Title 44
Taxation

Chapter 33.2
Historic Structures — Tax Credit

§ 44-33.2-3. Tax credit.

(a) Any person, firm, partnership, trust, estate, limited liability company, corporation (whether for profit or non-profit) or other business entity that 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 through its historic tax credit application process prior to January 1, 2008, and verified by the division of taxation, provided the rehabilitation meets standards consistent with the standards of the Secretary of the United States Department of the Interior for rehabilitation as certified by the commission, shall be entitled to a credit against the taxes imposed on such person or entity pursuant to chapter 11, 12, 13, 14, 17 or 30 of this title. For certified historical structures or some identifiable portion of a structure placed in service prior to January 1, 2008 the credit shall be an amount equal to thirty percent (30%) of the qualified rehabilitation expenditures. For certified historical structures or some identifiable portion of a structure placed in service after December 31, 2007, the credit shall not exceed twenty-five percent (25%), twenty-six percent (26%), or twenty-seven percent (27%) of the qualified rehabilitation expenditures as contracted between the division of taxation and the person, firm, partnership, trust, estate, limited liability company, corporation (whether for profit or non-profit) or other business entity that incurs qualified rehabilitation expenditures for the substantial rehabilitation of certified historic structures or some identifiable portion of a structure to be placed in service after December 31, 2007.

(b) Notwithstanding any provisions of the general laws or regulations adopted thereunder to the contrary, including, but not limited to, the provisions of chapter 2 of title 37, the division of taxation is hereby expressly authorized and empowered to enter into contracts with persons, firms, partnerships, trusts, estates, limited liability companies, corporations (whether for profit or non-profit) or other business entities that incur qualified rehabilitation expenditures for the substantial rehabilitation of certified historic structures or some identifiable portion of a structure to be placed in service after December 31, 2007, for the following purposes, all of which shall be set forth in more particular detail as follows:

(1) Upon payment of the fees as set forth in this section, the division of taxation shall, on behalf of the state of Rhode Island, guaranty through a contract with persons, firms, partnerships, trusts, estates, limited liability companies, corporations (whether for profit or non-profit) or other business entities that will incur qualified rehabilitation expenditures for the substantial rehabilitation of a certified historic structure or some identifiable portion of a structure to be placed in service after December 31, 2007, the delivery of one hundred percent (100%) of the tax credit in an amount which is the lesser of: (i) the amount of the tax credit identified in the contract with the division of taxation on or before May 15, 2008 in consideration of any processing fees; or (ii) the actual qualified rehabilitation expenditures multiplied by the tax credit percentage selected by the taxpayer on or before May 15, 2008 and any processing fees. The tax credit and fee shall not exceed the following combinations which shall be selected by any person, firm, partnership, trust, estate, limited liability company, corporation (whether for profit or non-profit) or other business entity that will incur qualified rehabilitation expenditures for the substantial rehabilitation of certified historic structures or some identifiable portion of a structure to be placed in service after December 31, 2007:

(A) For an amount of credit not exceeding twenty-five percent (25%) of the qualified rehabilitation expenditures, the fee shall be an amount equal to three percent (3%) of the qualified rehabilitation expenditures.

(B) For an amount of credit not exceeding twenty-six percent (26%) of the qualified rehabilitation expenditures, the fee shall be an amount equal to four percent (4%) of the qualified rehabilitation expenditures.

(C) For an amount of credit not exceeding twenty-seven percent (27%) of the qualified rehabilitation expenditures, the fee shall be an amount equal to five percent (5%) of the qualified rehabilitation expenditures.

(D) As referred to in subsection 44-33.2-4(d), two and one quarter percent (2.25%) of the qualified rehabilitation expenditures shall be paid by May 15, 2008 with the remaining percent to be paid by March 5, 2009. Payments made after March 5, 2009 shall accrue interest as set forth in § 44-1-7.

(E) The division of taxation and the Rhode Island historical preservation and heritage commission shall reconcile tax credits and fees with the persons, firms, partnerships, trusts, estates, limited liability companies, corporation (whether for profit or non-profit) or other business entities contracted with as part of the final project certification. In the event that the processing fee paid is greater than the amount of actual qualified rehabilitation expenditures multiplied by the percentage chosen pursuant to subsection 44-33.2-3(b), the persons, firms, partnerships, trusts, estates, limited liability companies, corporations (whether for profit or non-profit) or other business entities that incur qualified rehabilitation expenditures for the substantial rehabilitation of certified historic structures or some identifiable portion of a structure to be placed in service after December 31, 2007, shall be refunded such difference, without interest.

(F) Any contract executed pursuant to this chapter by a person, firm, partnership, trust, estate, limited liability company, corporation (whether for profit or non-profit) or other business entity that incurs qualified rehabilitation expenditures for the substantial rehabilitation of certified historic structures or some identifiable portion of a structure to be placed in service after December 31, 2007, shall be assignable to: (i) an affiliate thereof without any consent from the division of taxation or (ii) a person, firm, partnership, trust, estate, limited liability company, corporation (whether for profit or non-profit) or other business entity that incurs qualified rehabilitation expenditures for the substantial rehabilitation of certified historic structures or some identifiable portion of a structure to be placed in service after December 31, 2007, with such assignment to be approved by the division of taxation, which approval shall not be unreasonably withheld. For purposes of this subsection, “affiliate” shall be defined as any entity controlling, controlled by or under common control with such person, firm, partnership, trust, estate, limited liability company, corporation (whether for profit or non-profit) or other business entity.

(c) Tax credits allowed pursuant to this chapter shall be allowed for the taxable year in which such certified historic structure or an identifiable portion of the structure is placed in service provided that the substantial rehabilitation test is met for such year.

(d) If the amount of the tax credit exceeds the taxpayer’s total tax liability for the year in which the substantially rehabilitated property is placed in service, the amount that exceeds the taxpayer’s tax liability may be carried forward for credit against the taxes imposed for the succeeding ten (10) years, or until the full credit is used, whichever occurs first for the tax credits. Credits allowed to a partnership, a limited liability company taxed as a partnership or multiple owners of property shall be passed through to the persons designated as partners, members or owners respectively pro rata or pursuant to an executed agreement among such persons designated as partners, members or owners documenting an alternate distribution method without regard to their sharing of other tax or economic attributes of such entity.

(e)(1) If the taxpayer has not claimed the tax credits in whole or part, taxpayers eligible for the tax credits may assign, transfer or convey the credits, in whole or in part, by sale or otherwise to any individual or entity, including, but not limited to, condominium owners in the event the certified historic structure is converted into condominiums. The assignee of the tax credits may use acquired credits to offset up to one hundred percent (100%) of the tax liabilities otherwise imposed pursuant to chapter 11, 12, 13, (other than the tax imposed under § 44-13-13), 14, 17 or 30 of this title. The assignee may apply the tax credit against taxes imposed on the assignee until the end of the tenth (10th) calendar year after the year in which the substantially rehabilitated property is placed in service or until the full credit assigned is used, whichever occurs first. Fiscal year assignees may claim the credit until the expiration of the fiscal year that ends within the tenth (10th) year after the year in which the substantially rehabilitated property is placed in service. The assignor shall perfect the transfer by notifying the state of Rhode Island division of taxation, in writing, within thirty (30) calendar days following the effective date of the transfer and shall provide any information as may be required by the division of taxation to administer and carry out the provisions of this section.

(2) For purposes of this chapter, any assignment or sales proceeds received by the taxpayer for its assignment or sale of the tax credits allowed pursuant to this section shall be exempt from this title. If a tax credit is subsequently recaptured under subsection (e) of this section, revoked or adjusted, the seller’s tax calculation for the year of revocation, recapture, or adjustment shall be increased by the total amount of the sales proceeds, without proration, as a modification under chapter 30 of this title. In the event that the seller is not a natural person, the seller’s tax calculation under chapters 11, 12, 13 (other than with respect to the tax imposed under § 44-13-13), 14, 17, or 30 of this title, as applicable, for the year of revocation, recapture, or adjustment, shall be increased by including the total amount of the sales proceeds without proration.

(f) Substantial rehabilitation of property that is exempt from real property tax shall be ineligible for the tax credits authorized under this chapter. In the event a certified historic structure undergoes a substantial rehabilitation pursuant to this chapter and within twenty-four (24) months after issuance of a certificate of completed work the property becomes exempt from real property tax, the taxpayer’s tax for the year shall be increased by the total amount of credit actually used against the tax.

(g) In the case of a corporation, this credit is only allowed against the tax of a corporation included in a consolidated return that qualifies for the credit and not against the tax of other corporations that may join in the filing of a consolidated tax return.