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1997 SESSION
975700743Be it enacted by the General Assembly of Virginia:
1. That §§ 58.1-333, 58.1-430, and 63.1-320 through 63.1-325 of the Code of Virginia are amended and reenacted as follows:
§ 58.1-333. Tax credit for donations under the Neighborhood Assistance Act.
Any business firm, as defined in § 63.1-321, shall be allowed a credit
against the tax imposed by Article 2 (§
58.1-320 or Chapter 12 et seq.) of this
title, §§ 58.1-2501 and 58.1-2626 chapter of an
amount equal to fifty forty percent of the total sum
invested donated under the Neighborhood Assistance Act
of 1981 (§ 63.1-320 et seq.) during the taxable year, such
credit not to exceed $175,000 annually. No tax credit of less than
fifty dollars shall be granted, nor shall a
tax credit be granted to any business firm for investments if such activity is
part of its normal course of business as defined in § 63.1-321.
Any tax credit not usable for the taxable year the investment was made may be
carried over to the extent usable for the next five succeeding taxable years or
until the full credit is utilized, whichever is sooner. Credits granted to a
partnership or S corporation shall be passed through to the partners or
shareholders, respectively, as provided in § 63.1-324.
§ 58.1-430. Tax credit for donations under the Neighborhood Assistance Act.
Any business firm, as defined in § 63.1-321, shall be allowed a credit
against the tax imposed by Article 10 (§ 58.1-400 or
Chapter 12 et seq.) of this title, §§
58.1-2501 and 58.1-2626 chapter of an amount equal
to fifty forty percent of the total sum
invested donated under the Neighborhood Assistance Act
of 1981 (§ 63.1-320 et seq.) during the taxable year, such
credit not to exceed $175,000 annually. No tax credit of less than fifty
dollars shall be granted, nor shall a tax credit be granted to any business
firm for investments if such activity is a part of its normal course of
business as defined in § 63.1-321. Any tax credit not usable for the
taxable year the investment was made may be carried over to the extent usable
for the next five succeeding taxable years or until the full credit is
utilized, whichever is sooner. Credits granted to a partnership or Subchapter S
corporation shall be passed through to the partners or shareholders,
respectively, as provided in § 63.1-324.
§ 63.1-320. Short title.
This chapter shall be known and may be cited as the "Neighborhood Assistance
Act of 1981."
§ 63.1-321. Definitions.
As used in this chapter:
"Business firm" means any business entity authorized to do business in
the Commonwealth of Virginia and subject to the state income tax on net
corporation income (§ 58.1-400 et seq.) or a public service
company subject to a franchise or license tax on gross receipts, or a bank,
bank and trust company, insurance company, trust company, national bank, mutual
savings bank, savings institution, partnership, electing small
business (Subchapter S)
corporation, limited liability company, or sole proprietorship
authorized to do business in this
Commonwealth subject to tax imposed by
Articles 2 (§ 58.1-320 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 Title 58.1.
"Community services" means any type of counseling and advice, emergency
assistance, medical care, provision of basic necessities, or
services designed to minimize the effects of poverty, furnished to
individuals or groups in an impoverished area, or impoverished people.
"Crime prevention" means any activity which aids the prevention or
reduction of crime in an impoverished area.
"Education" means any type of scholastic instruction or scholarship assistance to an individual who is impoverished.
"Impoverished area" means any area in Virginia which is approved as such
by the Director of the Department of Planning and Budget or his designee. Such
approval shall be made on the basis of federal census studies or current
indices of social and economic conditions or both.
"Housing assistance" means furnishing financial assistance, labor, material, or technical advice to aid the physical improvement of the homes of impoverished people.
"Impoverished people" means people in Virginia approved as such by the
Director of the Department of Planning and Budget or his designee
State Board of Social Services. Such approval shall be made on
the basis of generally recognized low income criteria used by federal and state
agencies.
"Job training" means any type of instruction to an individual who is impoverished that enables him to acquire vocational skills so that he can become employable or able to seek a higher grade of employment.
"Neighborhood assistance" means providing community services, education, housing assistance, or job training.
"Neighborhood organization" means any organization performing community
services in an impoverished area or whose primary function is
providing neighborhood assistance for impoverished people, and holding a
ruling from the Internal Revenue Service of the United States Department of the
Treasury that the organization is exempt from income taxation under the
provisions of §§ 501 (c) (3) and 501 (c) (4) of the Internal Revenue
Code of 1986, as amended from time to time, or any organization defined as a
community action agency in the Economic Opportunity Act of 1964 (42 U.S.C.
§ 2701 et seq.), or any housing authority as defined in § 36-3.
"Neighborhood assistance" means furnishing financial assistance, labor,
material, or technical advice to aid in the physical improvement of any part or
all of an impoverished area, or to aid the physical improvement of the homes of
impoverished people.
"Normal course of business" means those acts which are engaged in by a
business firm with a view toward winning financial gain, or those acts which
are performed by a business firm in the conduct of the business firm as a
business.
"Professional services" means any type of personal service to the public which requires as a condition precedent to the rendering of such service the obtaining of a license or other legal authorization and shall include, but shall not be limited to, the personal services rendered by medical doctors, dentists, architects, professional engineers, certified public accountants and attorneys-at-law.
§ 63.1-322. Public policy; business firms; donations.
It is hereby declared to be public policy of the Commonwealth of Virginia to
encourage direct investment by business firms in offering
neighborhood assistance and providing job training, education, crime
prevention, and community servicesto make donations to
neighborhood organizations to for the benefit
individuals living in impoverished areas or of
impoverished people.
§ 63.1-323.; Proposals; regulations; tax credits authorized; amount for programs.
A. Any business firm that engages in the activities of
providing neighborhood assistance, job training or education for individuals
not employed by the business firm, community services or crime prevention
services in an impoverished area or for impoverished people shall receive a tax
credit as provided in § 63.1-324, if neighborhood organization
may submit a proposal to the Commissioner of Social Services or his
designee approves the proposal of such requesting an
allocation of tax credits for use by business firm or of
a firms making donations to the neighborhood organization. The
proposal shall set forth the program to be conducted by the neighborhood
organization, the impoverished area or impoverished people
selected to be assisted, the estimated amount to be
invested in donated to the program and the plans for
implementing the program. A copy of the proposal shall be submitted by the
Commissioner of Social Services or his designee to all planning district
commissions within whose boundaries the proposal will operate. The planning
district commissions shall thereafter notify their respective local units of
government of the contents of the proposal. Such commission or the governing
body of each governmental subdivision may thereafter comment in writing on the
proposal to the Commissioner or his designee. If, in the opinion of the
Commissioner or his designee, a business firm's investment can more
consistently meet with the purposes of this chapter if made through
contributions to a nonprofit neighborhood organization, a tax credit may
similarly be allowed as provided in § 63.1-324.
B. The State Board of Social Services is hereby authorized to
promulgate regulations for the approval or disapproval of such proposals by
business firms or neighborhood
organizations and for determining the value of
the donations. Such regulations shall contain a
requirement that an annual audit be provided by the business firm or
neighborhood organization as a prerequisite for approval. Such
regulations shall provide for the equitable allocation of the available amount
of tax credits among the approved proposals submitted by
neighborhood organizations. The regulations shall
also provide that ten percent of
the available amount of tax credits each year shall be
allocated to qualified programs proposed by
neighborhood organizations not receiving allocations in the
preceding year; however, if the amount of tax credits
for qualified programs requested by such
neighborhood organizations is less than ten percent of
the available amount of tax credits, the
unallocated portion of
such ten percent of the available
amount of tax credits shall be allocated to qualified
programs proposed by other neighborhood
organizations.
C. If the Commissioner of Social Services or his designee approves a proposal submitted by a neighborhood organization, the organization shall make the allocated tax credit amounts available to business firms making donations to the approved program. A neighborhood organization shall not assign or transfer an allocation of tax credits to another neighborhood organization without the approval of the Commissioner of Social Services or his designee.
D. Through June 30, 1998, the total amount of tax
credit credits granted for programs approved under this
chapter for each fiscal year shall not exceed $5,250,000. From July 1, 1998,
through June 30, 2000, the total amount of tax
creditcredits granted for programs approved under this
chapter for each fiscal year shall not exceed eight million dollars;
however, the $2,750,000 annual increase in the amount of tax credits during the
period July 1, 1998, through June 30, 2000, shall be allocated to
education programs conducted by
neighborhood organizations. Effective July 1, 1998, for
purposes of this section, impoverished areas shall meet the following criteria:
(i) have twenty-five percent or more of the population with incomes below
eighty percent of the median income of the locality, (ii) have an unemployment
rate of at least 1.5 times the state average, or (iii) have a demonstrated
floor area vacancy rate of industrial and/or commercial properties of twenty
percent or more. Such allocation of the increase in the amount of
tax credits to education programs shall constitute the minimum
amount of tax credits to be allocated to education
programs. Tax credits shall not be authorized after fiscal
year 2000.
§ 63.1-324. Tax credit; amount; limitation; carry over.
A. The Commissioner of the Department of Social Services
or his designee shall certify to the Commissioner of the Department
of Taxation, or in the case of public service corporations
business firms subject to a license tax
imposed by Chapter 26 (§ 58.1-2600 et seq.)
under Article 1 (§ 58.1-2500 et seq.) of Chapter 25
or Article 2 (§ 58.1-2620 et seq.) of Chapter
26 of Title 58.1, to the Director of Public Service Taxation for the
State Corporation Commission, the applicability of the tax credit
provided herein for a business firm against any tax due under Article 10
(§ 58.1-400 et seq.) of Chapter 3 of Title 58.1 or against any income tax,
franchise tax, gross receipts tax or premium tax due from a public service
company, bank, bank and trust company, trust company, insurance company, other
than a foreign fire or casualty insurance company, national bank, mutual
savings bank, savings institution, partnership, S corporation, or sole
proprietorship, in an amount equaling fifty percent of the total amount
invested by the business firm during its taxable year in programs approved
pursuant to § 63.1-323. Notwithstanding the provisions of § 63.1-325,
credits granted to a clinic organized in whole or in part for the delivery of
health care services without charge may be assigned by the clinic to physicians
and dentists who are licensed pursuant to Title 54.1 and who provide health
care services without charge within the scope of their licensure at the
clinic.
B. A business firm shall be eligible for a credit against the taxes
imposed by Articles 2 (§ 58.1-320 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 Title 58.1, in an amount
equal to forty percent of the value of
the money, property, and
professional services donated by the business
firm during its taxable year to neighborhood organizations for programs
approved pursuant to § 63.1-323. No tax credit of less
than $50 $400 shall be granted for any individual
proposal donation, and a business firm shall not be
allowed a tax credit in excess of $175,000 per taxable year. No tax credit
shall be granted to any business firm for activities that are a part of
its normal course of business donations to a neighborhood
organization providing job training or education for individuals
employed by the business firm. Any tax credit not usable for the
period taxable year the investment
donation was made may be carried over to the extent
usable for the next five succeeding taxable years or until the full credit has
been utilized, whichever is sooner. Credits granted to a partnership,
electing small business (Subchapter
S) corporation, or limited liability company shall be
allocated to their individual partners, shareholders, or members, respectively,
in proportion to their ownership or interest in such business entities.
C. A tax credit shall be issued by the Commissioner of Social Services to a business firm upon receipt of a certification made by a neighborhood organization to whom tax credits were allocated for an approved program pursuant to § 63.1-323. The certification shall identify the type and value of the donation received and the business firm making the donation. A business firm shall be eligible for a tax credit under this section only to the extent that sufficient tax credits allocated to the neighborhood organization for an approved project are available.
§ 63.1-325. Donations of professional services.
A. Tax credits shall not be allowed under this chapter for the
time spent by a self-employed person who renders A
sole proprietor or partnership engaged in the business of providing
professional services shall be eligible for a tax credit under this
chapter based on the time spent by the proprietor or a
partner, respectively, who renders professional services
to a project program which has been approved for
tax credit status by the Commissioner of the Department of Social
Services or his designee; provided, however, that an employer.
The value of the professional services, for purposes of determining
the amount of the tax credit allowable,
rendered by the proprietor or a partner to an approved program shall
not exceed the lesser of (i) the reasonable cost for similar services from
other providers or (ii) $125 per hour.
B. A business firm shall be allowed eligible
for a tax credit under this chapter for the time spent by a salaried
employee who renders professional services to such an approved
project program. The value of the professional
services, for purposes of determining the amount of tax credit allowed to
an employer a business firm for time spent by
his its salaried employee in rendering professional
services to an approved project, shall be equal to one-half
the salary that such employee was actually paid for the period of time
that such employee rendered professional services to the approved
project program.
C. Notwithstanding any provision of this chapter limiting eligibility for tax credits to business firms, physicians and dentists licensed pursuant to Title 54.1 who provide health care services within the scope of their licensure, without charge, at a clinic organized in whole or in part for the delivery of health care services without charge, shall be eligible for a tax credit pursuant to § 63.1-324 based on the time spent in providing health care services at such clinic. The value of such services, for purposes of determining the amount of the tax credit allowable, rendered by the physician or dentist shall not exceed the lesser of (i) the reasonable cost for similar services from other providers or (ii) $125 per hour.