Section 40-18-533 Applications and Awards; Allocation; Nonrefundability; Recapture.

(a)(1) For applications for federal tax credits submitted to the authority on and after January 1, 2025, the authority, upon approving a federal low-income housing tax credit for a qualified project pursuant to the authority’s qualified allocation plan or multifamily housing revenue bond policy, may award a workforce housing tax credit under this article to the owner of the qualified project so long as doing so will not result in exceeding the award cycle cap prescribed by this subsection. The workforce housing tax credit shall be in an amount determined by the authority to be necessary for the financial feasibility of the qualified project and consistent with the qualified allocation plan and multifamily housing revenue bond policy, as applicable, but the annual award for each qualified project shall not be greater than two million dollars ($2,000,000). (2) The authority shall send written notice of the award to the owner of the qualified project. The award notice shall state the amount of workforce housing tax credit awarded for each year of the qualified project’s credit period and stipulate that receipt of the tax credit is contingent upon issuance of an eligibility certificate. (3) Upon issuance of an eligibility certificate, a copy of which shall be provided to the department and the Alabama Department of Insurance, a workforce housing tax credit shall be allowed for the qualified project for each year of the credit period in the amount specified in the eligibility certificate. (4) The total amount of tax credit awards made by the authority under this article in each award cycle shall not exceed the award cycle cap. (b)(1) The tax credit may be allocated by pass-through entities to some or all of its partners, members, or shareholders, including any not-for-profit entity that is a partner, member, or shareholder, in any manner agreed to by such persons, regardless of whether or not the person is allocated or allowed any portion of any federal low-income housing tax credit with respect to the qualified project, whether the allocation of the tax credit under the terms of the agreement has substantial economic effect within the meaning of 26 U.S.C. § 704(b), and whether the person is deemed a partner for federal income tax purposes as long as the partner or member would be considered a partner or member under applicable state law governing such entity, and has been admitted as a partner or member on or prior to the date for filing the qualified taxpayer’s tax return, including any amendments thereto, with respect to the year of the tax credit. Such pass-through entities or qualified taxpayer may assign all or any part of its interest, including its interest in the tax credits, to one or more pass-through entities or qualified taxpayers, and the qualified taxpayer shall be able to claim the tax credit so long as its interest is acquired prior to the filing of its tax return claiming the tax credit. (2) If the tax credit is used to offset the financial institution excise tax, the offset shall be limited to the state portion of the financial institution excise tax. (c) The workforce housing tax credit authorized by this article shall not be refundable. Any tax credit not used in a taxable year may be carried forward by a qualified taxpayer for the succeeding five years. (d) Prior to filing the tax return, or in the case of pass-through entities, prior to passing the credit to the qualified taxpayer, a project owner that has been awarded a workforce housing tax credit shall submit a copy of the eligibility certificate to the department in a manner prescribed by the department. (e) If under 26 U.S.C. § 42, a portion of any federal low-income housing credits taken on a qualified project is required to be recaptured or is otherwise disallowed during the credit period, the qualified taxpayer claiming workforce housing tax credits with respect to the qualified project shall also be required to recapture a portion of any tax credits authorized by this article. The percentage of workforce housing tax credits subject to recapture shall be equal to the percentage of federal low-income housing credits subject to recapture or otherwise disallowed during such period. Any tax credits recaptured or disallowed shall increase the income tax liability of the qualified taxpayer who claimed the tax credits in a like amount and shall be included on the tax return of the qualified taxpayer submitted for the taxable year in which the recapture or disallowance event is identified. The owner of the qualified project shall report any recapture event to the department, the Department of Insurance, the authority, and, in the same manner done for the recapture of federal low-income housing credits, the qualified taxpayer, if the project owner is not the qualified taxpayer. (f) For each award cycle, the authority shall award at least 20 percent, but not more than 25 percent, of the award cycle cap to qualified projects located in areas designated as rural by the authority, subject to viable requests being received. The authority shall award the balance of the remaining available award cycle cap to four percent qualified projects without any geographic limitation. (g) An insurance company claiming a workforce housing tax credit against the taxes, licenses, and other fees, fines, and penalties imposed, including any retaliatory tax imposed on insurance companies by Section 27-3-29, shall not be required to pay any additional tax as a result of claiming the tax credit. The workforce housing tax credit may fully offset any retaliatory tax imposed by the Code of Alabama 1975. A reduction in the taxes of a foreign insurance company to the extent obtained through a claim for credit under this article does not increase the retaliatory tax liability otherwise charged against that company.