AN ACT relating to the certified rehabilitation credit and declaring an emergency.

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AN ACT relating to the certified rehabilitation credit and declaring an emergency. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 171.396 is amended to read as follows: 3
As used in this section and KRS 171.3961 and 171.397 and Section 3 of this Act: 4
(1) "Certified historic structure" means a structure that is located within the 5
Commonwealth of Kentucky that is: 6
(a) Listed individually on the National Register of Historic Places; or 7
(b) Located in a historic district listed on the National Register of Historic Places 8
and is certified by the council as contributing to the historic significance of 9
the district; 10
(2) "Certified rehabilitation" means a completed substantial rehabilitation of a certified 11
historic structure that the council certifies meets the United States Secretary of the 12
Interior's Standards for Rehabilitation; 13
(3) "Certified rehabilitation credit cap" means an annual amount of [: 14
(a) Three million dollars ($3,000,000) for app lications received prior to April 30, 15
2010; 16
(b) Five million dollars ($5,000,000) for applications received on or after April 17
30, 2010, but before April 30, 2022; and 18
(c) ]one hundred million dollars ($100,000,000) for applications received on or after: 19
(a) April 30, 2022, but before April 30, 2026, allocated with: 20
1. Twenty-five percent (25%) of the credit cap awarded to owner -occupied 21
residential property; and 22
2. Seventy-five percent (75%) of the credit cap awarded to property other 23
than owner -occupied r esidential property, which includes the major 24
certified rehabilitation allowed under KRS 171.3963; and 25
(b) April 30, 2026, in accordance with Section 3 of this Act, allocated with: 26
1. Fifteen percent (15%) of the credit cap awarded to owner -occupied 27
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residential property; and 1
2. Eighty-five percent (85%) of the credit cap awarded to property other 2
than owner -occupied residential property; including workforce 3
housing property; 4
plus any amounts[amount] added to the certified rehabilitation credit cap pursuant 5
to KRS 171.397(2)(c) and Section 3 of this Act; 6
(4) "Council" means the Kentucky Heritage Council; 7
(5) "Disqualifying work" means work that is performed within three (3) years of the 8
completion of the certified rehabilitation that, if performed as part of the 9
rehabilitation certified under KRS 171.397 and Section 3 of this Act , would have 10
made the rehabilitation ineligible for certification; 11
(6) "Exempt entity" means any tax exempt organization pursuant to sec. 501(c)(3) of 12
the Internal Revenue Code, any p olitical subdivision of the Commonwealth, any 13
state or local agency, board, or commission, or any quasi-governmental entity; 14
(7) "Local government" means a city, county, urban -county, charter county, or 15
consolidated local government; 16
(8) "Owner-occupied re sidential property" means a building or portion thereof, 17
condominium, or cooperative occupied by the owner as his or her principal 18
residence; 19
(9) "Qualified rehabilitation expense" means any amount that is properly chargeable to 20
a capital account, whether or not depreciation is allowed under Section 168 of the 21
Internal Revenue Code, and is expended at any time in connection with the certified 22
rehabilitation of a certified historic structure. It shall include the cost of restoring 23
landscaping and fencing tha t contributes to the historic significance of this 24
structure, but shall not include the cost of acquisition of a certified historic 25
structure, enlargement of or additions to an existing building, or the purchase of 26
personal property; 27
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(10) "Substantial rehabilitation" means rehabilitation of a certified historic structure for 1
which the qualified rehabilitation expenses, during a twenty -four (24) month period 2
selected by the taxpayer or exempt entity, ending with or within the taxable year, 3
exceed: 4
(a) Twenty thousand dollars ($20,000) for an owner -occupied residential 5
property; or 6
(b) For all other property, the greater of: 7
1. The adjusted basis of the structure; or 8
2. Twenty thousand dollars ($20,000); 9
(11) "Taxpayer" means any individual, corporation, limit ed liability company, business 10
development corporation, partnership, limited partnership, sole proprietorship, 11
association, joint stock company, receivership, trust, professional service 12
organization, or other legal entity through which business is conducted that: 13
(a) Elects to claim the credit on a return and receive a refund as provided in KRS 14
171.397(2)(b)2.a. or Section 3 of this Act; or 15
(b) Is the recipient of a credit which is transferred as provided in KRS 16
171.397(2)(b)2.b. or Section 3 of this Act;[ and] 17
(12) "Qualified purchased historic home" means any substantially rehabilitated certified 18
historic structure if: 19
(a) The taxpayer claiming the credit authorized under KRS 171.397 or Section 3 20
of this Act is the first purchaser of the structure after the date of completion of 21
the substantial rehabilitation; 22
(b) The structure or a portion thereof will be the principal residence of the 23
taxpayer; and 24
(c) No credit was allowed to the seller under this section. 25
A qualified purchased historic home shall be deemed owner -occupied residential 26
property for purposes of this section; and 27
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(13) "Workforce housing" means a certified historic structure that for a minimum 1
period of five (5) years after the building is plac ed in service, has at least fifty 2
percent (50%) of the structure's square footage designated to residential space 3
that is: 4
(a) Available for lease, rent, or sale; and 5
(b) Affordable to individuals earning eighty percent (80%) of the county -level 6
area median income or less as determined by the United States Department 7
of Housing and Urban Development. 8
Section 2. KRS 171.397 is amended to read as follows: 9
(1) (a) For all applications for a preliminary approval received prio r to April 30, 10
2010, there shall be allowed as a credit against the taxes imposed by KRS 11
141.020, 141.040, 141.0401, or 136.505, an amount equal to: 12
1. Thirty percent (30%) of the qualified rehabilitation expenses, in the case 13
of owner-occupied residential property; and 14
2. Twenty percent (20%) of the qualified rehabilitation expenses, in the 15
case of all other property. 16
In the case of an exempt entity that has incurred qualified rehabilitation 17
expenses, the credit provided in this subsection shall be availa ble to transfer 18
or assign as provided under subsection (8) or (9) of this section. 19
(b) For applications for preliminary approval received on or after April 30, 2010, 20
the credit shall be refundable if the taxpayer makes an election under 21
subsection (2)(b) of this section. 22
(2) (a) A taxpayer seeking the credit provided under subsection (1) of this section 23
shall file an application for a preliminary determination of maximum credit 24
eligibility before April 30 of the year in which the proposed project will 25
begin. The application shall describe the project and shall include 26
documentation supporting the qualification of the project for the credit, the 27
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proposed start date, the proposed completion date, the projected qualified 1
rehabilitation expenses, and any other i nformation the council may require. 2
The council shall determine the preliminary maximum credit available for 3
each taxpayer and shall notify the taxpayer of that amount by June 30 of the 4
year in which the application was filed. If total credits applied for in any year 5
exceed the certified rehabilitation credit cap, plus any amounts added to the 6
cap pursuant to paragraph (c) of this subsection, the provisions of subsection 7
(5) of this section shall be applied to reduce the approved credits for all 8
taxpayers with qualifying applications for that year. 9
(b) 1. An application for a final determination of credit shall be submitted to 10
the council upon completion of the project. 11
2. The application shall include an irrevocable election by the taxpayer to: 12
a. Use the credit, in which case, the credit shall be refundable; or 13
b. Transfer the credit. 14
3. The council shall determine the final amount of credit approved for each 15
taxpayer based upon the actual expenditures, preliminary determination 16
of maximum credit, and a det ermination that the expenditures are 17
qualified rehabilitation expenses. 18
4. The council shall notify the taxpayer and Department of Revenue of the 19
final approved credit amount within sixty (60) days of the receipt of a 20
completed application from the taxpayer. 21
(c) 1. If the total amount of credits finally approved for a taxpayer under 22
paragraph (b) of this subsection are less than the credits initially 23
approved for a taxpayer under paragraph (a) of this subsection, the 24
difference between the two (2) amounts s hall be added to the certified 25
rehabilitation credit cap for the next calendar year. 26
2. If the total amount of credits approved under paragraph (a) of this 27
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subsection in any calendar year is less than the certified rehabilitation 1
credit cap, the difference between the credits actually awarded and the 2
certified rehabilitation credit cap shall be added to the certified 3
rehabilitation credit cap for the next calendar year. 4
(3) (a) The maximum credit which may be claimed with regard to owner -occupied 5
residential property shall be one hundred twenty thousand dollars ($120,000) 6
subject to subsection (5) of this section. The credit in this section shall be 7
claimed for the taxable year in which the certified rehabilitation is completed. 8
(b) The maximum credit which may be claimed with regard to all other property 9
that is not owner -occupied residential shall be ten million dollars 10
($10,000,000) subject to subsection (5) of this section. The credit in this 11
section shall be claimed for the taxab le year in which the certified 12
rehabilitation is completed. 13
(4) In the case of a husband and wife filing separate returns or filing separately on a 14
joint return, the credit may be taken by either or divided equally, but the combined 15
credit shall not exceed one hundred twenty thousand dollars ($120,000) if subject to 16
the limitation in subsection (3)(a) of this section, or ten million dollars 17
($10,000,000) if subject to the limitation in subsection (3)(b) of this section, subject 18
to the provisions of subsection (5) of this section. 19
(5) The credit amount approved for a calendar year for all taxpayers under subsection 20
(2)(a) of this section shall be limited to the certified rehabilitation credit cap. When 21
the total credits applied for and approved in any year un der subsection (2)(a) of this 22
section exceed the certified rehabilitation credit cap, the council shall apportion the 23
certified rehabilitation credit cap as follows: The certified rehabilitation credit cap 24
for the year under consideration shall be multipli ed by a fraction, the numerator 25
which is the approved credit amount for an individual taxpayer for a calendar year 26
and the denominator which is the total approved credits for all taxpayers for a 27
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calendar year. 1
(6) (a) For all applications received prior to April 30, 2010, if the credit amount that 2
may be claimed in any tax year as determined under subsections (3) to (5) of 3
this section exceeds the taxpayer's total tax liabilities under KRS 136.505, 4
141.020, or 141.040 and 141.0401, the taxpayer may carry th e excess tax 5
credit forward until the tax credit is used, provided that any tax credits not 6
used within seven (7) years of the taxable year the certified rehabilitation was 7
complete shall be lost. 8
(b) For all applications received on or after April 30, 201 0, if the credit amount 9
that may be claimed in any tax year as determined under subsections (3) to (5) 10
of this section exceeds the taxpayer's total tax liabilities under KRS 136.505, 11
141.020, or 141.040 and 141.0401, the taxpayer may receive a refund, if t he 12
taxpayer elected to take the credit as required by subsection (2)(b) of this 13
section. 14
(7) (a) The credit shall apply against both the tax imposed by KRS 141.020 or 15
141.040 and the limited liability entity tax imposed by KRS 141.0401, with 16
the ordering of credits as provided in KRS 141.0205. 17
(b) 1. For applications received prior to April 30, 2010, if the taxpayer is a 18
pass-through entity not subject to the tax imposed by KRS 141.040, the 19
taxpayer shall apply the credit at the entity level against the lim ited 20
liability tax entity imposed by KRS 141.0401, and shall also pass the 21
credit through in the same proportion as the distributive share of income 22
or loss is passed through. 23
2. For applications received on or after April 30, 2010, if the taxpayer is a 24
pass-through entity not subject to the tax imposed by KRS 141.040, the 25
taxpayer shall apply the credit at the entity level against the limited 26
liability tax entity imposed by KRS 141.0401, and may receive a refund 27
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if the taxpayer elected to take the credit a s required by subsection 1
(2)(b)2.a. of this section. 2
(8) Credits received under this section may be transferred or assigned if an election is 3
made under subsection (2)(b) of this section, for some or no consideration, along 4
with any related benefits, right s, responsibilities, and liabilities to a financial 5
institution as defined in KRS 141.010 subject to the taxes imposed by KRS 6
136.505, 141.040, or 141.0401. Within thirty (30) days of the date of any transfer of 7
credits, the party transferring the credits shall notify the Department of Revenue of: 8
(a) The name, address, employer identification number, and bank routing and 9
transfer number, of the party to which the credits are transferred; 10
(b) The amount of credits transferred; and 11
(c) Any additional information the Department of Revenue deems necessary. 12
The provisions of this subsection shall apply to any credits that pass through to a 13
successor or beneficiary of a taxpayer. 14
(9) For purposes of this section, a lessee of a certified historic structure shall be treated 15
as the owner of the structure if the remaining term of the lease is not less than the 16
minimum period promulgated by administrative regulation by the council. 17
(10) The taxes imposed in KRS 141.020, 141.040, and 141.0401 shall not apply to any 18
consideration received for the transfer, sale, assignment, or use of a tax credit 19
approved under this section. 20
(11) The Department of Revenue shall assess a penalty on any taxpayer or exempt entity 21
that performs disqualifying work, as determined by the Kentuc ky Heritage Council, 22
on a certified historic structure for which a rehabilitation has been certified under 23
this section in an amount equal to one hundred percent (100%) of the tax credit 24
allowed on the rehabilitation. Any penalties shall be assessed agains t the property 25
owner who performs the disqualifying work and not against any transferee of the 26
credits. 27
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(12) The council may impose fees for processing applications for tax credits, not to 1
exceed the actual cost associated with processing the applications. 2
(13) The council may authorize a local government to perform an initial review of 3
applications for the credit allowed under this section and forward the applications to 4
the council with its recommendations. 5
(14) The council and the Department of Revenue m ay promulgate administrative 6
regulations in accordance with the provisions of KRS Chapter 13A to establish 7
policies and procedures to implement the provisions of subsections (1) to (13) of 8
this section. 9
(15) The tax credit authorized by this section shall apply to tax periods ending on or 10
after December 31, 2005. 11
(16) This section applies to applications received before April 30, 2026. 12
SECTION 3. A NEW SECTION OF KRS CHAPTER 171 IS CREATED TO 13
READ AS FOLLOWS: 14
(1) (a) There is available a certified rehabilitation credit for taxpayers who incur 15
qualified rehabilitation expenses for the certified rehabilitation of a certified 16
historic structure. 17
(b) This section applies to applications received on or after April 30, 2026. 18
(2) (a) Credit shall be allowed against the taxes imposed by: 19
1. KRS 141.020 or 141.040 and 141.0401; or 20
2. KRS 136.320, 136.330, 136.340, 136.350, 136.360, 136.370, 136.390, 21
or 136.392 if the entity is not subject to the taxes imposed by KRS 22
141.020 or 141.040 and 141.0401. 23
(b) The amount of credit shall be equal to: 24
1. Thirty percent (30%) of the qualified rehabilitation expenses, in the 25
case of owner-occupied residential property; 26
2. Thirty percent (30%) of the qualified rehabilitation expenses, in the 27
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case of workforce housing property; or 1
3. Twenty percent (20%) of the qualified rehabilitation expenses, in the 2
case of all other property. 3
(3) (a) There shall be two (2) rounds of applications per calendar year for the 4
credit provided under subsection (2) of this section, and a taxpayer seeking 5
the credit shall file an application for a preliminary determination of 6
maximum credit eligibility before: 7
1. April 15 of the year in which the proposed project will begin; or 8
2. August 15 of the year in which the proposed project will begin. 9
(b) The certified rehabilitation credit cap shall be allocated as follows, 10
including any amounts added to the certified rehabilitation credit cap 11
pursuant to paragraph (h) of this subsection: 12
1. Fifty million dollars ($50,000,000 ) for applications received in 13
accordance with paragraph (a)1. of this subsection; and 14
2. Fifty million dollars ($50,000,000) for applications received in 15
accordance with paragraph (a)2. of this subsection. 16
(c) In the event the full allocation in paragraph (b)1. is not utilized for 17
applications received by April 15, the remainder shall be made available for 18
applications received in accordance with paragraph (a)2. of this subsection. 19
(d) If the total amount of preliminary approvals for all applications recei ved in 20
a single application round under paragraph (a)1. or 2. of this subsection 21
exceeds the cap of fifty million dollars ($50,000,000) plus any amounts 22
added to the credit cap, the council shall apportion the certified 23
rehabilitation credit cap as follows: 24
1. The certified rehabilitation credit cap for the application round under 25
consideration shall be multiplied by a fraction, the numerator which is 26
the approved credit amount for an individual taxpayer for an 27
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application round and the denominator which is the total approved 1
credits for all taxpayers for an application round; and 2
2. Each taxpayer shall receive not more than their pro rata share of the 3
certified rehabilitation credit cap allocated for the corresponding 4
application round. 5
(e) Applications sub mitted for preliminary approval shall be reviewed in the 6
order in which they are received based on the date of the application. 7
(f) The council shall determine the preliminary maximum credit available for 8
each taxpayer and shall notify the taxpayer of that amount by: 9
1. June 30 for applications received on or before April 15 of the same 10
calendar year in which the application was filed; or 11
2. October 30 for applications received on or before August 15 of the 12
same calendar year in which the application was filed. 13
(g) An application submitted for preliminary approval shall describe the project 14
and shall include documentation supporting the qualification of the project 15
for the credit, the proposed start date, the proposed completion date, the 16
projected qualified rehabilitation expenses, and any other information the 17
council may require. 18
(h) 1. If the total amount of credits finally approved for a taxpayer under 19
paragraph (i) of this subsection is less than the amount of the credits 20
initially approved for a taxpay er under paragraph (f) of this 21
subsection, the difference between the two (2) amounts shall be added 22
to the certified rehabilitation credit cap for the next calendar year. 23
2. If the total amount of credits approved under paragraph (f) of this 24
subsection in any calendar year is less than the certified rehabilitation 25
credit cap, the difference between the credits actually awarded and the 26
certified rehabilitation credit cap shall be added to the certified 27
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rehabilitation credit cap for the next calendar year. 1
3. If the entire credit cap allocated for applications in paragraph (b) of 2
this subsection is not entirely utilized for preliminary applications 3
received under paragraph (a) of this subsection, the remaining portion 4
shall be made available for all other pro perties having submitted 5
preliminary applications within the same application round regardless 6
of property type. 7
(i) 1. An application for a final determination of credit shall be submitted to 8
the council upon completion of the project. A taxpayer who is no 9
longer the owner of the certified historic structure may apply for final 10
determination of credit as long as the taxpay er received preliminary 11
approval under paragraph (f) of this subsection and substantially 12
rehabilitated the certified historic structure. 13
2. The application shall include an irrevocable election by the taxpayer 14
to: 15
a. Use the credit, in which case the credit shall be refundable; or 16
b. Transfer the credit in accordance with subsection (7) of this 17
section, in which case the credit shall be nonrefundable. 18
3. The council shall determine the final amount of credit approved for 19
each taxpayer based upon the actual expenditures, preliminary 20
determination of maximum credit, and a determination that the 21
expenditures are qualified rehabilitation expenses. All qualified 22
rehabilitation expenses shall be included in the final calculation of the 23
credit. 24
4. The council shal l notify the taxpayer and Department of Revenue of 25
the final approved credit amount within sixty (60) days of the receipt 26
of a completed application from the taxpayer. 27
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5. If an election is made in accordance with subsection (6) of this 1
section, the council shall provide a copy of the written authorization 2
and amount of approved credit allocated by the pass-through entity. 3
(4) Subject to the certified rehabilitation cap in subsection (3)(b) of this section any 4
appointment required under subsection (3)(d) of this section: 5
(a) The maximum credit which may be claimed with regard to owner -occupied 6
residential property shall be one hundred twenty thousand dollars 7
($120,000), and the credit in this section shall be claimed for the taxable 8
year in which the certified rehabilitation is completed; and 9
(b) The maximum credit which may be claimed with regard to all other 10
property that is not owner -occupied residential shall be ten million dollars 11
($10,000,000), and the credit in this section shall be claimed for the taxa ble 12
year in which the certified rehabilitation is completed. 13
(5) In the case of two (2) spouses filing separate returns or filing separately on a 14
joint return, the credit may be taken by either or divided equally, but the 15
combined credit shall not exceed one hundred twenty thousand dollars ($120,000) 16
if subject to the limitation in subsection (4)(a) of this section, or ten million 17
dollars ($10,000,000) if subject to the limitation in subsection (4)(b) of this 18
section. 19
(6) (a) If the taxpayer is a pass -through entity not subject to the tax imposed by 20
KRS 141.040, the taxpayer shall: 21
1. Apply the credit at the entity level against the limited liability entity tax 22
imposed by KRS 141.0401; or 23
2. At the election and written authorization of the approved entity, p ass 24
the credit through to their partners, members, or shareholders in any 25
manner so prescribed by the approved entity and may be 26
disproportionate to such partner's, member's, or shareholder's 27
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distributive share of net income or loss. 1
(b) This subsection sh all apply to any credits that pass through to a partner or 2
successor or beneficiary of a taxpayer. 3
(7) (a) Credits received under this section may be transferred or assigned if an 4
election is made under subsection (3)(i)2. of this section, for some or no 5
consideration, along with any related benefits, rights, responsibilities, and 6
liabilities to any person or entity subject to the taxes imposed by: 7
1. KRS 141.020, 141.040, or 141.040; or 8
2. KRS 136.320, 136.330, 136.340, 136.350, 136.360, 136.370, 136.390, 9
or 136.392. 10
(b) Within thirty (30) days of the date of any transfer of credits, the party 11
transferring the credits shall notify the Department of Revenue and provide: 12
1. The name, address, employer identification number, and bank routing 13
and transfer numbers of the party to which the credits are transferred; 14
2. The amount of credit transferred; and 15
3. Any additional information the Department of Revenue deems 16
necessary. 17
(c) Any taxpayer receiving transferred credit under this subsection may carry 18
forward un used credit for a period not to exceed seven (7) taxable years 19
from which the certified rehabilitation was complete. 20
(d) This subsection shall apply to any credits that pass through to a partner or 21
successor or beneficiary of a taxpayer. 22
(8) For purposes of this section, a lessee of a certified historic structure shall be 23
treated as the owner of the structure if the remaining term of the lease is not less 24
than the minimum period established in an administrative regulation 25
promulgated by the council. 26
(9) The taxes imposed in KRS 141.020, 141.040, and 141.0401 shall not apply to any 27
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consideration received for the transfer, sale, assignment, or use of a tax credit 1
approved under this section. 2
(10) (a) The Department of Revenue shall assess a penal ty in an amount equal to 3
one hundred percent (100%) of the tax credit allowed on the rehabilitation 4
on any taxpayer or exempt entity that: 5
1. Performs disqualifying work as determined by the Kentucky Heritage 6
Council; or 7
2. Fails to maintain compliance wit h the workforce housing 8
requirements established in subsection (13) of Section 1 of this Act, as 9
determined by the council and the Kentucky Housing Corporation. 10
(b) Any penalties assessed under paragraph (a) of this subsection shall be 11
assessed against the property owner and not against any transferee of the 12
credits. 13
(11) The council may impose fees for processing applications for tax credits, not to 14
exceed the actual cost associated with processing the applications. 15
(12) The council may authorize a local g overnment to perform an initial review of 16
applications for the credit allowed under this section and forward the applications 17
to the council with its recommendations. 18
(13) The council and the Department of Revenue may promulgate administrative 19
regulations in accordance with KRS Chapter 13A to establish policies and 20
procedures necessary to implement this section. 21
Section 4. KRS 141.0205 is amended to read as follows: 22
If a taxpayer is entitled to more than one (1) of the tax credits allowed against the tax 23
imposed by KRS 141.020, 141.040, and 141.0401, the priority of application and use of 24
the credits shall be determined as follows: 25
(1) The nonrefundable business incen tive credits against the tax imposed by KRS 26
141.020 shall be taken in the following order: 27
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(a) The limited liability entity tax credit permitted by KRS 141.0401; 1
(b) The economic development credits computed under KRS 141.347, 141.381, 2
141.384, 141.3841, 1 41.400, 141.403, 141.407, 141.415, 154.12 -207, and 3
154.12-2088; 4
(c) The qualified farming operation credit permitted by KRS 141.412; 5
(d) The certified rehabilitation credit permitted by KRS 171.397(1)(a); 6
(e) The health insurance credit permitted by KRS 141.062; 7
(f) The tax paid to other states credit permitted by KRS 141.070; 8
(g) The credit for hiring the unemployed permitted by KRS 141.065; 9
(h) The recycling or composting equipment credit permitted by KRS 141.390; 10
(i) The [tax ]credit for cash contributio ns in investment funds permitted by KRS 11
154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 12
154.20-258; 13
(j) The research facilities credit permitted by KRS 141.395; 14
(k) The employer High School Equivalency Diploma program incentive credit 15
permitted under KRS 151B.402; 16
(l) The voluntary environmental remediation credit permitted by KRS 141.418; 17
(m) The biodiesel and renewable diesel credit permitted by KRS 141.423; 18
(n) The clean coal incentive credit permitted by KRS 141.428; 19
(o) The ethanol credit permitted by KRS 141.4242; 20
(p) The cellulosic ethanol credit permitted by KRS 141.4244; 21
(q) The energy efficiency credits permitted by KRS 141.436; 22
(r) The railroad maintenance and improvement credit permitted by KRS 141.385; 23
(s) The Endow Kentucky credit permitted by KRS 141.438; 24
(t) The New Markets Development Program credit permitted by KRS 141.434; 25
(u) The distilled spirits credit permitted by KRS 141.389; 26
(v) The angel investor credit permitted by KRS 141.396; 27
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(w) The film industry credit permitted by KRS 141.383 for applications approved 1
on or after April 27, 2018, but before January 1, 2022; 2
(x) The inventory credit permitted by KRS 141.408; 3
(y) The renewable chemical production credit permitted by KRS 141.4231; and 4
(z) The qualified broadband investment [tax ]credit permitted by KRS 141.391; 5
(2) After the application of the nonrefundable credits in subsection (1) of this section, 6
the nonrefundable personal tax credits aga inst the tax imposed by KRS 141.020 7
shall be taken in the following order: 8
(a) The individual credits permitted by KRS 141.020(3); 9
(b) The credit permitted by KRS 141.066; 10
(c) The tuition credit permitted by KRS 141.069; 11
(d) The household and dependent care credit permitted by KRS 141.067; 12
(e) The income gap credit permitted by KRS 141.066; and 13
(f) The Education Opportunity Account Program [tax ]credit permitted by KRS 14
141.522; 15
(3) After the application of the nonrefundable credits provided for in subsectio n (2) of 16
this section, the refundable credits against the tax imposed by KRS 141.020 shall be 17
taken in the following order: 18
(a) The individual withholding tax credit permitted by KRS 141.350; 19
(b) The individual estimated tax payment credit permitted by KRS 141.305; 20
(c) The certified rehabilitation credit permitted by KRS 171.3961, 171.3963, and 21
171.397(1)(b) and Section 3 of this Act; 22
(d) The film industry [tax ] credit permitted by KRS 141.383 for applications 23
approved prior to April 27, 2018, or on or after January 1, 2022; 24
(e) The development area [tax ]credit permitted by KRS 141.398; 25
(f) The decontamination [tax ]credit permitted by KRS 141.419; and 26
(g) The pass-through entity tax credit permitted by KRS 141.209; 27
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(4) The nonrefundable credit permitted by KRS 141.0401 shall be applied against the 1
tax imposed by KRS 141.040; 2
(5) The following nonrefundable credits shall be applied against the sum of the tax 3
imposed by KRS 141.040 after subtracting the credit provided for in subsection (4) 4
of this section, and the tax imposed by KRS 141.0401 in the following order: 5
(a) The economic development credits computed under KRS 141.347, 141.381, 6
141.384, 141.3841, 141.400, 141.403, 141.407, 141.415, 154.12 -207, and 7
154.12-2088; 8
(b) The qualified farming operation credit permitted by KRS 141.412; 9
(c) The certified rehabilitation credit permitted by KRS 171.397(1)(a); 10
(d) The health insurance credit permitted by KRS 141.062; 11
(e) The unemployment credit permitted by KRS 141.065; 12
(f) The recycling or composting equipment credit permitted by KRS 141.390; 13
(g) The coal conversion credit permitted by KRS 141.041; 14
(h) The enterprise zone credit permitted by KRS 154.45 -090, for taxable periods 15
ending prior to January 1, 2008; 16
(i) The [tax ]credit for cash contributions to investment funds permitted by KRS 17
154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 18
154.20-258; 19
(j) The research facilities credit permitted by KRS 141.395; 20
(k) The employer High School Equivalency Diploma program incentive credit 21
permitted by KRS 151B.402; 22
(l) The voluntary environmental remediation credit permitted by KRS 141.418; 23
(m) The biodiesel and renewable diesel credit permitted by KRS 141.423; 24
(n) The clean coal incentive credit permitted by KRS 141.428; 25
(o) The ethanol credit permitted by KRS 141.4242; 26
(p) The cellulosic ethanol credit permitted by KRS 141.4244; 27
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(q) The energy efficiency credits permitted by KRS 141.436; 1
(r) The ENERGY STAR home or ENERGY STAR manufactured home credit 2
permitted by KRS 141.437; 3
(s) The railroad maintenance and improvement credit permitted by KRS 141.385; 4
(t) The railroad expansion credit permitted by KRS 141.386; 5
(u) The Endow Kentucky credit permitted by KRS 141.438; 6
(v) The New Markets Development Program credit permitted by KRS 141.434; 7
(w) The distilled spirits credit permitted by KRS 141.389; 8
(x) The film industry credit permitted by KRS 141.383 for applications approved 9
on or after April 27, 2018, but before January 1, 2022; 10
(y) The inventory credit permitted by KRS 141.408; 11
(z) The renewable chemical production [tax ]credit permitted by KRS 141.4231; 12
(aa) The Education Opportunity Account Program tax credit permitted by KRS 13
141.522; and 14
(ab) The qualified broadband investment [tax ]credit permitted by KRS 141.391; 15
and 16
(6) After the application of the nonrefundable credits in subsection (5) of this section, 17
the refundable credits shall be taken in the following order: 18
(a) The corporation estimated tax payment credit permitted by KRS 141.044; 19
(b) The certified rehabilitation credit permitted by KRS 171.3961, 171.3963, and 20
171.397(1)(b) and Section 3 of this Act; 21
(c) The film industry [tax ] credit permitted by KRS 141.383 for applications 22
approved prior to April 27, 2018, or on or after January 1, 2022; 23
(d) The decontamination [tax ]credit permitted by KRS 141.419; and 24
(e) The pass-through entity tax credit permitted by KRS 141.209. 25
Section 5. KRS 141.382 is amended to read as follows: 26
(1) As used in this section: 27
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(a) "Certified historic structure" means the same as defined in KRS 171.396; 1
(b) "Qualified rehabilitation expense" means the same as defined in KRS 2
171.396; and 3
(c) "Substantial rehabilitation" means the same as defined in KRS 171.396. 4
(2) A refundable or transferable credit in the amount determined in KRS 171.397 and 5
Section 3 of this Act shall be allowed against the taxes imposed by KRS Chapter 6
136[.505] or KRS 141.020 or 141.040 and 141.0401, with the ordering of credits 7
provided in KRS 141.0205, for qualified rehabilitation expenses incurred by the 8
taxpayer and used for substantial rehabilitation to a certified historic structure. 9
Section 6. KRS 171.3961 is amended to read as follows: 10
(1) For taxable years beginning on or after January 1, 2014, a taxpayer completing a 11
certified rehabilitation to a certified historic structure shal l be allowed a credit 12
against the taxes imposed by KRS 141.020 or 141.040 and 141.0401, with the 13
ordering of credits as provided in KRS 141.0205, or KRS 136.505 if: 14
(a) The certified historic structure is located within the jurisdiction of a 15
consolidated local government or urban-county government; 16
(b) The amount of qualified rehabilitation expenses exceeds fifteen million 17
dollars ($15,000,000); 18
(c) The certified historic structure is located within one -half (1/2) mile of a tax 19
increment financing development area which has received at least preliminary 20
approval under KRS 65.490 or 154.30-050; and 21
(d) Substantial rehabilitation of the certified historic structure begins prior to July 22
1, 2015. 23
(2) (a) The credit shall: 24
1. Equal the percentage of qualified reh abilitation expenses as provided in 25
KRS 171.397(1)(a) and Section 3 of this Act; 26
2. Only apply to the first thirty million dollars ($30,000,000) of qualified 27
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rehabilitation expenses; and 1
3. Be refundable and transferable. 2
(b) Any projects approved for a credit under this section shall not be subject to 3
any caps established by KRS 171.397 or Section 3 of this Act and shall not be 4
considered in determining whether the certified rehabilitation credit cap has 5
been met in any year. 6
(3) The taxpayer seeking the credit shall file the applications for preliminary 7
determination and final determination as provided by KRS 171.397(2) and Section 8
3 of this Act. 9
(4) The total approved credit shall be available over a four (4) year period and the 10
maximum credit which may be claimed in a taxable year shall not exceed twenty -11
five percent (25%) of the total approved credit. 12
(5) The provisions of KRS 171.397(9) to (14) and subsections (8) to (13) of Section 3 13
of this Act shall also apply to this section. 14
SECTION 7. A NEW SECTION OF KRS CHAPTER 198A IS CREATED TO 15
READ AS FOLLOWS: 16
(1) The corporation shall work with the Kentucky Heritage Council to administer the 17
certified rehabilitation credit permitted by Section 3 of this Act. 18
(2) For workforce housing properties that are granted credit based on thirty percent 19
(30%) of qualified reha bilitation expenses for providing housing that is 20
affordable to households earning eighty percent (80%) or less of the Area Median 21
Income, the corporation shall ensure that the workforce housing property remain 22
compliant with this requirement for a minimum of five (5) years within the 23
completion of the certified rehabilitation. 24
(3) The corporation, in conjunction with the Kentucky Heritage Council and the 25
Department of Revenue, may promulgate administrative regulations in 26
accordance with KRS Chapter 13A to establish policies and procedures to ensure 27
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compliance with this section. 1
Section 8. Whereas approving applicants for the certified rehabilitation credit in 2
a timely manner is important to the rehabilitation of historic structures in the 3
Commonwealth and the administration of the credit, an emergency is declared to exist, 4
and this Act takes effect upon its passage and approval by the Governor or upon its 5
otherwise becoming a law. 6