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2018 SESSION

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HB 222 Income tax, corporate and state; modification for certain companies, grants.

Introduced by: James W. Morefield | all patrons    ...    notes | add to my profiles | history

SUMMARY AS PASSED:

Income tax; modification for certain companies; grants. Establishes an income tax modification for companies that, from 2018 through 2024, either (i) invest at least $5 million in new capital investment in a qualified locality and create at least 10 jobs paying at least 150 percent of the minimum wage in a qualified locality or (ii) create at least 50 jobs paying at least 150 percent of the minimum wage in a qualified locality. A company is eligible to claim the modification only if it had no property or payroll in Virginia on the effective date of the act.

The bill defines "qualified locality" to include (a) the Counties of Alleghany, Bland, Buchanan, Carroll, Craig, Dickenson, Giles, Grayson, Lee, Russell, Scott, Smyth, Tazewell, Washington, Wise, and Wythe and the Cities of Bristol, Galax, and Norton; (b) the Counties of Amelia, Appomattox, Buckingham, Charlotte, Cumberland, Halifax, Henry, Lunenburg, Mecklenburg, Nottoway, Patrick, Pittsylvania, and Prince Edward and the Cities of Danville and Martinsville; (c) the Counties of Accomack, Caroline, Essex, Gloucester, King and Queen, King William, Lancaster, Mathews, Middlesex, Northampton, Northumberland, Richmond, and Westmoreland; and (d) the Counties of Brunswick and Dinwiddie and the City of Petersburg. "Qualified locality" also includes certain real property owned or partly owned by such localities outside of their territorial boundaries.

The bill requires a company to obtain annual certification from the Virginia Economic Development Partnership Authority (the Authority) that the company will have a positive fiscal impact on Virginia, based on consideration of certain factors. It directs the Authority to deny certification to any company that reorganizes for the purpose of taking advantage of the tax benefits provided by the bill.

Generally, the amount of the modification is the value of the company's property and payroll in qualified localities and its sales in Virginia. The bill provides similar modifications for industries that use different apportionment formulas, including motor carriers, financial companies, construction companies, railway companies, manufacturing companies, retailers, and businesses with enterprise data center operations.

Eligibility for the income tax apportionment modifications shall continue for six years following the year in which the company initially makes a modification to its apportionment formula. Continuing eligibility is contingent on the company's maintaining its capital investment and jobs created in qualified localities and obtaining re-certification from the Authority.

The bill permits qualified localities to provide grants and loans to companies that qualify for the modification provided by the bill. The bill also authorizes grants and loans of up to $2,000 per job per year from the Commonwealth's Development Opportunity Fund to an eligible company.

This bill is identical to SB 883.

SUMMARY AS PASSED HOUSE:

Income tax; modification for certain companies and subtraction for their employees; local grants. Establishes an income tax modification for companies that, from 2018 through 2028, either (i) invest at least $5 million in new capital investment in a qualified locality and create at least 10 jobs paying at least twice the minimum wage in a qualified locality or (ii) create at least 50 jobs paying at least twice the minimum wage in a qualified locality. A company is eligible to claim the modification only if it had no property or payroll in Virginia on the effective date of the act.

The bill defines "qualified locality" to include (a) the Counties of Bland, Buchanan, Carroll, Craig, Dickenson, Giles, Grayson, Lee, Russell, Scott, Smyth, Tazewell, Wise, and Wythe and the Cities of Bristol, Galax, and Norton; (b) the Counties of Amelia, Appomattox, Buckingham, Charlotte, Cumberland, Halifax, Henry, Lunenburg, Mecklenburg, Nottoway, Patrick, Pittsylvania, and Prince Edward and the Cities of Danville and Martinsville; (c) the Counties of Accomack, Caroline, Essex, Gloucester, King and Queen, King William, Lancaster, Mathews, Middlesex, Northampton, Northumberland, Richmond, and Westmoreland; and (d) the City of Petersburg. "Qualified locality" also includes certain real property owned or partly owned by such localities outside of their territorial boundaries.

The bill requires a company to obtain annual certification from the Virginia Economic Development Partnership Authority (the Authority) that the company will have a positive fiscal impact on Virginia, based on consideration of certain factors. It directs the Authority to deny certification to any company that reorganizes for the purpose of taking advantage of the tax benefits provided by the bill.

Generally, the amount of the modification is the value of the company's property and payroll in qualified localities. The bill provides similar modifications for industries that use different apportionment formulas, including motor carriers, financial companies, construction companies, railway companies, manufacturing companies, retailers, and businesses with enterprise data center operations.

The bill also establishes a subtraction from individual income tax for employees of an eligible company. Such employees may subtract up to $250,000 of compensation received from an eligible company. Eligibility for the corporate and individual income tax subtractions shall continue for nine years following the year in which the company initially makes a modification to its apportionment formula. Continuing eligibility is contingent on the company's maintaining its capital investment and jobs created in qualified localities.

The bill permits qualified localities to provide grants and loans to companies that qualify for the modification provided by the bill.

SUMMARY AS INTRODUCED:

Income tax; modification for certain companies and subtraction for their employees; local grants. Establishes an income tax modification for companies that, from 2018 through 2028, either (i) invest at least $5 million in new capital investment in a qualified locality and create at least 10 jobs in a qualified locality or (ii) create at least 50 jobs in a qualified locality. Such companies are exempt from withholding for their employees that reside in a qualified locality.

The bill defines qualified locality to include (i) the Counties of Bland, Buchanan, Dickenson, Lee, Russell, Scott, Smyth, Tazewell, and Wise or the Cities of Bristol and Norton, (ii) the Counties of Grayson, Henry, Halifax, or Pittsylvania or the Cities of Danville, Galax, or Martinsville, and (iii) the City of Petersburg. Qualified locality also includes certain real property owned or partly owned by such localities outside of their territorial boundaries.

A company is eligible to claim the subtraction if it had no property or payroll in Virginia or if it had property or payroll in a qualified locality on the effective date of the act and remits its applicable estimated tax to the Tax Department. The bill authorizes the Commonwealth's Development Opportunity Fund and the Tobacco Indemnification and Community Revitalization Fund to issue grants or loans to eligible companies to pay their estimated tax liability. The bill defines applicable estimated tax as the sum of (i) the company's tax liability, calculated without allowing the modification, and (ii) the amount it would have been required to withhold for each of its employees that reside in a qualified locality.

Generally, the amount of the modification is the value of the company's property and payroll in qualified localities. The bill provides similar modifications for industries that use different apportionment formulas including motor carriers, financial companies, construction companies, railway companies, manufacturing companies, retailers, and businesses with enterprise data center operations.

The bill also establishes a subtraction from individual income tax for employees of an eligible company. Eligibility for the corporate and individual income tax subtractions shall continue for nine years following the year in which the company initially makes a modification to its apportionment formula. Continuing eligibility is contingent on the company maintaining its capital investment and jobs created in qualified localities.

The bill permits (i) the Counties of Bland, Buchanan, Dickenson, Lee, Russell, Scott, Smyth, Tazewell, and Wise and the Cities of Bristol and Norton, (ii) the Counties of Grayson, Henry, Halifax, and Pittsylvania and the Cities of Danville, Galax, and Martinsville, and (iii) the City of Petersburg to provide grants and loans to companies that qualify for the modification provided by the bill.  The bill also authorizes all industrial development authorities to provide grants and loans to such companies.