Form 40a727 - Income Tax Forms Requisition (Page 2 of 6) in pdf

N N N N N o o o o o v v v v v ember 2007

ember 2007

2 2 2 2 2

K K K K K entucky

entucky

entucky T T T T T ax A

ax A

ax Aler ler ler ler lert t t t t

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has been approved, the maximum amount of which is

HB1 also created a new section of KRS Chapter 139 to

based upon the estimated labor component of the total

provide a sales tax refund for an energy efficiency project.

capital investment of the eligible project, and the

An energy efficient project is a project undertaken by a person

utilization of Kentucky residents during the construction

engaged in manufacturing whereby the person purchases

period; (b) sales and use tax incentives of up to 100

new or replacement machinery or equipment that reduces

percent of the taxes paid on purchases of tangible

the consumption of energy or energy-producing fuels

personal property made to construct, retrofit or upgrade

in the manufacturing process at a plant facility in the

an eligible project; (c) Up to 80 percent of the severance

commonwealth by at least 15 percent measured in

taxes paid on the purchase or severance of coal that is

megawatts, gallons or other measurable units of energy,

subject to the tax imposed under

while maintaining or increasing the

KRS 143.020 and that is specifically

number of units of production for

used by an alternative fuel facility

that same period. The sales tax

or a gasification facility as

refund is equal to the amount of

feedstock for an eligible project; (d)

Kentucky sales or use tax paid on

up to 100 percent of the Kentucky

the purchase of new or replacement

income tax imposed under KRS

machinery or equipment for an

141.040 or 141.020, and the

energy efficiency project purchased

limited liability entity tax imposed

on or after July 1, 2008, reduced by

under KRS 141.0401 arising from

the amount of vendor compensation

the eligible project; and (e)

allowed under KRS 139.570.

authorization for the approved

company to impose a wage

HB 1 amended KRS 141.423 to

assessment fee of up to 4 percent

provide that in addition to a

of the gross wages of each

biodiesel producer or biodiesel

employee subject to the Kentucky income tax: (1) whose

blender, a renewable diesel producer shall be entitled to

job was created as a result of the eligible project; (2)

a $1 per gallon nonrefundable tax credit against taxes

who is employed by the approved company to work at

imposed by KRS 141.020 or 141.040 and KRS

the facility; and (3) who is on the payroll of the approved

141.0401. Renewable diesel means a renewable,

company or an affiliate of the approved company. The

biodegradable, non-ester combustible liquid that: (a) is

maximum of all incentives shall not exceed 50 percent

derived from biomass resources as defined in the statute;

of the capital investment in the eligible project.

and (b) meets the current American Society for Testing

and Material Specification D396 for fuel oils intended

To qualify for the incentives provided, the following

for use in various types of fuel-oil burning equipment;

requirements must be met: (a) for an alternative fuel

D975 for diesel fuel oils suitable for various types of

facility or gasification facility that uses coal as the primary

diesel fuel engines; or D1655 for aviation turbine fuels.

feedstock, the minimum capital investment shall be $100

Also KRS 141.423 was amended to provide that the $1

million; (b) for an alternative fuel facility or gasification

per gallon credit allowed a blender is based upon the

facility that uses biomass resources as the primary

gallons of biodiesel or renewable biodiesel used in the

feedstock, the minimum capital investment shall be $25

blending process. The annual biodiesel and renewable

million; and (c) for a renewable energy facility, the

diesel tax credit cap is $1.5 million for calendar years

minimum capital investment shall be $1 million. The

beginning prior to Jan. 1, 2008; $5 million for the

tax incentives allowed an alternative fuel facility or a

calendar year beginning on Jan. 1, 2008; and $10 million

gasification facility shall be allowed for tax periods

for calendar years beginning on or after Jan. 1, 2009.

beginning after Dec. 31, 2008 and ending before Jan. 1,

The biodiesel and renewable diesel provisions in HB 1

2021.

were effective Aug. 30, 2007.

Form 40a727 - Income Tax Forms Requisition Page 2

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