Petroleum Refinery Credit
INCOME TAXPAYER-Effective for all taxable years commencing after Dec. 31, 2005 and before Jan. 1, 2011.
An income taxpayer that makes a qualified investment in a new refinery , in the expansion of an existing refinery or in the restoration of production of a refinery shall be allowed a tax credit.
Qualifications
Before making a qualified investment, a taxpayer shall apply to the Secretary of Commerce to enter into an agreement for this tax credit.After receipt of the application the Secretary of Commerce may enter into an agreement with the applicant for a credit if it is determined that the taxpayer’s proposed investment satisfies the requirements.
Credit Amount
The credit is 10 percent of the taxpayer’s qualified investment on the first $250 million invested, and five percent of the taxpayer’s qualified investment that exceeds $250 million. The credit will be taken in ten equal, annual installments, beginning with the year in which the taxpayer places into service the new refinery, the expansion of an existing refinery or the restoration of production of a refinery.
Limitation of Credit
If the amount of the credit exceeds the taxpayer’s tax liability in any one taxable year, the remaining portion of the credit may be carried forward until the total amount of the credit is used, except that no such tax credit shall be carried over for deduction after the 14th taxable year after the taxable year in which the first annual installment is allowed.
PROCEDURES TO CLAIM THE CREDIT
You may download Schedule K-73 to claim the petroleum refinery credit. This schedule must be completed and submitted with the income tax return. You may also call the Department of Revenue voice mail system at 785-296-4937 to request Schedule K-73. You will be asked to give your name, address, phone number and form(s) you desire. Please allow two weeks for delivery of your forms.
Qualified Investment
Qualified investment means expenditures made in construction of a new refinery, expansion of an existing refinery or restoration of production of a refinery, for real and tangible personal property incorporated in and used as part of the refinery.
New Refinery
New refinery means a refinery, construction of which begins after Dec. 31, 2005.
Expansion of an Existing Refinery
Expansion of an existing refinery means expansion which begins after Dec. 31, 2005, of the capacity of an existing refinery by at least 10 percent of the capacity.
Restoration of Production of a Refinery
Restoration of production of a refinery means restoration which begins after Dec. 31, 2005, of production of a refinery which has been out of production for five or more years.
Refinery
Refinery means an industrial process plant, located in this state, where crude oil is processed and refined into petroleum products.