Rhode Island Adopts Historic Structures Tax Credit Regulation
| Rhode Island Adopts Historic Structures Tax Credit Regulation |
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The Rhode Island Division of Taxation has adopted a regulation to
implement the provisions of recent legislation making significant
changes to the tax credit for the rehabilitation of historic structures
taken against the business corporation tax, franchise tax, bank excise
tax, public service corporation tax, the tax on insurance companies or
personal income tax. A credit is allowed against business corporation
(whether for profit or non-profit) tax, franchise tax, bank excise tax,
public service corporation tax, the tax on insurance companies and
personal income tax for a taxpayer who incurs qualified rehabilitation
expenditures for the substantial rehabilitation of a property
officially recorded as having applied to be certified as a certified
historic structure by the Rhode Island Historical Preservation and
Heritage Commission (RIHPHC) through its historic tax credit
application process prior to January 1, 2008, and verified by the
Division of Taxation. The new regulations provide that projects are divided into three groups and are afforded different treatment depending upon what stage the project has reached as of January 1, 2008; projects placed in service prior to January 1, 2008; projects already in progress that have submitted Part 1 of their application to RIHPHC prior to January 1, 2008; and projects that submitted a Part 1 application to RIHPHC after December 31, 2007. In addition, the regulation provides definitions, includes examples of phased projects, sets forth the application guidelines, and describes the determination of the credit, assignment of the credit, processing fees, contracts of guaranty, and restrictive covenants among other things. (Reg. CR 08-13, RI Division of Taxation, eff. 11/10/2008.) Projects placed in service prior to January 1, 2008. All projects placed in service prior to January 1, 2008, will receive the current 30% tax credit, provided that processing fees are paid to the Division of Taxation on or before May 15, 2008. Projects that fail to make payment by May 15, 2008, will not be eligible to receive the tax credits. Projects already in progress. Projects that are already in progress and have submitted Part 1 of their application to the Commission prior to January 1, 2008, may continue but with a reduced credit amount and higher fee. Projects that wish to continue in the program must pay a processing fee ranging from 3% to 5% of qualified rehabilitation expenditures, with 2.25% of qualified rehabilitation expenditures due on or before May 15, 2008, and the balance due on or before March 5, 2009. Projects may opt for one of the following combinations of processing fees and tax credits: 27% credit with a 5% processing fee; 26% credit with a 4% processing fee; or 25% credit with a 3% processing fee. All projects continuing in the program will enter into a contract with the Division of Taxation stating the estimated amount of qualified rehabilitation expenditures for the project, the tax credit percentage, and the amount of fees. The contract will constitute a state guaranty that the stated amount of tax credits will be available when earned. Projects will not be allowed to claim additional tax credits based on an increase in the qualified rehabilitation expenditures. The Division of Taxation will refund overpayment of fees for final qualified rehabilitation expenditures that are less than the amount stated in the contract. Upon completion of the project, Part 3 of the application must be submitted to RIHPHC for certification that the rehabilitation is consistent with specified standards, and a detailed statement of costs must be submitted to the Division of Taxation. The detailed statement of costs must be certified by a certified public accountant licensed in Rhode Island. Projects that submitted a Part 1 application after December 31, 2007. Projects that submitted a Part 1 application to RIHPHC after December 31, 2007, will not be eligible for tax credits. |
