Declared Disaster Capital Investment Tax Credit

No further credits will be awarded for Tax Year 2008 as the $5,000,000 statutory allocation has been met. Funds are currently available for Tax Year 2009 and Tax Year 2010. The Kansas Department of Revenue reviews applications received through the Declared Disaster Capital Investment Credit Program daily. To access the results of the review, click here.

The Declared Disaster Capital Investment tax credit program has been established for the purpose of assisting businesses in specific declared disaster areas. This program provides an investment credit for any business that constructs, equips, reconstructs, maintains, repairs, enlarges, or furnishes a business facility located in the city of Chanute, Coffeyville, Erie, Fredonia, Greensburg, Independence, Iola, Neodesha, Osawatomie or within one mile of the city limits of any such cities as long as the business is located in Kansas.

The capital investment must be made within three years from the date of the disaster, or June 26, 2007 through June 26, 2010, for those businesses to be located or that are currently located in Chanute, Coffeyville, Erie, Fredonia, Independence, Iola, Neodesha, or Osawatomie, or within one mile of the city limits of any such cities as long as the business is located in Kansas.

For those businesses to be located or that are currently located in the city of Greensburg, or within one mile of Greensburg the investment dates are May 4, 2007 through May 4, 2010.

The tax credit is up to 10 percent of the capital investment made through this program. It is a nonrefundable credit and can be carried forward for up to 10 years. A taxpayer can claim a maximum of $100,000 in tax credits through this program.

Alternatively, the taxpayer can elect to receive a refundable credit in the amount of 50 percent of the tax credit earned as provided above. Should the taxpayer choose the refundable credit in lieu of the nonrefundable credit, the remaining portion of the tax credit shall be lost.

The tax credit can be claimed in tax years 2008, 2009 and 2010.

The tax credit/refund may be allowed against a taxpayer's income tax liability, a bank's privilege tax liability or an insurance company's premium tax.

A taxpayer may be allowed a credit/refund in a subsequent tax year if the taxpayer was not allowed the credit/refund in a previous tax year.

"Capital investment" is defined as investment in construction, equipment, reconstruction, maintenance, repair, enlargement, furnishing or remodeling of real property, and the purchase, lease or repair of tangible personal property. "Capital investment" does not include inventory or property held for sale in the regular course of business.

If a business has received disaster assistance from the Department under the program in State Finance Council Resolution No. 07-567 (Southeast Kansas Business Restoration Assistance Program) or 2007 House Bill 2540 (Kiowa County Business Restoration Assistance Program) it cannot use any investment made under that program to qualify for the tax credit under this program. If the taxpayer has qualified for any other tax credits using this investment, then that same investment cannot be used to qualify for the tax credit under this program.

The tax credits allowed under this program are capped at $5 million per fiscal year. The credits will be claimed on the taxpayer's return, but in order to administer this cap, an application must be completed to reserve credit claims in advance of filing returns. You may apply for the declared disaster capital investment tax credit by completing and submitting the disaster application. Applications will be accepted through Nov. 30, 2008 to be considered for funding initially. It is very important that applications be received within this time frame as not more than $5 million can be expended in any one fiscal year. Applications received after Nov. 30, 2008 and before Dec. 31, 2008 will be considered for tax credits if funding is available. Additional dates may be posted based on funding availability.

Questions may directed to the Kansas Department of Revenue at 785-296-3070 or to kathleen.smith@kdor.ks.gov.