Tax Type
Corporation Income Tax
Description
Jobs credit
Topic
Credits
Exemptions
Date Issued
03-25-1982
March 25, 1982
Re: § 58-1118 Application for Correction
Corporation Income Tax
Dear ****************
This will reply to your letter of September 11, 1981 in which you apply for relief from additional corporation income taxes assessed for the corporation's fiscal year ended September 30, 1980.
Your letter requested a conference for discussion of the matter and you were advised by letter dated November 6, 1981 of a conference scheduled for January 19, 1982 at 10:00 a.m. However, you did not avail yourself of the conference and this determination is made on the basis of information disclosed in taxpayer's filed return.
FACTS
Taxpayer filed a Virginia corporation income tax return for the fiscal year ended September 30, 1980 on April 13, 1981 and included with the return, as required by Virginia law, a copy of its U.S. corporation income tax return for the fiscal year.
In its Virginia return, taxpayer correctly reflected its federal taxable income but made a subtraction therefrom for "the amount of salaries or wages eligible for the federal targeted jobs credit under § 280C(b) of the IRC." However, Form 5884 of taxpayer's federal return describes the amount so deducted as a carryover of unused "Jobs Credit" from the fiscal year ended September 30, 1978.
While salaries or wages eligible for the federal targeted jobs credit in fiscal year 1980 would constitute an allowable subtraction under Virginia law, a carryover of unused credit from fiscal year 1978 would not.
§ 58-151.013 of the Code of Virginia was amended in 1978 by providing a subtraction effective for taxable years beginning on and after January 1, 1978 for "the amount of wages or salaries eligible for the federal 'New Jobs Credit which was not deducted for federal purposes on account of the provisions of § 280C of the Internal Revenue Code of 1954, as amended.
§ 280C of the Internal Revenue Code (in effect for 1978) provides that no deduction shall be allowed for that portion of the wages or salaries paid or incurred for the taxable year which in equal to the amount of credit allowable for the taxable year.
Accordingly, while IRC § 280C provides for the carryback and carryover of the Jobs Credit, it clearly requires that taxpayer forgo the deductions for eligible wages and salaries in the year such wages or salaries are paid or incurred. In the basis of information furnished by taxpayer, it is equally clear that the wages and salaries subtracted on the Virginia income tax return for the fiscal year ended September 30, 1980 were paid or incurred in the fiscal year ended September 30, 1978.
DETERMINATION
Since the wages and salaries subtracted by taxpayer in computing Virginia taxable income for the fiscal year ended September 30, 1980 were paid or incurred in the fiscal year ended September 30, 1978 and since Virginia law providing for such subtraction is effective only for taxable years beginning on and after January 1, 1978, your application for relief is denied. The assessment should now be paid together with interest accrued to date of payment.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner