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1995 SESSION
LD4861176Patrons--Deeds, Putney, Shuler and Thomas; Senators: Bell, Miller, K.G., Nolen, Schewel and Trumbo
Be 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. Virginia 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 "qualified company" is a company that satisfies the following criteria:
1. The Department of Economic Development must certify to the Department of
Taxation: (i) that the company has established or expanded a major
business facility in this Commonwealth and (ii) the date on which such
facility commenced or expanded operations; and
2. Subject to the provisions of subsection K, the establishment or expansion
of the major business facility shall result in the creation of at
least 10050 jobs for qualified full-time employees
for which the average gross wages shall equal at least $16,000; the
first such 100 50 jobs shall be referred to as the
"threshold amount" ; and
3. The company is primarily engaged in the Commonwealth in the business
of (i) manufacturing or mining; (ii) agriculture, forestry or fishing; (iii)
transportation or communications; or (iv) a public utility subject to the
corporation income tax. In addition, the following activities, whether
operated as a separate trade or business, or as a separate support operation
of another business, shall satisfy the requirements of this subdivision
regardless of what industry the taxpayer is engaged in: (i) central
administrative offices and warehouses; (ii) research, development and testing
laboratories; (iii) computer-programming, data-processing and other
computer-related services facilities; and (iv) 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. "Major businessBusiness facility" includes, but is
not limited to, a headquarters, or portion of such a facility, where company
staff 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 major business facility
shall also include facilities that perform a central management or
administrative function for other establishments of the same enterprise such
as general management, accounting, computing, tabulating, data processing,
purchasing, transportation or shipping, engineering and systems planning,
advertising, legal, financial, and research and development if it otherwise
meets the staffing requirements. An enterprise engaged in the
Commonwealth in the business of (i) manufacturing or mining; (ii)
agriculture, forestry or fishing; (iii) transportation or communications; or
(iv) a public utility subject to the corporation income tax shall be
deemed to have established or expanded a major business facility
in this Commonwealth if it meets the requirements of subdivision C 2 during a
single taxable year. The Department of Economic Development shall make all
determinations as to the classification of a major business
facility in accordance with the provisions of this section. Only those
major business facilities which have been certified by the
Department of Economic Development shall be eligible to receive the credit
pursuant to 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-five hours of an employee's time a week for the
entire normal year of the company's operations, which "normal year" must
consist of at least 48 forty-eight weeks, or a position
of indefinite duration which requires a minimum of thirty-five 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
shall not qualify as new, permanent full-time positions.
G. For any qualified company, 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 twelve 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 qualified company in this Commonwealth during the
credit year, and the denominator of which is twelve. A separate credit year
and a three-year allowance period will 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 five succeeding taxable years. No credit shall be carried back to a
preceding taxable year. The maximum amount of credit that may be cumulatively
earned by a taxpayer pursuant to this section in one or more taxable years,
for one or more major business facilities, is one million dollars.
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 which 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 subsection K, 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 5025 for purposes of subdivision C 2 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 Department of Economic Development shall identify and publish a
list of all economically distressed areas at least annually.
L. The Tax Commissioner shall promulgate regulations, in accordance with the
Administrative Process Act (§ 9-6.14:1 et seq.), relating to (i) the
computation, carryover, and recapture of the credit provided under this
section and (ii) defining criteria for (a) a major business
facility, (b) qualifying jobs for such facility, and (c) economically
distressed areas.
M. 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, 19941996. 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.
N. 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 qualified companies 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.
2. That the provisions of this act shall become effective on January 1, 1996.