Tax Type
Corporation Income Tax
Description
Coalfield Employment Enhancement Tax Credit; Change in taxable year
Topic
Credits
Date Issued
02-22-2000
Feburary 22, 2000
RE: Request for a Ruling: Coalfield Employment Enhancement Credit
Dear ****
This will reply to your letter in which you request a ruling on the application of the Coalfield Employment Enhancement Credit (the "Coal Credit") to **** and its subsidiaries (collectively the "Taxpayer").
The Taxpayer changed its taxable year from a calendar year to a fiscal year, effective July 1, 1999. It will file a "short period" consolidated federal income tax return for the taxable year ended June 30, 1999. The Taxpayer has earned Coal Credits in its 1996, 1997 and 1998 tax years.
The Taxpayer requests a ruling on a number of different questions. Each question will be addressed separately below.
The employment factor is the ratio of the number of Virginia coal mining jobs for the calendar year ending during the taxable year in which the credit is earned to the number of Virginia coal mining jobs for the prior calendar year. See Virginia Tax Bulletin 97-1, Page 3, copy enclosed. If a taxpayer changes from a calendar year to a fiscal year, the employment factors will be adjusted as follows:
Taxable Year Applicable Employment Factor
(Calendar Years)
1/1/96-12/31/96 1995/1996
1/1/97-12/31/97 1996/1997
1/1/98-12/31/98 1997/1998
1/1/99-6/30/99 1998/1999
7/1/99-6/30/00 1999/2000
7/1/00-6/30/01 2000/2001
7/1/01-6/30/02 2001/2002
The Taxpayer may file for an extension or file an amended return for the short taxable year in order to properly report the 1999 employment factor.
Claiming the Credit
In Public Document (P.D.) 99-189 (7/16/99), copy enclosed, the department ruled that a taxpayer that changed its tax year from a fiscal to a calendar year would treat the change as if it was retroactive in nature for purposes of earning the Coal Credit. The department's rationale was that such taxpayers would not be in parity with those taxpayers that remained either fiscal or calendar year filers and would lose several months in which the credit could be earned.
In the instant case, the Taxpayer is changing from a calendar year to a fiscal year. Under this scenario, a taxpayer would not lose the opportunity to earn the credit because of the change in the taxable year. Therefore, the Taxpayer will be treated as earning the credit beginning with the 1996 calendar year and will report its coal sales on its returns as indicated on the schedule below:
Taxable Years In Which Credits Will Be Redeemed in the Taxable
Coal Credits are Earned Years as Shown
1/1/96 - 12/31/96 50% in 1/1/99 - 6/30/99
50% in 7/1/05 - 6/30/06
1/1/97 - 12/31/97 50% in 7/1/00 - 6/30/01
50% in 7/1/06 - 6/30/07
1/1/98 - 12/31/98 75% in 7/1/01 - 6/30/02
25% in 7/1/07 - 6/30/08
1/1/99 - 6/30/99 75% in 7/1/02 - 6/30/03
25% in 7/1/08 - 6/30/09
7/1/99 - 6/30/00 75% in 7/1/02 - 6/30/03
25% in 7/1/08 - 6/30/09
7/1/00 - 6/30/01 100% in 7/1/03 - 6/30/04
7/1/01 - 6/30/02 100% in 7/1/04 - 6/30/05
Tonnage Reports
The number of hours worked at Virginia coal mining jobs are reported on the Department of Mines, Minerals and Energy's tonnage report. These hours are aggregated for the calendar year and used to calculate the employment factor. Code of Virginia § 45.1-161.62 requires that tonnage reports (Form DM-CM2) be filed by February 15 for the preceding twelve months ending with December 31. When a taxpayer changes from a calendar year to a fiscal year, it will still need to submit its tonnage report for the calendar year by February 15. Because the taxpayer will need either to amend its tax return or file for an extension in order to determine the calendar year employment factor, the tonnage report can be filed pursuant to the calendar year ending during the taxable year in which the credit is earned.
Isopach Mapping
Virginia Tax Bulletin 97-1, Page 5, states that isopach maps shall be submitted by April 1 of the year immediately following the year in which the tax credit is earned or within three months after the end of the operator's fiscal year. However, in P. D. 99-189, the taxpayer failed to timely file the isopach map because the taxpayer's taxable year changed from a fiscal year to a calendar year and the due date had passed. The department allowed the taxpayer to file the isopach map within 60 days of receipt of the Commissioner's decision because of the change in taxable years. Therefore, in the instant case, the department will permit the Taxpayer to submit the isopach maps within 60 days of the date of this letter.
I hope that this ruling has answered all your inquires. If you have any other questions, you may contact **** at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/24049B
RE: Request for a Ruling: Coalfield Employment Enhancement Credit
Dear ****
This will reply to your letter in which you request a ruling on the application of the Coalfield Employment Enhancement Credit (the "Coal Credit") to **** and its subsidiaries (collectively the "Taxpayer").
FACTS
The Taxpayer changed its taxable year from a calendar year to a fiscal year, effective July 1, 1999. It will file a "short period" consolidated federal income tax return for the taxable year ended June 30, 1999. The Taxpayer has earned Coal Credits in its 1996, 1997 and 1998 tax years.
The Taxpayer requests a ruling on a number of different questions. Each question will be addressed separately below.
RULING
Employment FactorThe employment factor is the ratio of the number of Virginia coal mining jobs for the calendar year ending during the taxable year in which the credit is earned to the number of Virginia coal mining jobs for the prior calendar year. See Virginia Tax Bulletin 97-1, Page 3, copy enclosed. If a taxpayer changes from a calendar year to a fiscal year, the employment factors will be adjusted as follows:
Taxable Year Applicable Employment Factor
(Calendar Years)
1/1/96-12/31/96 1995/1996
1/1/97-12/31/97 1996/1997
1/1/98-12/31/98 1997/1998
1/1/99-6/30/99 1998/1999
7/1/99-6/30/00 1999/2000
7/1/00-6/30/01 2000/2001
7/1/01-6/30/02 2001/2002
The Taxpayer may file for an extension or file an amended return for the short taxable year in order to properly report the 1999 employment factor.
Claiming the Credit
In Public Document (P.D.) 99-189 (7/16/99), copy enclosed, the department ruled that a taxpayer that changed its tax year from a fiscal to a calendar year would treat the change as if it was retroactive in nature for purposes of earning the Coal Credit. The department's rationale was that such taxpayers would not be in parity with those taxpayers that remained either fiscal or calendar year filers and would lose several months in which the credit could be earned.
In the instant case, the Taxpayer is changing from a calendar year to a fiscal year. Under this scenario, a taxpayer would not lose the opportunity to earn the credit because of the change in the taxable year. Therefore, the Taxpayer will be treated as earning the credit beginning with the 1996 calendar year and will report its coal sales on its returns as indicated on the schedule below:
Taxable Years In Which Credits Will Be Redeemed in the Taxable
Coal Credits are Earned Years as Shown
1/1/96 - 12/31/96 50% in 1/1/99 - 6/30/99
50% in 7/1/05 - 6/30/06
1/1/97 - 12/31/97 50% in 7/1/00 - 6/30/01
50% in 7/1/06 - 6/30/07
1/1/98 - 12/31/98 75% in 7/1/01 - 6/30/02
25% in 7/1/07 - 6/30/08
1/1/99 - 6/30/99 75% in 7/1/02 - 6/30/03
25% in 7/1/08 - 6/30/09
7/1/99 - 6/30/00 75% in 7/1/02 - 6/30/03
25% in 7/1/08 - 6/30/09
7/1/00 - 6/30/01 100% in 7/1/03 - 6/30/04
7/1/01 - 6/30/02 100% in 7/1/04 - 6/30/05
Tonnage Reports
The number of hours worked at Virginia coal mining jobs are reported on the Department of Mines, Minerals and Energy's tonnage report. These hours are aggregated for the calendar year and used to calculate the employment factor. Code of Virginia § 45.1-161.62 requires that tonnage reports (Form DM-CM2) be filed by February 15 for the preceding twelve months ending with December 31. When a taxpayer changes from a calendar year to a fiscal year, it will still need to submit its tonnage report for the calendar year by February 15. Because the taxpayer will need either to amend its tax return or file for an extension in order to determine the calendar year employment factor, the tonnage report can be filed pursuant to the calendar year ending during the taxable year in which the credit is earned.
Isopach Mapping
Virginia Tax Bulletin 97-1, Page 5, states that isopach maps shall be submitted by April 1 of the year immediately following the year in which the tax credit is earned or within three months after the end of the operator's fiscal year. However, in P. D. 99-189, the taxpayer failed to timely file the isopach map because the taxpayer's taxable year changed from a fiscal year to a calendar year and the due date had passed. The department allowed the taxpayer to file the isopach map within 60 days of receipt of the Commissioner's decision because of the change in taxable years. Therefore, in the instant case, the department will permit the Taxpayer to submit the isopach maps within 60 days of the date of this letter.
I hope that this ruling has answered all your inquires. If you have any other questions, you may contact **** at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/24049B
Rulings of the Tax Commissioner