The Kentucky Schedule VERB (Voluntary Environmental Remediation Tax Credit) is a specific tax form issued by the Commonwealth of Kentucky’s Department of Revenue for taxpayers who have undertaken approved environmental cleanup projects. This nonrefundable credit is designed to incentivize the rehabilitation of contaminated properties, often referred to as “brownfields,” by offsetting costs against state tax liabilities. The credit can be applied to individual income tax, corporation income tax, or the limited liability entity tax (LLET). To qualify, the property must meet strict remediation standards set by the Kentucky Energy and Environment Cabinet, which verifies all claimed expenditures. The credit operates on a dollar-for-dollar basis, capped at a maximum of $150,000 in approved costs, with the annual claim limited to 25% of the total approved amount. Unused portions of the credit can be carried forward for up to ten years, making this schedule a crucial tool for financial recovery in environmental projects.
How To File Schedule VERB
You must attach the completed Schedule VERB to your primary Kentucky tax return, such as Form 720, 720U, PTE, 725, 740, 740-NP, or 741. Before filing, ensure that your remediation expenditures have been submitted to and verified by the Kentucky Energy and Environment Cabinet. Once verified, the Department of Revenue will certify your eligibility. Because this is a recurring credit (available for multiple years), you must file a copy of this schedule every year you claim the credit or carry forward a balance.
How To Complete Schedule VERB: (Line-By-Line Instructions)
Follow these detailed instructions to ensure your Schedule VERB is accurate and compliant.
Header Section: Entity Information
- Name Of Entity: Enter the legal name of the business or individual claiming the credit.
- Identification Number: Provide your Federal Identification Number (FEIN) or Social Security Number (SSN).
- Tax Classification: Check the appropriate box for your entity type: Corporation, Limited Liability Pass-through Entity, General Partnership, Individual, or Other (specify if needed).
- Account Number: Enter your 6-digit Kentucky Corporation/LLET Account Number (if 6 digits, lead with zeros to make 9).
- Property Location: List the specific address and county where the remediation work took place.
Part I: Computation Of Allowable Tax Credit
- Note: This section is typically completed by the Department of Revenue based on cabinet certification.
- Line 1 (Date Certified): The date the Kentucky Energy and Environment Cabinet certified the credit.
- Line 2 (Certified Expenditures): The total amount of approved remediation costs, which cannot exceed $150,000.
- Line 3 (Maximum Annual Credit): The maximum credit you can claim in a single tax year, calculated as 25% of the amount on Line 2.
Part II: Taxpayer’s Certification
- Declaration: By signing this section, you certify under penalty of perjury that the cleanup costs were not paid for by public grants or the petroleum storage tank environmental assurance fund.
- Signature: An authorized representative must sign, title, and date this section.
Part III: Current Year Credit
- Line 1 (LLET Credit): Enter the amount of credit you are applying against your LLET liability for the current year. Note that this credit cannot reduce your LLET below the minimum $175 fee. Transfer this amount to Schedule TCS, Part II, Column E.
- Line 2 (Corporation Income Tax Credit): Enter the credit amount applied to your corporation income tax. Transfer this to Schedule TCS, Part II, Column F.
- Line 3 (Individual Income Tax Credit): Enter the credit amount applied to individual income tax. Transfer this figure to Form 740, 740-NP, or 741.
- Pass-Through Entities: If you are a pass-through entity, you must report the pro-rata share of this credit to each partner or member on their Schedule K-1.
Part IV: Amount Of Credit Claimed
- Use this section to track your credit usage over multiple years.
- Column A (Year): Enter the month and year for the tax period you are claiming the credit.
- Column B (Balance Of VERB):
- For Year 1: Enter the total allowable credit from Part I, Line 2.
- For Subsequent Years: Enter the remaining balance by subtracting the previous year’s used credit (Column C) from the previous year’s balance (Column B).
- Column C (Amount Of Credit Used): Enter the actual amount of credit you used for LLET and Income Tax in that specific year. If you used zero credit, enter “-0-“.