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2014 Credit for Taxes Paid for Coal

Arizona Form

Consumed in Generating Electrical Power

318

Obtain additional information or assistance by calling one of

Specific Instructions

the numbers listed below:

Complete the name and employer identification number

Phoenix

(602) 255-3381

section at the top of the form. Indicate the period covered by

From area codes 520 and 928, toll-free

(800) 352-4090

the taxable year. Include the completed form with the tax

Obtain tax rulings, tax procedures, tax forms and instructions,

return.

and other tax information by accessing the department's

All returns, statements, and other documents filed with the

website at

department require a taxpayer identification number (TIN).

The TIN for a corporation, an exempt organization with

General Instructions

UBTI, an S corporation or a partnership is the taxpayer's

employer identification number. Taxpayers that fail to

Arizona

Revised

Statutes

§ 43-1178

provides

include their TIN may be subject to a penalty.

nonrefundable corporate income tax credit equal to 30% of

the amount paid by the seller or purchaser as transaction

Part 1 - Current Taxable Year's Credit Calculation

privilege tax or use tax for coal sold to the taxpayer that is

Form 318-1 and Line 1 -

consumed in the generation of electrical power in Arizona.

"Amount paid by the seller or purchaser as transaction

Complete Form 318-1 before completing Part 1, line 1, of

privilege tax or use tax" means that the Arizona transaction

Form 318. Complete Form 318-1 to list the qualifying coal

privilege tax (TPT) was passed through to the taxpayer by the

purchases for the taxable year.

seller as an added charge or that the seller collected the

FORM 318-1

Arizona use tax from the taxpayer or that the taxpayer paid

the Arizona use tax to the department.

The design of Form 318-1 allows the taxpayer to list

The tax credit is in lieu of a deduction for the taxes for which

qualifying coal purchases for the taxable year in two

the credit is claimed. An addition to Arizona gross income is

situations:

required for the amount of Arizona TPT and Arizona use

1. Purchases from vendors that passed the Arizona TPT

taxes included in the computation of federal taxable income

through to the taxpayer as an added charge or purchases

for which the Arizona tax credit is claimed.

from vendors that collected the Arizona use tax from the

For example, a taxpayer that paid $50,000 in TPT for coal

taxpayer; and

consumed in the generation of electrical power in Arizona

2. Purchases from vendors for which the taxpayer paid the

would receive a credit of $15,000 ($50,000 x 30% =

Arizona use tax to the department.

$15,000). The addition to Arizona gross income would be

Situation 1: List the qualifying coal purchases by vendor for

$50,000.

situation 1 above. If the taxpayer has purchased coal from more

The tax credit is available only to corporate taxpayers. A

than two vendors, additional Form(s) 318-1 must be completed

partnership may pass this credit through only to its corporate

to list the qualifying coal purchases for the taxable year.

partners. An S corporation may claim this credit, or the

Complete section A to list the vendor name and the vendor’s

S corporation may elect to pass this credit through to only its

Arizona TPT or use tax number. Do not complete section B.

exempt organization shareholders.

NOTE: The Arizona TPT must be shown as an added charge

The credit is available to an exempt organization that is

on the vendor's invoice. If the vendor collects the Arizona use

subject to corporate income tax on unrelated business taxable

tax from the taxpayer, the tax must be shown as a separate

income (UBTI). The credit must result from the activities that

charge on the vendor's invoice.

generate UBTI.

Situation 2: List the qualifying coal purchases from all

Co-owners of a business, including corporate partners of a

vendors for situation 2 above. Complete section B to list the

partnership or exempt organization shareholders of an

taxpayer’s Arizona TPT or use tax number. Do not complete

S corporation, may each claim only the pro rata share of the

section A.

credit allowed based on the ownership interest. The pro rata

share that would be distributed to non-eligible partners or

NOTE: If the taxpayer pays the Arizona use tax directly to

shareholders is lost. The total of the credits allowed all such

the department, the taxpayer must document the amount of

owners may not exceed the amount that would have been

tax paid for each invoice.

allowed for a sole owner of the business.

Column (a): On lines 1 through 12, enter the applicable

If the allowable tax credit exceeds the taxes otherwise due, or

month of the taxable year.

if there are no taxes due, the amount of the credit not used to

Column (b): On lines 1 through 12, indicate the type of tax,

offset taxes may be carried forward for not more than five

TPT or use.

consecutive taxable years as a credit against subsequent years'

income tax liability.

Column (c): On lines 1 through 12, enter the total amount of

qualifying coal purchases for that month. Do not include the

amount of tax paid in the total.

Instructions For Arizona Form 318 - Credit For Taxes Paid For Coal Consumed In Generating Electrical Power - 2014

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