What Texas Form 05-179 (2023) Is For
The sale, assignment, or allocation of an already-earned historic structure credit must be reported using Texas Form 05-179. It formally reports a change in credit ownership to the Texas Comptroller of Public Accounts.
The historic structure credit applies to qualified rehabilitation projects involving certified landmark structures and historic properties. Filing this form enables the Texas Comptroller to issue updated Tax Credit Certificates, allowing the new owner to apply the credit against their tax liability.
When You’d Use Texas Form 05-179
When a historic structure credit is sold, transferred, or allotted to another qualified entity, the reporting entity is required to submit Texas Form 05-179. This requirement applies to entities filing insurance premium tax reports and businesses subject to the Texas Franchise Tax.
After the transaction date, the form must be submitted within 30 days. Regardless of the fiscal year, taxable year, or the year the credit is claimed on tax returns, this deadline is applicable.
The transaction is not canceled due to late filing. The recipient is unable to use the credit on a Texas Franchise Tax Return or insurance premium tax reports, though, because it postpones the issuance of the updated Tax Credit Certificate.
Key Rules or Details for 2023
The historic structure credit can be worth up to 25% of the costs of restoring a qualified historic structure. Section 47 of the federal Internal Revenue Code states that projects qualifying for tax benefits must meet the Certified Rehabilitation standards.
Transfer and Allocation Rules
- The credit expires six tax years after the structure is placed in service.
- The credit amount does not increase after any transfer.
- The credit may be transferred an unlimited number of times.
- Allocation percentages do not necessarily need to match ownership interests.
Pass-through entities may allocate credits in accordance with written agreements among partners, members, or shareholders. Insurance companies may only use credits acquired through the sale or assignment of a policy under the Texas Insurance Code.
Step-by-Step (High Level)
The current credit holder should review all supporting documentation and verify the remaining credit balance before completing the form. This comprises the qualified rehabilitation plan, cost certification records, and Form 05-901.
Overview of the Filing Process
- The parties agree upon the historic structure credit transfer amount. The parties agree on the amount of landmark structure credit to be transferred.
- Texas Form 05-179 is completed by both parties with accurate entity and transaction details. Both parties provide accurate entity and transaction information on Form 05-179, Texas.
- Authorized representatives of both organizations sign the completed form. Authorized representatives from both organizations sign the completed form.
- The Texas Comptroller of Public Accounts, located in Austin, Texas, mailed the form along with Form 05-901.
No payment is submitted with this form. The filing serves only to update credit ownership records maintained by the Division of Revenue.
Common Mistakes and How to Avoid Them
- Missing the 30-day filing deadline: File within 30 days of the transaction date so the recipient can use the credit to reduce total revenue-based tax liability.
- Submitting the form with only one signature: Obtain signatures from both parties on the same Form 05-179 before submission.
- Failing to include Form 05-901 with the filing: Attach the current Form 05-901 so the Texas Comptroller can process and record the transfer.
- Reporting an incorrect credit amount: Reconcile the transferred amount and any retained balance to the credit amount shown on the certificate to avoid rejection.
- Misunderstanding allocation rules for pass-through entities: Allocate credits only to eligible owners and confirm recipients can report the credit on the applicable Texas franchise tax filings.
What Happens After You File
The Texas Comptroller reviews the form to ensure it is complete and meets the requirements of the Texas Tax Code after it has been submitted. Staff verify that the transferred credit doesn't exceed the available balance.
New tax credit certificates are given out once they are approved. If the seller retains some of the credit, both parties receive new Form 05-901 certificates that reflect their remaining balances.
The new owner can then use the credit to pay for Texas Franchise Tax or insurance premium tax reports. The credit might lower your tax bill to zero, but it can't give you a refund.
FAQs
Who must file Texas Form 05-179?
Any entity selling, assigning, or allocating a historic structure credit must file the form jointly with the receiving entity.
Can part of a historic structure credit be sold or assigned?
Yes, an entity may transfer any portion of the credit, but each transaction requires a separate filing.
Does filing late cancel the transaction?
No, late filing delays issuance of the tax credit certificate, but does not invalidate the sale, assignment, or allocation.
What documents should be kept with tax records?
Entities should retain Form 05-901, cost certification records, allocation agreements, and certified rehabilitation approvals.
Can insurance companies use allocated credits?
No, insurance companies may only use credits acquired through direct sale or assignment.
Does transferring the credit extend its expiration date?
No, the expiration date remains tied to the original date the historic project was placed in service.
