Tax Type
Corporation Income Tax
Description
Coalfield Employment Enhancement Credit
Topic
Credits
Date Issued
10-22-2001
October 22, 2001
Re: Request for a Ruling: Corporate Income Taxation
Dear *****
This will reply to your letter in which you request a ruling on the application of the Coalfield Employment Enhancement Credit (the "Credit") to your client, ***** (the "Taxpayer").
FACTS
The Taxpayer owns two coal mines that are located in another state ("State A") that is adjacent to Virginia. Coal from these two mines is transported by a conveyor system to the Taxpayer's processing plant in Virginia. The Taxpayer has an economic interest in this coal as defined in Virginia Tax Bulletin 97-1 (the "Bulletin").
Specifically, each of the two conveyors exits the earth in State A and carries the raw coal to a point where it is dropped through a feeder onto another conveyor belt. The raw coal then enters the earth in State A and travels through a mine by conveyor belt until it exits the earth in Virginia where it is deposited in a pile at a processing facility.
DETERMINATION
You contend that the Taxpayer's situation is nearly identical to the fact scenario presented in Public Document ("P.D.") 97-359 (9/4/97), copy enclosed. P.D. 97-359 provides that coal that is transported above ground is Virginia coal for purposes of the Credit provided that it reenters the earth prior to resurfacing permanently in Virginia. However, P.D. 00-171 (9/22/00), copy enclosed, further clarified the treatment of coal mined out-of-state for purposes of the Credit. P.D. 00-171 provides in pertinent part:
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- 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.
If the transport is interrupted while the coal is still in another state, the coal will be considered to have been permanently removed from the ground. Such coal is not considered Virginia coal for purposes of the Credit.
In the instant case, coal leaves the earth in State A on conveyor belts that drop the coal through a feeder onto another conveyor belt for transport underground into Virginia. At no time does the coal stop until after it exits the earth in Virginia and it is deposited at the Taxpayer's processing plant. As such, the coal that the Taxpayer is extracting from the two mines in State A and is transported on the current conveyor system is Virginia coal for purposes of the Credit.
I hope the above ruling answers your question. If you have any further questions regarding this ruling, you may contact ***** in the department's Appeals and Rulings Office at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
ARO/31061B
Rulings of the Tax Commissioner