The Iowa Department of Revenue correctly sought repayment of corporate investment tax credits that were awarded to two limited liability companies (LLCs) from the individual members of the LLCs. The investment tax credits were awarded to the LLCs for new investments made in a biodiesel plant. In order to be eligible for the investment tax credits the company had to meet wage and investment requirements, but the plant only operated for one month. The department filed notices of assessment against the individual members of the LLC for repayment of the tax credits and interest because the credits flowed through the LLCs to the individual members. The taxpayers argued that the repayment had to come from the LLC, not the individual shareholders. However, the statute allows the tax credits to flow down to individual taxpayers if the business is an LLC. Therefore, because the LLC utilized the tax credits by allowing the individual partners to claim the credits, the department could seek repayment of the business credits by the same means.
Trebilcock v. Iowa Department of Revenue, Iowa Department of Inspections and Appeals, June 11, 2012 , released August 2012,¶201-319