directly claim the credit on their individual income tax return.

 

Procedures for the incentivized company making the allocation of the Investment Credit

 

Procedures for the business entity receiving an allocation (allocating entity) of the Investment Credit

 

Procedures for claiming the Investment Credit against utility taxes

 

 

 

 

 

Procedures for the Incentivized Company Making the Allocation of the Investment Credit

 

Prerequisites for claiming the Investment Credit claim through MAT:

  • A letter from ADOR directing the incentivized company to submit an allocation schedule via My Alabama Taxes (MAT). ADOR’s letter is initiated when the Department of Commerce forwards the Investment Credit Certificate to ADOR.

Procedures for submitting an allocation schedule online through MAT:

  • Log in to My Alabama Taxes using your login credentials.
  • Once logged in, navigate to the Pass-through Entity or Business Income Tax under Accounts.
  • Under the ‘I Want to’ section, click on the ‘Submit investment allocation schedule’ link and select the “Project Number” from the drop-down menu. The Project number will be provided in the letter from ADOR.
  • Complete the required fields as follows:

Part I – Project Information

  • Information for (choose one): Select “Incentivized Company.”
  • Project Name: Project Name assigned by the Department of Commerce.
  • Tax Year Credit Will Be Claimed: Enter the tax year in which the credit will be claimed. The incentivized company may elect to utilize the credit in the tax year that includes the end date of the reporting year or the start date of the reporting year period, provided that the issuance of the tax credit certificate is no later than 30 days prior to the incentivized company’s income tax due date, including extension. This election is made in the first year of receiving the annual certification and shall remain constant for all subsequent years the annual Investment Credit is available for a project.

Part II – Allocation Information

  • Allocate the full credit amount against the appropriate tax types.
  • If allocating to owners of pass-through entities, or other business entities allowed by the state project agreement, enter the appropriate information under the “Allocation” section.
  • If transferring the credit allowed by the state project agreement, enter the amount to be transferred. Enter the transferee information, if known at the time of submitting the allocation schedule. If the transferee information is not available at this time, please contact the Office of Economic Development when the transferee information is available. Transfers are only allowed to an investing company that has the transfer provision provided for in the State Project Agreement and for which the transfer contract has been approved by the Department of Commerce.

Please review the information in full and submit the online schedule. Once the annual allocation has been made, the allocation cannot be amended. Any unused credit associated with the annual allocation can be carried forward for up to 5 years.

Once the Department reviews the allocation schedule, a Web notice will be sent to the investing company notifying them of whether their allocation schedule has been rejected or approved. If the allocation schedule is approved, the business entity can claim the income tax credit on their return. Any business entities that have been allocated the credit will receive a letter from ADOR to submit an allocation schedule via My Alabama Taxes (MAT).

NOTE: If you are allocating the credit to an individual taxpayer, you must notify them of the amount of credit allocated.

If claiming the credit against utility taxes paid, please see below – Claiming against Utility taxes paid.

 

Procedures for the Business Entity Receiving an Allocation of the Investment Credit

 

Prerequisites for claiming the Investment Credit claim through MAT:

  • A letter from ADOR directing to submit an allocation schedule via My Alabama Taxes (MAT). ADOR’s letter is initiated by the allocation of the credit from the incentivized company (or allocating entity) receiving the tax credit certification.

Procedures for submitting an allocation schedule online through MAT:

Part I – Project Information

  • Information for (choose one): Select “Allocating Entity.”
  • Tax Year Credit Will Be Claimed: Enter the tax year in which the credit will be claimed. The allocating entity may elect to utilize the credit in the tax year that includes the end date of the reporting year or the start date of the reporting year period, provided that the issuance of the tax credit certificate is no later than 30 days prior to the allocating entity’s income tax due date, including extension. This election is made with the filing of the tax return corresponding to the allocating company’s first reporting year and shall remain constant for all subsequent years the annual Investment Credit is available.

Part II – Allocation Information

  • Allocate the full credit amount against the appropriate tax types.
  • If allocating to owners of pass-through entities, enter the appropriate information under the “Allocation” section.

Please review the information in full and submit the online schedule. Once the annual allocation has been made, the allocation cannot be amended. Any unused credit associated with the annual allocation can be carried forward for up to 5 years.

Once the Department reviews the allocation schedule, a Web notice will be sent to the allocating entity notifying whether the allocation schedule has been rejected or approved. If the allocation schedule is approved, the business entity can claim the income tax credit on their return. If allocating the credit to owners of a pass-through entity that are business entities, these entities will receive a letter from ADOR to submit an allocation schedule via My Alabama Taxes (MAT).

NOTE: If you are allocating the credit to an individual taxpayer, you must notify them of the amount of credit allocated.

If claiming the credit against utility taxes paid, please see below – Claiming against Utility taxes paid.

 

Procedures for Claiming the Investment Credit against Utility Taxes

 

A utility tax is levied on the furnishing of utility services which include power, natural gas, domestic water, and landline telephone. The Investment Credit can be claimed against these utility taxes paid within the reporting period for which the allocation is being made. The credit can be claimed against the recipient’s utility taxes paid that were either collected by the utility service company or paid directly to ADOR under the Utility Tax Direct Pay account.

Prerequisites for claiming the Investment Credit against utility taxes paid:

  • Your allocation schedule (allocating part or all of the credit to utility taxes) submitted via My Alabama Taxes (MAT) has been approved and you have received a letter from ADOR.

Procedures for claiming the Investment Credit against utility taxes paid:

  • Log in to My Alabama Taxes using your login credentials.
  • Once logged in, under the ‘I Want to’ section, click on the ‘Claim utility investment credit’ link and select the “Project Number” from the drop-down menu. The Project number will be provided in the letter from ADOR.
  • Complete the required fields as follows:
    1. Reporting Year Begin and Reporting Year End: Enter the reporting year period for this annual incentive. The beginning and ending reporting dates are provided in the Department of Commerce’s annual certification as well as letters from ADOR associated with the recipient’s Investment Credit.
    2. Credit Amount: This amount is pre-populated based on the amount previously allocated when the Investment Credit allocation schedule was submitted and cannot be amended.
    3. Utilities: Enter the utility type, name of the utility company, and the amount of utility taxes paid to each utility against which the Investment Credit will be applied.

      Note! If you are a Direct Pay Permit Account holder, you will be asked Are you claiming your Utility Investment Credit via Direct Pay?” Click “Yes” if you are claiming utility investment credit via Direct Pay and enter the Direct Pay Claim Amount. If not, click “No”, and you must go back to step “3. Utilities” above.


      If you are allocating part of the credit to utility taxes paid via a service provider in addition to the Direct Pay claim, under “Utilities” please enter the utility type, name of the utility company, and the amount of utility taxes paid to each utility against which the remaining portion of the Investment Credit will be applied.

    4. Attachments: Attach copies of all utility bills within the reporting period for which the credit claim is being requested.

Once all the pertinent information has been provided, submit the claim. Once the claimed amounts have been verified, a check will be issued for utility taxes paid for each respective utility service. Any unused credit associated with the annual allocation can be carried forward for 5 years.