What Texas Form 05-179 Is For
The sale, assignment, or distribution of a historic structure credit between taxable entities under the Texas Franchise Tax and specific insurance premium tax programs must be reported using Texas Form 05-179. Changes in ownership of a tax credit associated with a certified historic structure are recorded on this form.
The Texas Comptroller of Public Accounts, working with the Cultural Resources Division, oversees the Historic Structure Rehabilitation Program, which includes the historic structure credit. It enables owners of eligible historic buildings to deduct tax obligations based on rehabilitation expenses that qualify for tax benefits.
By using this form, the Texas Comptroller can ensure that the correct Reporting Entity is tracking which credit belongs to which tax year. The recipient cannot apply the credit to tax reports or obtain a Tax Credit Certificate without Form 05-179.
When You’d Use Texas Form 05-179
When a historic structure credit is sold, transferred, or divided among taxable entities, such as partnerships, S corporation filers, and limited liability companies, Texas Form 05-179 is utilized. It is applicable whenever there is a change in ownership of an authorized tax credit associated with a certified historic building.
Regardless of the fiscal or tax year in which the transaction occurred, the form must be submitted within 30 days of the transaction date. The recipient can claim the historic structure credit on a Texas franchise tax report or insurance premium tax report if the filing is done on time.
Key Rules or Details for 2022
Only credits generated from a qualified historic structure with an approved Certificate of Eligibility may be transferred. The rehabilitation credit equals up to 25 percent of qualified rehabilitation costs incurred during certified rehabilitation.
Credits may be transferred multiple times but remain subject to a six-year expiration period that begins when the property is placed in service. Transfers do not extend this deadline or increase the original tax credit amount.
Step-by-Step (High Level)
Step 1: Confirm Credit Eligibility
The entity transferring the credit should ensure that it originates from a qualified historic building with approved costs for repairs. Before negotiating the deal, review all the cost certification records.
Step 2: Negotiate Transfer Terms
The credit amount, payment terms, and allocation method for the flow-through entity should be agreed upon by both parties. These conditions ought to be consistent with joint venture agreements, trust company documents, and partnership agreements.
Step 3: Complete Texas Form 05-179
Form 05-179 must be filled out and signed by both the transferor and the recipient. The form requires legal entity names, federal identification numbers, transfer amounts, and the credit's fiscal year.
Step 4: Assemble Supporting Documents
All necessary certificates and reports must be included in the filing package. A new Tax Credit Certificate may not be issued due to incomplete submissions, which also cause processing delays.
Step 5: Submit Within 30 Days
The Texas Comptroller of Public Accounts in Austin, Texas, must receive the completed package by mail. This form does not currently accept electronic submissions.
Step 6: Receive Updated Certificates
The Texas Comptroller updates Form 05-901 certificates to reflect new ownership after review. Both the preparation of tax returns and the credit application require these certificates.
Common Mistakes and How to Avoid Them
- Missing the 30-day filing deadline: Prepare and submit Form 05-179 immediately after the transaction date to ensure the credit can be claimed without delay.
- Math errors in transferred and retained amounts: Reconcile the transferred credit plus any retained balance to the amount shown on the original Tax Credit Certificate.
- Submitting incomplete documentation: Use a checklist to confirm all required records are included before mailing the transfer package.
- Insurance companies claiming credits received through allocation: Confirm the acquisition method and avoid allocated credit claims that are denied under Texas Tax Code Section 171.908.
- Not tracking credit expiration dates: Verify the remaining usable tax years before acquiring credits near the end of the six years.
What Happens After You File
The Texas Comptroller of Public Accounts checks Form 05-179 and the supporting documents for accuracy and compliance after they are submitted. This review confirms the reporting entity, the amount of credit, and that it is consistent with other tax reports.
The Texas Comptroller issues new Form 05-901 certificates that reflect the new ownership once the request is approved. When claiming the credit on the right tax returns, the recipient must include the certificate.
FAQs
Who must file Texas Form 05-179?
Texas Form 05-179 must be submitted by any taxable entity that receives or transfers a historic structure credit. This includes companies in Texas, flow-through organizations, and insurance firms that obtain credits by assignment or sale.
Can the credit be used against income tax?
The historic structure credit does not apply to federal or Kansas income taxes. It can only be used to pay Texas Franchise Tax or eligible insurance premium tax debts.
Is an extension of time to file available for Form 05-179?
There is no extension of time to file for Texas Form 05-179. The 30-day filing deadline applies regardless of other tax report extensions.
Can credits be transferred across state lines?
Credits may be purchased by entities located in New York, North Carolina, or other states. However, the credit may only offset Texas tax liability under Texas law.
Do Public Information Report or Ownership Information Report filings affect the credit?
Public Information Report and Ownership Information Report filings do not transfer credits. Only Texas Form 05-179 documents ownership changes for historic structure credits.
What agencies are involved in the credit process?
The program involves the Texas Comptroller of Public Accounts and preservation authorities that review certified rehabilitation plans. Other state agencies may be involved during the cost certification stage.
Can credits be used for internal use or real estate held for resale?
Credits apply only to qualified rehabilitation costs for certified historic properties. Internal use, nonqualified expenditures, or ineligible real estate costs do not generate transferable credits.
