In addition to any new tax credits, several changes to existing tax credits affect taxpayers filing their annual returns.
Coalfield Employment Enhancement Tax Credit
This credit expired Jan. 1, 2017
Food Crop Donation Tax Credit
Applications are due to Virginia Tax by Feb. 1. Use Form FCD.
For taxable years beginning on or after Jan. 1, 2016, but before Jan. 1, 2022, any person engaged in the business of farming as defined under 26 C.F.R. § 1.175-3 that donates food crops grown by the person in the Commonwealth to a nonprofit food bank shall be allowed a credit against the tax levied pursuant to § 58.1-320 or 58.1-400 for the taxable year of the donation. The person shall be allowed a credit in an amount equal to 30% of the fair market value of such food crops donated by the person to a nonprofit food bank during the taxable year but not to exceed an aggregate credit of $5,000 for all such donations made by the person during such year. Any unused credit amount can be carried forward for 5 years.
Green Job Creation Tax Credit
The expiration date was extended to Dec. 31, 2017.
Historic Rehabilitation Credit
For taxable years beginning on and after January 1, 2017 but before January 1, 2019, the amount of the Historic Rehabilitation Tax Credit that may be claimed by each taxpayer, including carryover amounts, may not exceed $5 million for any taxable year.
Land Preservation Tax Credit
Effective 2015, the following changes were implemented:
- The annual cap was reduced to $75 million for each calendar year.
- For conveyances recorded on or after July 1, 2015 and forward, Form LPC-1 must be postmarked no later than Dec. 31 of the year following the calendar year of the conveyance.
- Postmark dictates filing deadline & effective year of credit. Example: A "complete" Form LPC-1 that is postmarked on or after Jan. 1, 2016 will be granted a 2016 credit and NOT a 2015 credit.
- The maximum claim amount has been reduced to $20,000 for taxable years 2015, 2016, and 2017. For the taxable year 2018 and thereafter, the credit will be limited to $50,000 per taxpayer per taxable year.
- For any qualifying fee simple donation of land conveyed to the Commonwealth on or after Jan. 1, 2015, the amount of credit claimed by each taxpayer would be limited to $100,000 provided that no part of the charitable contributions deduction under §170 of the Internal Revenue Code related to such fee simple donation is allowable by reason of sale or exchange of property.
Virginia Tax is unable to guarantee that any LPC-1 application received/postmarked on or after the first business day in November will be processed in time to make a current year transfer. We will use our best efforts and resources available to process these applications by the end of the year. Due to the volume of applications received during the months October through January, it may take up to 30 business days for processing.
Major Business Facility Job Tax Credit
A qualified major business facility may spread the credit allowed per qualified full-time employee over 2 taxable years through the Dec. 31, 2019 expiration date for the credit.
Major Research and Development Expenses Tax Credit
- The credit is effective for taxable years beginning on or after January 1, 2016, but before January 1, 2022.
- It can be claimed against the tax levied pursuant to § 58.1-320 or 58.1-400
- This credit is for taxpayers with Virginia qualified research and development expenses for the taxable year in excess of $5 million .
- You cannot receive a Research and Development Credit and a Major R&D Credit for the same taxable year.
- The credit is a nonrefundable tax credit and may be carried forward for 10 years.
- It is equal to 10% of the difference between (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50% of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the 3 taxable years immediately preceding the taxable year for which the credit is being determined.
- If the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the 3 taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal 5% of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year.
Motion Picture Production Tax Credit
The expiration date was extended to Jan. 1, 2022.
Neighborhood Assistance Tax Credit
- Expenses for teachers salaries will count toward the requirement that at least 50% of a neighborhood organization's revenues be used to provide services to low-income persons or eligible students with disabilities.
- The Department of Education and Department of Social Services are required to consider the past performance of neighborhood organizations that have received allocations of credits, including review of performance metrics, success in reaching targeted goals, or other measures of accountability that may be established by regulations or guidelines.
- Effective for tax credit allocations that occur in fiscal years beginning on or after July 1, 2015, physician specialists who donate specialty medical services to patients who are referred from certain approved neighborhood organizations whose sole purpose is to provide specialty medical referral services to patients of participating clinics or federally qualified health centers may now be eligible for this credit regardless of where the physician specialist performs the specialty medical services. To be eligible, the approved neighborhood organization must have received an allocation of tax credits from the Commissioner of Social Services and must be exempt from taxation under the provisions of §501(c)(3) of the Internal Revenue Code.
- A business firm or individual that is eligible for this credit may agree in writing to a credit of less than 65% of the qualified donation.
Recyclable Materials Processing Equipment Tax Credit
Applications are due to Virginia Tax by June 1. Use Form RMC.
Effective Taxable Year 2015 and thereafter, the following changes have been implemented:
- The expiration date has been extended to December 31, 2019.
- The credit allowed has been increased from 10% to 20% of the purchase price of qualifying machinery and equipment.
- The machinery or equipment must be used predominately in or on the premises of manufacturing facilities or plant units which manufacture, process, compound, or produce items of tangible personal property from recyclable materials.
- The annual cap is $2 million.
Effective Taxable Year 2016 and thereafter, the following changes have been implemented:
- DEQ Form 50-11s must be filed with DEQ no later than March 1
- Form RMC must be filed with Virginia Tax no later than June 1
- Virginia Tax will issue a credit certificate by Sept.1
Research and Development Expenses Tax Credit
Applications are due to Virginia Tax by July 1. Use Form RDC.
Effective for tax years beginning on or after Jan. 1, 2016:
The tax credit amounts are:
- 15% of the first $300,000 in Virginia qualified research and development expenses or
- 20% of the first $300,000 of Virginia qualified research and development expenses if the research was conducted in conjunction with a Virginia public or private college or university.
The credit was previously only allowed on the first $234,000 of qualified R&D expenses and the due date for Form RDC was April 1.
There are now 2 ways to calculate the credit - use the spreadsheets below to calculate the Virginia Base Amount for the credit:
The cap on the total amount of credits allowed in any fiscal year also increased from $6 million to $7 million.
Telework Expenses Tax Credit
The expiration date was extended to Jan. 1, 2022.
Worker Retraining Tax Credit
The expiration date was extended to Jan.1, 2022.
Land Preservation Credit Affidavit Requirements
(1) Section 58.1-512(D)(2) of the Land Conservation Incentives Act states: “Applications for otherwise qualified donations of a less-than-fee interest shall be accompanied by an affidavit describing how the donated interest in land meets the requirements of § 170(h) of the United States Internal Revenue Code of 1986, as amended, and the regulations adopted thereunder. The application with accompanying affidavit shall be submitted to the Department of Taxation, with a copy also provided to the Department of Conservation and Recreation.”
The requirements of this section can be met by completing Form LPC-1 Section VI- Less-Than-Fee-Donations. This section should be completed by the applicant describing how the donation meets the requirements of §170(h) of the United States Internal Revenue Code of 1986, as amended.
(2) Section 58.1-512.1(C) of the Land Conservation Incentives Act states: “Any appraisal submitted in support of an application for a credit under this article shall include an affidavit by the appraiser that to the best of his knowledge and belief the valuation complies with this section and shall set forth in the affidavit or refer to the specific portion of the appraisal setting forth the facts and basis for this knowledge and belief.”
The requirements of this section can be met with a notarized affidavit from the appraiser or a signed statement made under penalty of perjury that meets the requirements of §8.01-4.3 of the Code of Virginia.
The statement should :
- State to the best of the appraiser's knowledge and belief that the valuation made in the appraisal complies with § 58.1-512.1 of the Code of Virginia (1950), as amended.
- Set forth specific facts and basis for this knowledge and belief (or refer to specific portions of the appraisal in which such facts are set out) and that such facts are true and correct to the best of the appraiser's knowledge and belief.
- Include the declaration set out in § 8.01-4.3 such as: I declare under penalty of perjury that the forgoing is true and correct.
- Include the date of the appraiser's signature.
The following would be an acceptable example:
I declare under penalty of perjury that to the best of my knowledge and belief (i) that the valuation made in the foregoing appraisal complies with § 58.1-512.1 of the Code of Virginia (1950), as amended, (ii) that all of the relevant facts and assumptions that form the basis for the valuation and compliance with § 58.1-512.1 are set forth in section(s) ___________ of this appraisal, and (iii) that such facts are true and correct to the best of my knowledge and belief except as qualified in the foregoing sections, and if qualified, that the stated reservations concerning the facts were taken into account in the valuation.
LPC-1 applications received on or after August 1, 2009 that do not have Section VI completed (if applicable), and a signed statement or a notarized affidavit from the appraiser, will be considered incomplete and cannot be processed until these requirements have been met.