Major Business Facility Job Tax Credit, Department of Taxation (November 1, 2022)

Summary

A November 1, 2022 report from the Virginia Department of Taxation on the Major Business Facility Job Tax Credit, addressed to the chairs of the Senate Finance and Appropriations, House Appropriations and House Finance Committees. It states that the Department issued a total of $3.13 million in credits for Taxable Year 2020, accounting for 6,263 qualified full-time employees. The report says the credits went to facilities in nine different localities with six different NAICS codes, and lists them. It states that the General Fund revenue impact for credits claimed on Taxable Year 2020 returns processed during Calendar Year 2021 was $843,335.

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                    COMMONWEALTH of VIRGINIA
                                     Department of Taxation

                                        November 1, 2022

The Honorable Janet D. Howell
Co-Chair, Senate Finance and Appropriations Committee

The Honorable, George L. Barker
Co-Chair, Senate Finance and Appropriations Committee

The Honorable Barry D. Knight
Chairman, House Appropriations Committee

The Honorable Roxann L. Robinson
Chairman, House Finance Committee


         During the 2019 Session, 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 2020 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.

       Information Regarding Taxable Vear 2020 Credits

        The Department issued a total of $3.13 million in Major Business Facility Tax Credits to
taxpayers for Taxable Year 2020. 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
Report on the Major Business Facility Job Tax Credit
November 1 , 2022
Page2


 includes credits for major business facilities established or expanded during Taxable Years
2018 and2019.

        The credits issued for Taxable Year2020 accounted for 6,263 qualified full-time
employees. The credit was issued to facilities located in nine different localities, and by facilities
with six different NAICS codes, as shown below:

                  Taxable Year 2020 Major Business Facility Job Tax Credits
                   Locations                                  NAICSCodes
                                               Other Food Manufacturing (311900)
                                                     Offices of Other Holding Companies (551112)
                                                     Wholesale Trade (424210)
   The Localities of Alexandria, Arlington,          All Other General Merchandise Stores
 Chesapeake, Chesterfield, Fairfax, Frederick,       (452319)
     Goochland, Henrico, and Richmond
                                                     Information (511210)
                                                     Real Estate and Rental and Leasing (531390)



        The General Fund revenue impact of the Major Business Facility Tax Credit for credits
claimed on Taxable Year 2020 returns processed during Calendar Year 2021 was $843,335 .
This amount includes the amount of credit issued by the Department for Taxable Year 2020 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 2020 that
could not be applied against tax liability on the Taxable Year2020 return and, therefore, will be
carried over to future taxable years. It also does not include credits claimed on returns
processed after Calendar Year2021.

        Please contact me if you have any questions.




C: The Honorable Stephen E. Cummings, Secretary of Finance
   Kristin Collins, Assistant Commissioner for Tax Policy


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