Scary things happen at the last minute. Think of the last-minute history paper you finished at 4:30 a.m. demonstrating that George Washington was directly responsible for the Hindenberg Disaster. Or the iguana that seemed like a great last-minute anniversary present. And let's not even talk about that one tax return...
The last minute is a scary time for legislators, too. Tax Analysts brought to our notice a drafting error made on the last day of the 2004 Iowa legislative session that has brought much of Iowa's nascent wind energy industry to an abrupt halt.
The legislature passed a bill that would create a tax credit for new wind farms. To make sure the cost didn't get too high, the legislature inserted in the bill an annual cap on the amount of credit for each wind turbine. And they certainly did keep the cost down.
The cap was meant to be $3.20 per megawatt capacity - that is, based on how many megawatts a unit generates per hour. There are 8,760 hours in a year, so that should translate into a maximum annual credit of $42,048 for a typical 1.5 megawatt unit. Unfortunately for the wind industry, the bill as drafted fails to make the necessary translation of hourly capacity to annual capacity, so the maximum credit per year for a 1.5 megawatt unit is... $4.80.
According to an Associated Press story, the error has put on hold a $200 million wind farm planned for the Iowa Falls area.
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Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to