Prerequisite for reserving an Innovate Alabama Credit for an approved qualifying project:
- Donors must have a My Alabama Taxes account to reserve the credit through ALDOR’s online reservation system.
Procedures for making an online credit reservation through My Alabama Taxes:
Part I – Make a Donation
- Log in to My Alabama Taxes.
- Once logged in, navigate to the appropriate tax account for the taxing entity:
- For corporations, navigate to the Business Income Tax account. If the corporation is a public utility, then navigate to Utility 2.2 Gross Receipts License Tax account.
- For S corps, LLCs, and partnerships, navigate to the Pass-Through Entity account. If the entity is a public utility, then navigate to Utility 2.2 Gross Receipts License Tax account.
- For individuals, navigate to the Individual Income Tax account.
- For financial institutions, navigate to Financial Institution Excise Tax account.
- For insurance companies, navigate to the Business Privilege Tax or Withholding
- Under the appropriate Account, click on ‘Report a donation to an Innovating Alabama Project and complete the required fields as follows:
- Check the box to confirm that you’re logged into the correct My Alabama Taxes account for your reservation by checking the box. Take a moment to thoroughly review this information before proceeding to ensure that you’re using the appropriate My Alabama Taxes account. Under ‘Donor Information,’ enter the donor’s contact information and address.
- Under ‘EDO Donation Information,’ click on the project for which you wish to make the credit reservation.
- Donation amount – Enter the amount of credit you are reserving.
- For utility companies that choose “Utility 2.2 Gross Receipts License Tax” account, click ‘Yes’ or ‘No’ to the question, ‘Would you like to allocate a portion of your donation to your 2.2% License Tax?’
- If you choose Yes, enter the amount of credit to be allocated against income tax and/or 2.2 utility gross receipts license tax at the time of the donation reservation. Please be advised that this allocation is irreversible once made.
- Donation date – Enter the date the reservation is made. Please note that the donor has 21 days from this date to make the cash contribution to the EDO. Any donation that is not confirmed by the EDO on the date the online project reservation is closed will be denied.
NOTE: If you are an Innovating Alabama Credit recipient claiming the credit against the Utility 2.2 Gross Receipts License Tax, then you may apply the credit against the annual payment when filing the Utility 2.2 Gross Receipts License Tax return or apply the credit against your payments on a quarterly basis. If you choose to apply the credit against the quarterly payments, click “Make a payment” in the Utility 2.2 box on your “Accounts” page in My Alabama Taxes, then “Utilize Credits for Payment” to apply the credit against quarterly payments.
Part II – Review Submission
The donor must agree to the terms and rules of the donation by checking the box before the donation can be submitted. The terms and rules include the following:
- The donor has 21 days from the date of the online credit reservation to make a cash donation to the EDO for the approved project.
- The EDO has 60 days from the date the project is added to the online system to confirm that the taxpayer’s donation has been received, the project has been funded, and the project will be undertaken.
- In the event the taxpayer’s donation is greater than the amount of the reservation, the credit is limited to the amount of the reservation available for the project.
- The credit is only available to the donating taxpayer making the donation. For pass-through entities, the credit may pass through to owners of the pass-through entity. In order to pass the income tax credit to the owner(s), the pass-through entity must submit a credit claim once they receive the Innovate Alabama approval letter from ALDOR. For detailed instructions on how to submit a credit claim to pass through entities, please click here.
What to expect after the online credit reservation is submitted through My Alabama Taxes:
- The donor will receive a confirmation number acknowledging the receipt of the reservation.
- The donor will receive a subsequent web notice from My Alabama Taxes notifying whether their donation has been approved or denied by the EDO.
- The donor will receive a letter from ALDOR confirming their Innovating Alabama Credit if the EDO confirms via ALDOR’s online system that the donation has been received, the project has been funded, and the project will be undertaken.