Report on the Major Business Facility Job Tax Credit — Department of Taxation (November 1, 2021)

Summary

A November 1, 2021 report from the Department of Taxation, addressed to the Honorable Janet D. Howell, the Honorable Luke E. Torian and the Honorable Vivian E. Watts, on the Major Business Facility Job Tax Credit. It states that House Bill 2003 (Chapter 699 of the Acts of Assembly) required the Department to publish an annual report on the credit. The report states that the Department issued a total of $1.97 million in credits for Taxable Year 2019, accounting for 3,477 qualified full-time employees. It states that the General Fund revenue impact of credits claimed on Taxable Year 2019 returns processed during Calendar Year 2020 was $2.03 million.

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                   COMMONWEALTH of VIRGINIA
                                  Departmellf of Taxation

                                    November 1, 2021

TO:           The Honorable Janet D. Howell
              Chairwoman, Senate Finance and Appropriations Committee

              The Honorable Luke E. Torian
              Chairman, House Appropriations Committee

              The Honorable Vivian E. Watts
              Chairwoman, House Finance Committee


FROM:


       During the 2019 S       10n, the General Assembly enacted House Bill 2003
(Chapter 699 of the Acts of Assembly), which required the Department of Taxation ("the
Department") to publish an annual report regarding the Major Business Facility Job Tax
Credit. This report must include the location of sites used for major business facilities for
which a credit was claimed; the North American Industry Classification System
("NAICS") codes used for the major business facilities for which a credit was claimed;
the number of qualified full time employees for whom a credit was claimed; and the total
cost to the Commonwealth's General Fund of the credits claimed. The report is to be
published for taxable years beginning on or after January 1, 2019 and must include
information for the 12-month period ending on the preceding December 31. The
Department is publishing this report to provide data pertaining to Taxable Year 2019
Major Business Facility Job Tax Credits.

Background Regarding the Major Business Facility Job Tax Credit

       Under Va. Code§ 58.1-439, Virginia allows individuals, estates, trusts and
corporations to claim the Major Business Facility Job Tax Credit against their Virginia
income tax. Taxpayers may also apply these credits against their Virginia bank
franchise tax and certain license taxes. The credit is available to businesses that have
establish a new facility, or expand an existing facility in Virginia. The credit amount is
$1,000 per new job created in excess of the qualifying threshold amount. The threshold
amount is generally 50 new jobs, but may be lowered to 25 new jobs if the new jobs are
located in designated Enterprise Zones, or areas the Virginia Economic Development
Authority has identified as economically distressed. The credit is earned over a two-year
period and the employment level must be maintained for a minimum of six years. The
amount of credit allowed cannot exceed the tax imposed in any taxable year. Any credit
not used in the taxable year the credit was allowed may be carried forward for the next
ten succeeding taxable years.
Report on the Major Business Facility Job Tax Credit
November 1 , 2021
Page 2




Information Regarding Taxable Year 2019 Credits
         The Department issued a total of $1.97 million in Major Business Facility Tax
Credits to taxpayers for Taxable Year 2019. Because the credit is issued for a two-year
period beginning with the year after the establishment or expansion of a major business
facility, this amount includes credits for major business facilities established or
expanded during Taxable Years 2017 and 2018.

       The credits issued for Taxable Year 2019 accounted for 3,477 qualified full-time
employees. The credit was issued to facilities located in twelve different localities, and
by facilities with ten different NAICS codes, as shown below:

             Taxable Year 2019 Major Business Facility Job Tax Credits
                Locations                               NAICSCodes
                                               Wholesale Trade (424210)
                                               General Merchandise Stores (452900)
                                               Warehousing and Storage (49311 O)
The Counties of Arlington, Augusta, Fairfax, Information (511210 and 518210)
    Frederick, Goochland, and Henrico
                                             Finance and Insurance (524210)
         The Cities of Chesapeake,             Real Estate and Rental and Leasing
    Fredericksburg, Lynchburg, Norfolk,        (531390)
       Richmond, and Virginia Beach
                                               Professional, Scientific, and Technical
                                               Services (541513)
                                               Administrative and Support Services
                                               (561300 and 561420)

       The General Fund revenue impact of the Major Business Facility Tax Credit for
credits claimed on Taxable Year 2019 returns processed during Calendar Year 2020
was $2.03 million. This amount includes the amount of credit issued by the Department
for Taxable Year 2019 and also includes amounts carried over from prior taxable years
under the Major Business Facility Tax Credit's ten-year carryover. It does not include
credits issued for Taxable Year 2019 that could not be applied against tax liability on the
Taxable Year 2019 return and, therefore, will be carried over to future taxable years. It
also does not include credits claimed on returns processed after Calendar Year 2020.


C: The Honorable K. Joseph Flores, Secretary of Finance
   William J. White, Assistant Commissioner for Tax Policy


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