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2004 SESSION
041828264Be it enacted by the General Assembly of Virginia:
1. That § 58.1-439 of the Code of Virginia is amended and reenacted as follows:
§ 58.1-439. Major business facility job tax credit.
A. For taxable years beginning on and after January 1, 1995, but before January 1, 2005, a taxpayer shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.), and 10 (§ 58.1-400 et seq.) of Chapter 3; Chapter 12 (§ 58.1-1200 et seq.); Article 1 (§ 58.1-2500 et seq.) of Chapter 25; or Article 2 (§ 58.1-2620 et seq.) of Chapter 26 of this title as set forth in this section.
B. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
C. A "major business facility" is a company that satisfies the following criteria:
1. Subject to the provisions of subsectionsubsections K or L, the establishment
or expansion of the company shall result in the creation of at least 100 jobs
for qualified full-time employees; the first such 100 jobs shall be referred to
as the "threshold amount"; and
2. The company is engaged in any business in the Commonwealth, except a retail trade business if such trade is the principal activity of an individual facility in the Commonwealth. Examples of types of major business facilities that are eligible for the credit provided under this section include, but are not limited to, a headquarters, or portion of such a facility, where company employees are physically employed, and where the majority of the company's financial, personnel, legal or planning functions are handled either on a regional or national basis. A company primarily engaged in the Commonwealth in the business of manufacturing or mining; agriculture, forestry or fishing; transportation or communications; or a public utility subject to the corporation income tax shall be deemed to have established or expanded a major business facility in the Commonwealth if it meets the requirements of subdivision 1 during a single taxable year and such facilities are not retail establishments. A major business facility shall also include facilities that perform central management or administrative activities, whether operated as a separate trade or business, or as a separate support operation of another business. Central management or administrative activities include, but are not limited to, general management; accounting; computing; tabulating; purchasing; transportation or shipping; engineering and systems planning; advertising; technical sales and support operations; central administrative offices and warehouses; research, development and testing laboratories; computer-programming, data-processing and other computer-related services facilities; and legal, financial, insurance, and real estate services. The terms used in this subdivision to refer to various types of businesses shall have the same meanings as those terms are commonly defined in the Standard Industrial Classification Manual.
D. For purposes of this section, the "credit year" is the first taxable year following the taxable year in which the major business facility commenced or expanded operations.
E. The Department of Taxation shall make all determinations as to the classification of a major business facility in accordance with the provisions of this section.
F. A "qualified full-time employee" means an employee filling a new, permanent
full-time position in a major business facility in this Commonwealth. A "new,
permanent full-time position" is a job of an indefinite duration, created by
the company as a result of the establishment or expansion of a major business
facility in this Commonwealth, requiring a minimum of thirty-five35 hours of an
employee's time a week for the entire normal year of the company's operations, which "normal year"
shall consist of at least forty-eight48 weeks, or a position of indefinite
duration which requires a minimum of thirty-five35 hours of an employee's time
a week for the portion of the taxable year in which the employee was initially hired for, or
transferred to, the major business facility in this Commonwealth. Seasonal or temporary positions, or
a job created when a job function is shifted from an existing location in this
Commonwealth to the new major business facility and positions in building and
grounds maintenance, security, and other such positions which are ancillary to
the principal activities performed by the employees at a major business
facility shall not qualify as new, permanent full-time positions.
G. For any major business facility, the amount of credit earned pursuant to
this section shall be equal to $1,000 per qualified full-time employee, over
the threshold amount, employed during the credit year. The credit shall be
allowed ratably, with one-third of the credit amount allowed annually for three
years beginning with the credit year. The portion of the $1,000 credit earned
with respect to any qualified full-time employee who is employed in this
Commonwealth for less than twelve12 full months during the credit year will be
determined by multiplying the credit amount by a fraction, the numerator of which is the number of
full months that the qualified full-time employee worked for the major business
facility in this Commonwealth during the credit year, and the denominator of
which is twelve12. A separate credit year and a three-year allowance period
shall exist for each distinct major business facility of a single taxpayer.
H. The amount of credit allowed pursuant to this section shall not exceed the
tax imposed for such taxable year. Any credit not usable for the taxable year
the credit was allowed may be, to the extent usable, carried over for the next
ten10 succeeding taxable years. No credit shall be carried back to a
preceding taxable year. In the event that a taxpayer who is subject to the tax limitation
imposed pursuant to this subsection is allowed another credit pursuant to any other section of
the Code of Virginia, or has a credit carryover from a preceding taxable year,
such taxpayer shall be considered to have first utilized any credit allowed
which does not have a carryover provision, and then any credit which is carried
forward from a preceding taxable year, prior to the utilization of any credit
allowed pursuant to this section.
I. No credit shall be earned pursuant to this section for any employee (i) for whom a credit under this section was previously earned by a related party as defined by Internal Revenue Code § 267 (b) or a trade or business under common control as defined by Internal Revenue Code § 52 (b); (ii) who was previously employed in the same job function in Virginia by a related party as defined by Internal Revenue Code § 267 (b) or a trade or business under common control as defined by Internal Revenue Code § 52 (b); (iii) whose job function was previously performed at a different location in Virginia by an employee of the taxpayer, a related party as defined by Internal Revenue Code § 267 (b), or a trade or business under common control as defined by Internal Revenue Code § 52 (b); or (iv) whose job function previously qualified for a credit under this section at a different major business facility on behalf of the taxpayer, a related party as defined by Internal Revenue Code § 267 (b), or a trade or business under common control as defined by Internal Revenue Code § 52 (b).
J. Subject to the provisions of subsectionsubsections K or L, recapture of this
credit, under the following circumstances, shall be accomplished by increasing
the tax in any of the five years succeeding the taxable year in which a credit
has been earned pursuant to this section if the number of qualified full-time
employees decreases below the average number of qualified full-time employees
employed during the credit year. Such tax increase amount shall be determined
by (i) recomputing the credit which would have been earned for the original
credit year using the decreased number of qualified full-time employees and
(ii) subtracting such recomputed credit from the amount of credit previously
earned. In the event that the average number of qualifying full-time employees
employed at a major business facility falls below the threshold amount in any
of the five taxable years succeeding the credit year, all credits earned with
respect to such major business facility shall be recaptured. No credit amount
will be recaptured more than once pursuant to this subsection. Any recapture
pursuant to this section shall reduce credits earned but not yet allowed, and
credits allowed but carried forward, before the taxpayer's tax liability may be
increased.
K. In the event that a major business facility is located in an economically distressed area or in an enterprise zone as defined in § 59.1-271 during a credit year, the threshold amount required to qualify for a credit pursuant to this section and to avoid full recapture shall be reduced from 100 to 50 for purposes of subdivision C 1 and subsection J. An area shall qualify as economically distressed if it is a city or county with an unemployment rate for the preceding year of at least 0.5 percent higher than the average statewide unemployment rate for such year. The Virginia Economic Development Partnership shall identify and publish a list of all economically distressed areas at least annually.
L. For taxable years beginning on or after January 1, 2004, in the event that a major business facility is located in a severely economically distressed area, the threshold amount required to qualify for a credit pursuant to this section and to avoid full recapture shall be reduced from 100 to 25 for purposes of subdivision C 1 and subsection J. An area shall qualify as severely economically distressed if it is a city or county with an unemployment rate for the preceding year of at least twice the average statewide unemployment rate for such year. The Virginia Economic Development Partnership shall identify and publish a list of all severely economically distressed areas at least annually.
LM. The Tax Commissioner shall promulgate regulations, in accordance with the
Administrative Process Act (§ 2.2-4000 et seq.), relating to (i) the
computation, carryover, and recapture of the credit provided under this section;
(ii) defining criteria for (a) a major business facility, (b) qualifying
full-time employees at such facility, and (c) economically distressed areas;
and (iii) the computation, carryover, recapture, and redemption of the credit
by affiliated companies pursuant to subsection R S.
MN. The provisions of this section shall apply only in instances where an
announcement of intent to establish or expand a major business facility is made on or after January
1, 1994. An announcement of intent to establish or expand a major business facility includes, but is
not limited to, a press conference or extensive press coverage, providing
information with respect to the impact of the project on the economy of the
area where the major business facility is to be established or expanded and the
Commonwealth as a whole.
NO. The credit allowed pursuant to this section shall be granted to the person
who pays taxes for the qualified full-time employees pursuant to Chapter 5 (§
60.2-500 et seq.) of Title 60.2.
OP. No person shall claim a credit allowed pursuant to this section and the
credit allowed pursuant to § 58.1-439.2.
PQ. No person operating a business in the Commonwealth pursuant to Chapter 29
(§ 59.1-364 et seq.) of Title 59.1 shall claim a credit pursuant to this section.
QR. Notwithstanding subsection N O, a taxpayer may, for the purpose of
determining the number of qualified full-time employees at a major business facility, include the employees of a contractor
or a subcontractor if such employees are permanently assigned to the taxpayer's
major business facility. If the taxpayer includes the employees of a contractor
or subcontractor in its total of qualified full-time employees, it shall enter
into a contractual agreement with the contractor or subcontractor prohibiting
the contractor or subcontractor from also claiming these employees in order to
receive a credit given under this section. The taxpayer shall provide evidence
satisfactory to the Department of Taxation that it has entered into such a
contract.
RS. For purposes of satisfying the criteria of subdivision C 1, two or more
affiliated companies may elect to aggregate the number of jobs created for qualified full-time
employees as the result of the establishment or expansion by the individual companies in order to
qualify for the credit allowed pursuant to this section. For purposes of this
subsection, "affiliated companies" means two or more companies related to each
other such that (i) one company owns at least eighty80 percent of the voting
power of the other or others or (ii) at least eighty80 percent of the voting
power of two or more companies is owned by the same interests.
ST. The General Assembly of Virginia finds that modern business infrastructure
allows businesses to locate their administrative or manufacturing facilities with minimal regard to
the location of markets or the transportation of raw materials and finished
goods, and that the economic vitality of this Commonwealth would be enhanced if
such facilities were established in Virginia. Accordingly, the provisions of
this section targeting the credit to major business facilities and limiting the
credit to those companies which establish a major business facility in Virginia
are integral to the purpose of the credit earned pursuant to this section and
shall not be deemed severable.