Fillable Form N-324 - Ethanol Facility Tax Credit

FORM N-324

(REV. 2012)

PAGE 2

cent of its nameplate capacity if the nameplate

“Qualifying ethanol production facility” or

shall be provided to the Department of Tax-

capacity is greater than five hundred thousand

“facility” means a facility located in Hawaii which

ation and the Department of Business, Eco-

but less than fifteen million gallons. A taxpayer

produces motor fuel grade ethanol meeting the

nomic Development, and Tourism on forms

may claim this credit for each qualifying ethanol

minimum specifications by the American Society

provided by the Department of Business,

facility; provided that:

of Testing and Materials standard D-4806, as

Economic Development, and Tourism, and

amended.

shall include information on the taxpayer,

(1) The claim for this credit by any taxpayer of a

facility location, facility production capacity,

qualifying ethanol production facility shall

In the case of a taxable year in which the

anticipated production start date, and the

not exceed one hundred per cent of the total

cumulative claims for the credit by the taxpayer

taxpayer’s contact information. Notwith-

of all investments made by the taxpayer in

of a qualifying ethanol production facility exceeds

standing any other law to the contrary, this

the qualifying ethanol production facility dur-

the cumulative investment made in the qualifying

information shall be available for public in-

ing the credit period;

ethanol production facility by the taxpayer, only

spection and dissemination under chapter

that portion that does not exceed the cumulative

(2) The qualifying ethanol production facility op-

92F, HRS.

investment shall be claimed and allowed.

erated at a level of production of at least

The taxpayer shall provide written notice to

seventy-five per cent of its nameplate ca-

The tax credit allowable over the credit

the Director of Taxation and the Director of

pacity on an annualized basis;

period is capped at 100 percent of the qualifying

Business, Economic Development, and

investment. For example, Company X invests $7.1

(3) The qualifying ethanol production facility is

Tourism within thirty days following the start

million in a qualifying ethanol production facility

in production on or before January 1, 2017;

of production. The notice shall include the

with an annual nameplate capacity of 7.2 million

and

production start date and expected ethanol

gallons. The total tax credit allowable each year

fuel production for the next twenty-four

(4) No taxpayer that claims the credit under this

is 30 per cent of the nameplate capacity dollar

months. Notwithstanding any other law to

section shall claim any other Hawaii income

amount (0.30 X 7,200,000 gallons) or $2,160,000

the contrary, this information shall be avail-

tax credit for the same taxable year.

until the $7.1 million investment is recovered.

able for public inspection and dissemination

In the case of a partnership, S corporation,

Company X may claim a $2.16 million tax credit

under chapter 92F, HRS. Attach a copy of

estate, or trust, the tax credit allowable is for

each year for three years and a $620,000 tax

this notice to Form N-324 for the first year

every qualifying ethanol production facility. The

credit in the fourth year.

the credit is claimed.

cost upon which the tax credit is computed shall

If the credit exceeds the taxpayer’s income

Each calendar year during the credit period,

be determined at the entity level. Distribution and

tax liability, the excess of credit over liability

the taxpayer shall provide information to the

share of credit shall be determined pursuant to

shall be refunded to the taxpayer; provided that

Director of Business, Economic Develop-

section 235-110.7(a), HRS.

no refunds or payments on account of the tax

ment, and Tourism on the number of gallons

Definitions

credit shall be made for amounts less than $1.

of ethanol produced and sold during the

All claims for a credit must be properly filed on or

previous calendar year, how much was sold

“Credit period” means a maximum period of

before the end of the twelfth month following the

in Hawaii versus overseas, feedstocks used

eight years beginning from the first taxable year

close of the taxable year for which the credit may

for ethanol production, the number of em-

in which the qualifying ethanol production facility

be claimed. Failure to comply with the foregoing

ployees of the facility, and the projected

begins production even if actual production is not

provision shall constitute a waiver of the right to

number of gallons of ethanol production for

at seventy-five per cent of nameplate capacity.

claim the credit.

the succeeding year.

“Investment” means a nonrefundable capital

CERTIFYING CREDITS BY THE

If a qualifying ethanol production facility or an

expenditure related to the development and

interest therein is acquired by a taxpayer prior

DEPARTMENT OF BUSINESS,

construction of any qualifying ethanol production

to the expiration of the credit period, the credit

ECONOMIC DEVELOPMENT, AND

facility, including processing equipment, waste

allowable for any period after such acquisition

treatment systems, pipelines, and liquid storage

TOURISM

shall be equal to the credit that would have been

tanks at the facility or remote locations, including

allowable to the prior taxpayer had the taxpayer

expansions or modifications. Capital expenditures

The Department of Business, Economic

not disposed of the interest. If an interest is

shall be those direct and certain indirect costs

Development, and Tourism shall:

disposed of during any year for which the credit is

determined in accordance with section 263A

allowable, the credit shall be allowable between

(1) Maintain records of the total amount of in-

of the Internal Revenue Code (IRC), relating to

the parties on the basis of the number of days

vestment made by each taxpayer in facility;

uniform capitalization costs, but shall not include

during the year the interest was held by each

(2) Verify the amount of the qualifying invest-

expenses for compensation paid to officers of the

taxpayer. In no case shall the credit be allowed

ment;

taxpayer, pension and other related costs, rent

after the expiration of the credit period.

for land, the costs of repairing and maintaining

(3) Total all qualifying and cumulative invest-

Once the total nameplate capacities of

the equipment or facilities, training of operating

ments that the Department of Business,

qualifying ethanol production facilities built

personnel, utility costs during construction,

Economic Development, and Tourism certi-

within the State reaches or exceeds a level of

property taxes, costs relating to negotiation

fies;

forty million gallons per year, credits shall not be

of commercial agreements not related to

(4) Certify the total amount of the tax credit for

allowed for new ethanol production facilities. If a

development or construction, or service coats

each taxable year and the cumulative

new facility’s production capacity would cause

that can be identified specifically with a service

amount of the tax credit during the credit pe-

the statewide ethanol production capacity to

department or function or that directly benefit or

riod.

exceed forty million gallons per year, only the

are incurred by reason of a service department

ethanol production capacity that does not exceed

or function. For the purposes of determining a

Upon each determination, the Department of

the statewide forty million gallon per year level

capital expenditure for the credit, the provisions

Business, Economic Development, and Tourism

shall be eligible for the credit.

of section 263A of the IRC shall apply as it read

shall issue a certificate to the taxpayer verifying

on March 1, 2004. For purposes of the tax credit,

the qualifying investment amounts, the credit

If a qualifying ethanol production facility fails to

investment excludes land costs and includes any

amount certified for each taxable year, and the

achieve an average annual production of at least

investment for which the taxpayer is at risk, as

cumulative amount of the tax credit during the

seventy-five per cent of its nameplate capacity

that term is used in section 465 of the IRC (with

credit period. The taxpayer shall file the certificate

for two consecutive years, the stated capacity

respect to deductions limited to amount at risk).

with the taxpayer’s tax return with the Department

of that facility may be revised by the Director of

of Taxation. Notwithstanding the Department of

Business, Economic Development, and Tourism

“Nameplate capacity” means the qualifying

Business, Economic Development, and Tourism’s

to reflect actual production for the purposes of

ethanol production facility’s production design

certification authority, the Director of Taxation

determining statewide production capacity and

capacity, in gallons of motor fuel grade ethanol

may audit and adjust certification to conform to

allowable credits for that facility. Notwithstanding

per year.

the facts.

any other law to the contrary, this information

“Net income tax liability” means net income

shall be available for public inspection and

If in any year, the annual amount of certified

tax liability reduced by all other credits allowed

dissemination under chapter 92F, HRS.

credits reaches $12,000,000 in the aggregate, the

under this chapter.

INFORMATION REPORTING

Department of Business, Economic Development,

“Qualifying ethanol production” means ethanol

and Tourism shall immediately discontinue

REQUIREMENTS FOR THE

produced from renewable, organic feedstocks, or

certifying credits and notify the Department of

TAXPAYER PRODUCING ETHANOL

waste materials, including municipal solid waste.

Taxation. In no instance shall the total amount

All qualifying production shall be fermented,

of certified credits exceed $12,000,000 per year.

Prior to construction of any new qualifying

distilled, gasified, or produced by physical

Notwithstanding any other law to the contrary, this

ethanol production facility, the taxpayer shall

chemical conversion methods such as reformation

information shall be available for public inspection

provide written notice of the taxpayer’s in-

and catalytic conversion and dehydrated at the

and dissemination under chapter 92F, HRS.

tention to begin construction of a qualifying

facility.

ethanol production facility. The information

FORM N-324

Form N-324 - Ethanol Facility Tax Credit - 2012 Page 2

Related Articles

Related forms

Related Categories