Okla. Stat. tit. 68, § 68-2357.32A

Tax credit.

A. Except as otherwise provided in subsection H of this

section, for tax years beginning on or after January 1, 2003, but

with respect to tax credits for eligible renewable resources

described by subparagraphs b, c and d of paragraph 2 of this

subsection, for tax years ending not later than December 31, 2021,

there shall be allowed a credit against the tax imposed by Section

2355 of this title to a taxpayer for the taxpayer's production and

sale to an unrelated person of electricity generated by zero-

emission facilities located in this state. As used in this section:

1. "Electricity generated by zero-emission facilities" means

electricity that is exclusively produced by any facility located in

this state with a rated production capacity of one megawatt (1 mw)

or greater, constructed for the generation of electricity and placed

in operation after June 4, 2001, and with respect to electricity

generated by wind for any facility placed in operation not later

than July 1, 2017, which utilizes eligible renewable resources as

its fuel source. The construction and operation of such facilities

Oklahoma Statutes - Title 68. Revenue and Taxation Page 809

shall result in no pollution or emissions that are or may be harmful

to the environment, pursuant to a determination by the Department of

Environmental Quality; and

2. "Eligible renewable resources" means resources derived from:

a. wind,

b. moving water,

c. sun, or

d. geothermal energy.

B. For facilities placed in operation on or after January 1,

2003, and before January 1, 2007, the amount of the credit for the

electricity generated on or after January 1, 2003, but prior to

January 1, 2004, shall be seventy-five one-hundredths of one cent

($0.0075) for each kilowatt-hour of electricity generated by zero-

emission facilities. For electricity generated on or after January

1, 2004, but prior to January 1, 2007, the amount of the credit

shall be fifty one-hundredths of one cent ($0.0050) per kilowatt-

hour for electricity generated by zero-emission facilities. For

electricity generated on or after January 1, 2007, but prior to

January 1, 2012, the amount of the credit shall be twenty-five one-

hundredths of one cent ($0.0025) per kilowatt-hour of electricity

generated by zero-emission facilities. For facilities placed in

operation on or after January 1, 2007, and before January 1, 2021,

or with respect to electricity generated by wind for any facility

placed in operation not later than July 1, 2017, the amount of the

credit for the electricity generated on or after January 1, 2007,

shall be fifty one-hundredths of one cent ($0.0050) for each

kilowatt-hour of electricity generated by zero-emission facilities.

C. Credits may be claimed with respect to electricity generated

on or after January 1, 2003, during a ten-year period following the

date that the facility is placed in operation on or after June 4,

2001.

D. 1. For credits generated prior to January 1, 2014, if the

credit allowed pursuant to this section exceeds the amount of income

taxes due or if there are no state income taxes due on the income of

the taxpayer, the amount of the credit allowed but not used in any

tax year may be carried forward as a credit against subsequent

income tax liability for a period not exceeding ten (10) years.

2. Except as provided by paragraph 3 of this subsection, for

credits generated, but not used, on or after January 1, 2014, the

Oklahoma Tax Commission shall refund, at the taxpayer's election,

directly to the taxpayer eighty-five percent (85%) of the face

amount of such credits. The direct refund of the credits pursuant

to this paragraph shall be available to all taxpayers, including,

without limitation, pass-through entities and taxpayers subject to

Section 2355 of this title, but shall not be available to any

entities falling within the provisions of subsection E of this
ection,

directly to the taxpayer eighty-five percent (85%) of the face

amount of such credits. The direct refund of the credits pursuant

to this paragraph shall be available to all taxpayers, including,

without limitation, pass-through entities and taxpayers subject to

Section 2355 of this title, but shall not be available to any

entities falling within the provisions of subsection E of this

section. The amount of any direct refund of credits actually

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received at the eighty-five percent (85%) level by the taxpayer

pursuant to this paragraph shall not be subject to the tax imposed

by Section 2355 of this title. If the pass-through entity 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; provided, the total of all

credits refunded or allocated shall not exceed the amount of the

credit or refund to which the pass-through entity is entitled. For

the purposes of this paragraph, "pass-through entity" means a

corporation that for the applicable tax year is treated as an S

corporation under the Internal Revenue Code of 1986, as amended,

general partnership, limited partnership, limited liability

partnership, trust or limited liability company that for the

applicable tax year is not taxed as a corporation for federal income

tax purposes.

3. With respect to credits claimed for the first time on or

after July 1, 2019, or the effective date of this act, whichever

date last occurs, a taxpayer may irrevocably elect to not receive a

direct refund for a given tax year. Any credits not directly

refunded may be carried forward as a credit against subsequent

income tax liability for a period not exceeding ten (10) years. If

a taxpayer makes the irrevocable election to carry over credits for

a given tax year pursuant to this paragraph, any credits remaining

in the tenth year of carry forward shall be refunded at eighty-five

percent (85%).

E. Any nontaxable entities, including agencies of the State of

Oklahoma or political subdivisions thereof, shall be eligible to

establish a transferable tax credit in the amount provided in

subsection B of this section. Such tax credit shall be a property

right available to a state agency or political subdivision of this

state to transfer or sell to a taxable entity, whether individual or

corporate, who shall have an actual or anticipated income tax

liability under Section 2355 of this title. These tax credit

provisions are authorized as an incentive to the State of Oklahoma,

its agencies and political subdivisions to encourage the expenditure

of funds in the development, construction and utilization of

electricity from zero-emission facilities as defined in subsection A

of this section.

F. For credits generated prior to January 1, 2014, the amount

of the credit allowed, but not used, shall be freely transferable at

any time during the ten (10) years following the year of

qualification. Any person to whom or to which a tax credit is

transferred shall have only such rights to claim and use the credit

under the terms that would have applied to the entity by whom or by

which the tax credit was transferred. The provisions of this

subsection shall not limit the ability of a tax credit transferee to

reduce the tax liability of the transferee, regardless of the actual

Oklahoma Statutes - Title 68. Revenue and Taxation Page 811

tax liability of the tax credit transferor, for the relevant taxable

period. The transferor initially allowed the credit and any

subsequent transferees shall jointly file a copy of any written

transfer agreement with the Oklahoma Tax Commission within thirty
ree to

reduce the tax liability of the transferee, regardless of the actual

Oklahoma Statutes - Title 68. Revenue and Taxation Page 811

tax liability of the tax credit transferor, for the relevant taxable

period. The transferor initially allowed the credit and any

subsequent transferees shall jointly file a copy of any written

transfer agreement with the Oklahoma Tax Commission within thirty

(30) days of the transfer. The written agreement shall contain the

name, address and taxpayer identification number or Social Security

number of the parties to the transfer, the amount of the credit

being transferred, the year the credit was originally allowed to the

transferor, and the tax year or years for which the credit may be

claimed. The Tax Commission may promulgate rules to permit

verification of the validity and timeliness of the tax credit

claimed upon a tax return pursuant to this subsection but shall not

promulgate any rules that unduly restrict or hinder the transfers of

such tax credit. The tax credit allowed by this section, upon the

election of the taxpayer, may be claimed as a payment of tax, a

prepayment of tax or a payment of estimated tax for purposes of

Section 1803 or Section 2355 of this title.

G. For electricity generation produced and sold in a calendar

year, the tax credit allowed by the provisions of this section, upon

election of the taxpayer, shall be treated and may be claimed as a

payment of tax, a prepayment of tax or a payment of estimated tax

for purposes of Section 2355 of this title on or after July 1 of the

following calendar year.

H. No credit otherwise authorized by the provisions of this

section may be claimed for any event, transaction, investment,

expenditure or other act occurring on or after July 1, 2010, for

which the credit would otherwise be allowable until the provisions

of this subsection shall cease to be operative on July 1, 2011.

Beginning July 1, 2011, the credit authorized by this section may be

claimed for any event, transaction, investment, expenditure or other

act occurring on or after July 1, 2010, according to the provisions

of this section. Any tax credits which accrue during the period of

July 1, 2010, through June 30, 2011, may not be claimed for any

period prior to the taxable year beginning January 1, 2012. No

credits which accrue during the period of July 1, 2010, through June

30, 2011, may be used to file an amended tax return for any taxable

year prior to the taxable year beginning January 1, 2012.

I. For tax years beginning on or after January 1, 2019, the

total amount of credits authorized by this section with respect to

eligible renewable resources described by subparagraphs b, c and d

of paragraph 2 of subsection A of this section used to offset tax or

paid as a refund shall be adjusted annually to limit the annual

amount of credits to Five Hundred Thousand Dollars ($500,000.00).

The Tax Commission shall annually calculate and publish a percentage

by which the credits authorized by subparagraphs b, c and d of

paragraph 2 of subsection A of this section shall be reduced so the

total amount of credits used to offset tax or paid as a refund does

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not exceed Five Hundred Thousand Dollars ($500,000.00) per year.

The formula to be used for the percentage adjustment shall be Five

Hundred Thousand Dollars ($500,000.00) divided by the credits

claimed in the second preceding year.

J. Pursuant to subsection I of this section, in the event the

total tax credits authorized by this section with respect to

eligible renewable resources described by subparagraphs b, c and d

of paragraph 2 of subsection A of this section exceed Five Hundred

Thousand Dollars ($500,000.00) in any calendar year, the Tax

Commission shall permit any excess over Five Hundred Thousand

Dollars ($500,000.00) but shall factor such excess into the
in the event the

total tax credits authorized by this section with respect to

eligible renewable resources described by subparagraphs b, c and d

of paragraph 2 of subsection A of this section exceed Five Hundred

Thousand Dollars ($500,000.00) in any calendar year, the Tax

Commission shall permit any excess over Five Hundred Thousand

Dollars ($500,000.00) but shall factor such excess into the

percentage adjustment formula for subsequent years.

K. Any credits authorized by this section with respect to

eligible renewable resources described by subparagraphs b, c and d

of paragraph 2 of subsection A of this section not used or unable to

be used because of the provisions of subsection I or J of this

section may be carried over until such credits are fully used.

L. The Tax Commission shall prepare an annual report and submit

it to the Office of the State Secretary of Energy and Environment,

the Governor, the Speaker of the Oklahoma House of Representatives

and the President Pro Tempore of the Oklahoma State Senate

summarizing the amount of credits allowed pursuant to subparagraphs

b, c and d of paragraph 2 of subsection A of this section. The

Secretary of Energy and Environment shall submit recommendations for

changes to the tax credit to the Governor, the Speaker of the

Oklahoma House of Representatives and the President Pro Tempore of

the Oklahoma State Senate within sixty (60) days after receipt of

the report from the Oklahoma Tax Commission.