expenditures. A. Except as otherwise provided by this section, for taxable years beginning after December 31, 2005, and ending before January 1, 2030, there shall be allowed a credit against the tax imposed by Section 2355 of this title equal to fifty percent (50%) of an eligible taxpayer’s qualified railroad reconstruction or replacement expenditures. B. For tax years 2020 through 2029, the amount of the credit shall be limited to the product of Five Thousand Dollars ($5,000.00) and the number of miles of railroad track owned or leased within this state by the eligible taxpayer as of the close of the taxable year. C. The credit allowed pursuant to subsection A of this section 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. An eligible transferee shall be any taxpayer subject to the tax imposed by Section 2355 of this title. The person originally allowed the credit and the subsequent transferee shall jointly file a copy of the written credit 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 of the parties to the transfer, the amount of credit being transferred, the year the credit was originally allowed to the transferring person and the tax year or years for which the credit may be claimed. The Tax Commission shall promulgate rules to permit verification of the timeliness of a tax credit claimed upon a tax return pursuant to this subsection but shall not promulgate any rules which unduly restrict or hinder the transfers of such tax credit. The Department of Transportation shall promulgate rules to permit verification of the eligibility of an eligible taxpayer’s expenditures for the purpose of claiming the credit. The rules shall provide for the approval of qualified railroad reconstruction or replacement expenditures prior to commencement of a project and provide a certificate of verification upon completion of a project that uses qualified railroad reconstruction or replacement expenditures. The certificate of verification shall satisfy all requirements of the Tax Commission pertaining to the eligibility of the person claiming the credit. D. Any credits allowed pursuant to the provisions of subsection A of this section but not used in any tax year may be carried over in order to each of the five (5) years following the year of qualification. E. As used in this section: 1. “Class II and Class III railroad” means a railroad that is classified by the United States Surface Transportation Board as a Class II or Class III railroad; 2. “Eligible taxpayer” means any Class II or Class III railroad; and 3. “Qualified railroad reconstruction or replacement expenditures” means expenditures for: a. track maintenance, natural disasters, and reconstruction or replacement of railroad infrastructure including track, roadbed, crossings, bridges, industrial leads and track-related structures owned or leased by a Class II or Class III railroad as of January 1, 2006, or b. new construction of industrial leads, switches, spurs and sidings and extensions of existing sidings by a Class II or Class III railroad. F. The total amount of credits authorized by this section used to offset tax shall be adjusted annually to limit the annual amount of credits to Two Million Dollars ($2,000,000.00) for tax years 2018 and 2019 and Five Million Dollars ($5,000,000.00) for tax year 2020 and all subsequent tax years. 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 does not exceed the applicable annual limit. The formula to be used for the percentage adjustment shall be the applicable annual limit divided by the credits claimed in the second preceding year. G. Pursuant to subsection F of this section, in the event the total tax credits authorized by this section exceed the annual applicable limit in any calendar year, the Tax Commission shall permit any excess over the annual applicable limit but shall factor such excess into the percentage adjustment formula for subsequent years. Added by Laws 2005, c. 413, § 8, eff. July 1, 2005. Amended by Laws 2006, 2nd Ex. Sess., c. 44, § 24, eff. July 1, 2007; Laws 2008, c. 122, § 1, eff. Nov. 1, 2008; Laws 2010, c. 327, § 24, eff. July 1, 2010; Laws 2016, c. 325, § 1, eff. Jan. 1, 2016; Laws 2018, 2nd Ex. Sess., c. 7, § 1, eff. Jan. 1, 2018; Laws 2020, c. 95, § 1, eff. Nov. 1, 2020; Laws 2023, 1st Ex. Sess., c. 33, § 1, eff. Nov. 1, 2023.
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