November 20, 2025
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you contest the denial of your application for the Qualified Equity and Subordinated Debt Investments Tax Credit (the “Credit”) submitted by ***** (the “Taxpayers”) for the taxable year ended December 31, 2024.
FACTS
The Taxpayers contend that they filed an application for the Credit related to an investment they made in a qualified business during the 2024 taxable year by mail in March 2025. The Department has no record of receiving the application. The Taxpayers sent a copy of the application to the Department in May 2025. They request that the Department allow them to claim the Credit for the 2024 taxable year because their application for the Credit was mailed prior to the application deadline.
DETERMINATION
Virginia Code § 58.1-339.4 provides a credit for individual and fiduciary income tax equal to 50% of a qualified equity and subordinated debt investment made during the taxable year in a qualified business venture. Under the statute, when the aggregate amount of requests for the Credit for a calendar year exceeds $5 million, the Department allocates the available Credit pro rata among the approved applicants.
Title 23 of the Virginia Administrative Code (VAC) 10-110-288 provides that, “[f]or any taxable year that ends after January 1, and on or before December 31 of a calendar year, eligible taxpayers must submit an application and supporting documentation requesting the tax credit no later than April 1 of the subsequent calendar year.”
Therefore, in order to receive the Credit, an eligible taxpayer must submit an application for the Credit (currently Form EDC) and any supporting documentation to the Department no later than April 1 of the year following the investment. This requirement is also clearly set forth in the instructions for the application.
Because the Credit is subject to an annual cap, the Department must have a deadline for tax credit applications. Adopting a policy of approving late applications for the Credit could result in the amount of tax credit exceeding the tax credit cap for a particular year. The Department’s policy of establishing a hard deadline for capped tax credits has been applied to all capped tax credits that are administered by the Department. See Public Document (P.D.) 04-201 (11/4/2004), P.D. 13-189 (10/18/2013), P.D. 15-201 (10/19/2015), P.D. 21-124 (9/14/2021), and P.D. 24-83 (9/13/2024). Accordingly, the Department cannot accept an application for the Credit after the deadline.
The Taxpayers contend that they mailed the Credit application to the Department in March 2025. The Department has no record of the receiving this application, nor have the Taxpayers provided proof that the application was mailed during the time they claim. After becoming aware that the Department had not received their application, they filed an application for correction in May 2025, including a copy of Form EDC. While the Department empathizes with the Taxpayers’ situation, because Form EDC was filed beyond the statutory deadline, the Credit cannot be granted.
The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at ***** or *****.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/5209.T