Tax Type
Corporation Income Tax
Description
Major business facility job tax credit; Qualifications for credit
Topic
Credits
Date Issued
09-26-1997
September 26, 1997
Re: Ruling Request: Major Business Facility Jobs Tax Credit
Dear**********
This will reply to your letter in which you request a ruling regarding the eligibility of your client, ***************(the "Taxpayer") for the Major Business Facility Job Tax Credit.
FACTS
The Taxpayer, a calendar year filer, is headquartered in Virginia, and is in the business of providing computer-related consulting. Most of the Taxpayer's principal Virginia operations are conducted in one location in Virginia, however, the Taxpayer does maintain offices in other locations in Virginia. The Taxpayer maintains its corporate headquarters at its principal location in Virginia. The Taxpayer also performs its computer-related services at this facility, as well as at the other facilities in Virginia.
During its 1995 taxable year, the Taxpayer created over 300 new full-time positions at its various Virginia facilities. The vast majority of these new positions were part of the skilled labor force needed for the Taxpayer's highly specialized computer--related services business.
You have requested guidance whether the creation of over 300 full-time positions at the Taxpayer's Virginia locations qualifies for the Major Business Facility Job Tax Credit (the "credit") under Code of Virginia § 58.1-439. You have also posed several questions related to the application of the credit to the Taxpayer. Your questions have been addressed individually below.
DETERMINATION
Does the creation of over 300 full-time jobs at an existing computer services corporation's Virginia locations qualify for the credit under Code of Virginia § 58.1-439?
Code of Virginia § 58.1-439 grants a credit to taxpayers that establish or expand a "major business facility" based on the number of "qualified full-time employees" that are employed in the "credit year." The 1997 Virginia General Assembly enacted Senate Bill 914 and House Bill 2183 (Chapters 786 and 852 of the Acts of Assembly, respectively) that amended Code of Virginia § 58.1-439. These identical bills contained many provisions that clarified those companies that qualify for the credit, and were considered to be declaratory of existing law.
Code of Virginia § 58.1-439, as amended by the 1997 legislation, provides in relevant part;
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- C. A "major business facility" is a company that satisfies the following criteria:
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- 1. ... the establishment or expansion of the company shall result in the creation of at least 100 jobs for qualified full-time employees; the first such 100 jobs shall be referred to as the "threshold amount;" and
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- 2. The company is engaged in any business in the Commonwealth, except a retail trade business if such trade is the principal activity of an individual facility in the Commonwealth. Examples of types of major business facilities that are eligible for the credit provided under this section included, but are not limited to, a headquarters, or portion of such a facility, where company employees are physically employed, and where the majority of the company's financial, personnel, legal or planning functions are handled either on a regional or national basis.... A major business facility shall also include facilities that perform central management or administrative activities, whether operated as a separate trade or business, or as a separate support operation of another business. Central management or administrative activities include, but are not limited to, ... data-processing and other computer-related services facilities...
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- D. For the purposes of this section, the "credit year" is the first taxable year in which the major business facility commenced or expanded operations. (Emphasis added.)
With respect to the above provisions amended by the 1997 legislation, the second enactment clause of the legislation stated;
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- ... [The] provisions of this act are declaratory of existing law.
As provided in Code of Virginia, any company engaged in business, except a retail trade business if such trade is the principle activity of an individual facility in the Commonwealth, may qualify for the credit if it adds jobs in connection with the establishment or expansion of a major business facility. The statute specifically provides that headquarters facilities and computer-related services facilities are examples of facilities that qualify for the credit.
According to the information provided, the Taxpayer has created over 100 positions during its 1995 taxable year at its headquarters facilities in Virginia, as well as its other facilities in Virginia where computer-related services are performed. The department has determined that taxpayers will be permitted to aggregate its hires at multiple facilities and earn the credit provided the activities conducted at each location are part of the same process or operation, or where qualified full-time employees located at separate facilities are hired within the same continuous twelve month period.
You indicate that the Taxpayer created 314 new jobs at its headquarters facility and its computer-related service facilities during its 1995 taxable year (i.e. calendar year 1995). Provided the new jobs created at these facilities met the definition of a "new permanent full-time position" as defined in Code of Virginia § 58.1-439 (F), copy attached, the Taxpayer qualified for the credit during its taxable year ended December 31, 1995, and could begin earning the credit during its "credit year." The credit year is statutorily defined as the first taxable year following the year in which a facility is expanded by a taxpayer creating the requisite number of jobs. Accordingly, the Taxpayer was eligible to calculate and begin to claim its credit during its taxable year ended December 31, 1996.
Does a favorable ruling that the Taxpayer is eligible for the credit constitute the "certification" required pursuant to Code of Virginia § 58.1-439(C)?
The aforementioned 1997 legislation repealed the certification language of Code of Virginia § 58.1-439 (C) to which you refer. It is not necessary for a taxpayer to receive a prior certification from the department in order to be eligible for the credit. Upon satisfying the statutory criteria for credit eligibility, taxpayers claim the credit by completing Virginia Form 304 and attaching it to their tax return.
Does the fact that the Taxpayer did not make a public announcement of its intention to expand its Virginia business activities bar the company from claiming credits with respect to otherwise qualifying full-time it has added to its Virginia workforce?
The department has previously ruled that it is not necessary that a company actually make an announcement of its intention to create additional jobs or expand a facility in order to qualify for the credit. See Public Document 95-142, (6/2/95), copy attached. Code of Virginia § 58.1-439(M) does provide, however, that an announcement of the creation of jobs or facilities that occurred prior to January 1, 1994, will not qualify for the credit.
May the Taxpayer file an amended return in order to claim the credit?
Yes. The filing of an amended return to claim an unclaimed credit constitutes a an amended return claiming a refund pursuant to Code of Virginia § 58.1-1823. Amended returns claiming a refund due to the failure to claim a tax credit provided by Virginia law must be filed within three years from the date for filing a timely return.
This ruling is based on the facts provided to the department concerning the nature of the Taxpayer's facilities and the job functions of the employees to be located there. If you have any questions concerning this ruling, you may contact ********** in the Office of Tax Policy at*************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11890L
Rulings of the Tax Commissioner