Tax Type
Corporation Income Tax
Description
Coalfield Employment Enhancement Tax Credit
Topic
Credits
Date Issued
09-22-2000
September 22, 2000
Re: Request for a Ruling: Coalfield Employment Enhancement Tax Credit
Dear ****
This will reply to your letter in which you request a ruling on the application of the Coalfield Employment Enhancement Tax Credit (the "Enhancement Credit") to several possible scenarios involving ****** (the "Taxpayer"). I apologize for the delay in response.
FACTS
The Taxpayer owns an interest in coal reserves which straddle Virginia and a neighboring state ("State A"). The Taxpayer requests a ruling on the application of the Enhancement Credit to four scenarios which involve the mining of coal from State A. The Taxpayer also requests a ruling on the application of the Virginia Coal Employment and Production Incentive Tax Credit (the "Incentive Credit") to these scenarios.
RULING
Scenario One
In the first scenario, the Taxpayer intends to send State A coal underground through the Virginia mine and out the Virginia mine's portal. At no time will the coal surface prior to exiting the portal in Virginia. This situation was addressed in Public Document ("P.D.") 97-359 (9/4/97), copy enclosed. P.D. 97-359 provided that the physical location of the portal where the coal reaches the surface determines where it is mined, not the physical location of the coal being removed. Therefore, the coal which is sent underground from State A to a Virginia portal is considered Virginia coal for purposes of the Enhancement Credit.
Scenario Two
The second scenario is identical to the first except that the coal surfaces in State A while traveling on the belt before reentering the earth and surfacing at the Virginia portal. This situation was also addressed in P.D. 97-359. P.D. 97-359 provides that "[i]f coal leaves the earth while being transported, it has not been brought to the surface for purposes of the Enhancement credit provided that it reenters the earth" before it ultimately resurfaces out of the Virginia portal. In this scenario, the coal would be considered Virginia coal for purposes of the Enhancement Credit because it would temporarily surface and reenter the earth in State A before being permanently removed at the Virginia portal.
Scenario Three
The third scenario is similar to the second scenario, except that the coal is stockpiled temporarily in a raw coal staging area when it surfaces in State A prior to being put on the conveyor belt to the Virginia portal. P.D. 97-359 provides that coal is not brought to the surface for purposes of the Enhancement Credit if it "... leaves the earth while being transported, ...". (emphasis added). Therefore, coal may temporarily leave the earth providing that it remain in transport, i.e., kept in continuous motion, while being sent to the Virginia portal. However, if at any time the coal stops moving while it is above ground and it is removed from the conveyor belt, the transport would be interrupted. In this scenario, the transportation of the coal is stopped because it is stockpiled at the raw coal staging area in State A prior to being returned to the conveyor belt for its trip to Virginia. Such a scenario would prevent coal mined in State A from being considered Virginia-mined coal for purposes of the Enhancement Credit.
Scenario Four
In the final scenario, coal mined from State A would be trucked to a raw coal staging area, where it is temporarily stockpiled prior to being loaded onto the conveyor belt for its trip to Virginia. Such coal would not be considered Virginia coal for the same reasons given in the third scenario. The result would not change even if the coal was placed directly on the conveyor belt rather than stockpiled at the raw coal staging area. The continuous motion of the coal is interrupted at the time that it is loaded onto the truck. Directly loading coal onto a conveyor belt from a truck does not alter the outcome of this scenario.
Incentive Credit
The Incentive Credit is taken against a public service corporation's license tax. See Code of Virginia § 58.1-2600, et seq. The license tax assessed against public service companies is administered by the State Corporation Commission ("SCC") which interprets all applicable tax law. The Tax Commissioner lacks the authority to issue rulings on taxes administered by other agencies. Therefore, I am unable to give you a ruling on whether the coal in the previous four scenarios qualifies for the Incentive Credit.
However, I must point out to you that Code of Virginia § 58.1-439.2 (E) provides that no person may claim the Enhancement Credit for any ton of coal for which the Incentive Credit has been claimed. Therefore, under any of the previous four scenarios, the Enhancement Credit may not be claimed on any ton of coal in which the Incentive Credit has been claimed.
I hope that the foregoing ruling has answered your questions. If you have any other questions, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/22958B
Related Documents
Rulings of the Tax Commissioner