Okla. Admin. Code § 710:50-15-76

Current through Vol. 42, No. 1, September 16, 2024

Section 710:50-15-76 - Oklahoma coal credits

(a)General provisions applicable to qualifying business entities purchasing Oklahoma-mined coal. There shall be allowed a credit against the tax imposed by Sections 1803 and 2355 of Title 68 or Sections 624 and 628 of Title 36 of the Oklahoma Statutes for legal business entities purchasing Oklahoma-mined coal for qualifying purposes. In order to qualify for the Oklahoma Coal Credit, the business entity must either furnish water, heat, light, or power to the citizens or to the State of Oklahoma, or burn coal to generate heat, light, or power for use in manufacturing operations in Oklahoma. [See: 68 O.S. § 2357.11; Wyoming v. Oklahoma, 112 S.Ct. 789 (1992)]

(1)Basic credit. For tax years beginning on or after January 1, 1993, and ending on or before December 31, 2005 and for the period beginning January 1, 2006 through June 30, 2006, the credit shall be Two Dollars ($2.00) per ton of Oklahoma-mined coal purchased. For the period July 1, 2006 through December 31, 2006 and for tax years beginning on or after January 1, 2007 and ending on or before December 31, 2021, the credit shall be Two Dollars and eighty-five cents ($2.85) per ton of Oklahoma-mined coal purchased, except as provided in (h) of this Section.

(2)Extended basic credit. For the period July 1, 2006 through December 31, 2006 and for tax years beginning on or after January 1, 2007 and ending on or before December 31, 2021, the credit shall be Two Dollars and fifteen cents ($2.15) per ton of Oklahoma-mined coal purchased. The extended basic credit may not be claimed or transferred prior to January 1, 2008, except as provided in (h) of this Section.

(3)Additional credit for large quantity purchasers. For tax years beginning on or after January 1, 1995, and ending on or before December 31, 2005 and for the period beginning January 1, 2006 through June 30, 2006, there shall be allowed, in addition to the credit described in (1) of this subsection, a supplemental credit of Three Dollars ($3.00) per ton of Oklahoma-mined coal purchased. However, to obtain the credit described in this paragraph, purchases must total at least Seven Hundred Fifty Thousand (750,000) tons of Oklahoma-mined coal in the tax year for which credit is sought.

(b)General provisions applicable to qualifying business entities that mine, produce, or extract coal. For tax years beginning on or after January 1, 2001, and ending on or before December 31, 2021, there shall be allowed a credit against the tax imposed by Sections 1803 and 2355 of Title 68 or Sections 624 and 628 of Title 36 of the Oklahoma Statutes for every business entity in this state primarily engaged in mining, production, or extraction of coal, and holding a valid permit issued by the Oklahoma Department of Mines, so long as the average price of coal mined, produced, or extracted in any month for which credits are claimed is less than Sixty-eight Dollars ($68.00) per ton.

(1)Basic credit. For tax years beginning on or after January 1, 2001 and ending on or before December 31, 2005, and for the period beginning January 1, 2006 through June 30, 2006, the credit shall be Ninety-five Cents ($0.95) per ton and for the period of July 1, 2006 through December 31, 2006, and for tax years beginning on or after January 1, 2007 and ending on or before December 31, 2021, the credit shall be Five Dollars ($5.00) for each ton of coal mined, produced, or extracted in, on, under, or through a permit in this state, except as provided in (h) of this Section.

(2)Additional credit for thin seam coal. For tax years beginning on or after January 1, 2001 and ending on or before December 31, 2005, and for the period of January 1, 2006 through June 30, 2006, there shall be allowed, in addition to that described in (1) of this subsection, a supplemental credit in the amount of Ninety-five Cents ($0.95) per ton of coal mined, produced, or extracted from thin seams in this state, so long as the purchaser of the thin seam coal purchases less than Seven Hundred Fifty Thousand (750,000) tons of Oklahoma coal per year.

(3)Extended credit for thin seam coal. For tax years beginning on or after January 1, 2005 and ending on or before December 31, 2005, for the period of January 1, 2006, through June 30, 2006, there shall be allowed, in addition to that described in (1) and (2) of this subsection, a supplemental credit in the amount of Ninety-five Cents ($0.95) per ton of coal mined, produced, or extracted from thin seams in this state on or after July 1, 2005.

(c)Transferability. The coal credits allowed, but not used, shall be freely transferable by written agreement to subsequent transferees, at any time during the five (5) years following the year of qualification.

(1)"Eligible transferee" defined. For purposes of this subsection, an "eligible transferee" means any taxpayer subject to the tax imposed by Section 1803 or 2355 of Title 68 or Section 624 or 628 of Title 36 of the Oklahoma Statutes. [See: 68 O.S. § 2357.11(H)] Pursuant to the statutory definition, an "eligible transferee" taxpayer may be an individual, as well as a legal business entity.

(2)Written transfer agreement requirements. The business entity which originally earned the credit and the subsequent transferee must jointly file a copy of the written transfer agreement with the Commission, within thirty (30) days of the transfer. The written agreement must contain the name, address, and taxpayer identification number of the parties to the transfer, the amount of credit being transferred, the year the credit was originally allowed to the transferring entity, and the tax year or years for which the credit may be claimed.

(3)Claiming transferred credit. A copy of OTC Form 572 must be attached to any tax return on which a taxpayer claims a transferred credit.

(4)Limitation of transferability. Credits earned after December 31, 2013, shall not be transferable.

(d)Application of credit election. Any coal credit may, upon the election of the taxpayer, be claimed as a payment of tax, a prepayment of tax, or a payment of estimated tax for purposes of Section 1803 or 2355 of Title 68 or Section 624 or 628 of Title 36. In no event shall the credit reduce the tax below zero, and as such, this credit is non-refundable. Coal credits shall not be used to lower the price of any Oklahoma-mined coal sold that is produced by a subsidiary of the person receiving a tax credit under this Section to other buyers of the Oklahoma-mined coal.

(e)Carryover provisions. Any coal credit earned prior to January 1, 2014, to the extent not used, may be carried over in order to each of the five (5) years following the year of qualification. However, at no time may the credit claimed exceed the tax liability for credits earned prior to January 1, 2014.

(f)Refund of tax credits. Credits earned on or after January 1, 2014, but not used, shall be refunded to the taxpayer at eighty-five percent (85%) of the face amount of the credits. If the taxpayer is a pass-through entity and does not file a claim for a direct refund, the pass-through entity shall allocate the credit to one or more of the shareholders, partners or members of the pass-through entity. The total amount of credits refunded or allocated shall not exceed the amount of the credit or refund to which the pass-through entity is entitled.

(g)Tax credit moratorium. No credit may be claimed for coal purchased, mined, produced or extracted during the period of July 1, 2010 through June 30, 2012, for which the credit would otherwise be allowable. This credit may be claimed for tax year 2012 and subsequent tax years, for Oklahoma-mined coal for qualifying purposes purchased, mined, produced or extracted on or after July 1, 2012.

(h)Tax credit limitation.

(1) For any credits calculated pursuant to (a)(1) or (a)(2), or (b)(1) of this Section for activities occurring on or after January 1, 2016, the amount of credit allowed shall be equal to seventy-five percent (75%) of the amount otherwise provided. [68 O.S. § 2357.11(N)]

(2) For tax years beginning on or after January 1, 2018, the total amount of credits authorized by this Section used to offset tax or paid as a refund shall be adjusted annually to limit the annual amount of credits to Five Million Dollars ($5,000,000.00). The Tax Commission shall annually calculate and publish a percentage by which the credits authorized by this Section shall be reduced so the total amount of credits used to offset tax or paid as a refund does not exceed Five Million Dollars ($5,000,000.00) per year.

Okla. Admin. Code § 710:50-15-76

Amended at 10 Ok Reg 3837, eff 7-12-93; Amended at 11 Ok Reg 555, eff 11-10-93 (emergency); Amended at 11 Ok Reg 3497, eff 6-26-94; Amended at 14 Ok Reg 2699, eff 6-26-97; Amended at 17 Ok Reg 2669, eff 6-25-00; Amended at 20 Ok Reg 2165, eff 6-26-03; Amended at 23 Ok Reg 2824, eff 6-25-06; Amended at 24 Ok Reg 2359, eff 6-25-07; Amended at 28 Ok Reg 18, eff 8-9-10 (emergency); Amended at 28 Ok Reg 935, eff 6-1-11

Amended by Oklahoma Register, Volume 31, Issue 24, September 2, 2014, eff. 9/12/2014

Amended by Oklahoma Register, Volume 34, Issue 24, September 1, 2017, eff. 9/11/2017

Amended by Oklahoma Register, Volume 36, Issue 22, August 1, 2019, eff. 8/11/2019