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Major Business Facility Job Tax Credit, Department of Taxation (November 1, 2023)

Summary

Report dated November 1, 2023 from the Commonwealth of Virginia Department of Taxation to the co-chairs of the Senate Finance and Appropriations Committee and the chairmen of the House Appropriations and House Finance Committees. It states that House Bill 2003, enacted in the 2019 Session, requires the Department to publish an annual report on the Major Business Facility Job Tax Credit, and that this report covers Taxable Year 2021. The report states that the credit is $1,000 per new job created in excess of the qualifying threshold amount. It states that the Department issued a total of $1.02 million in credits for Taxable Year 2021, accounting for 2,043 qualified full-time employees, and lists the localities and NAICS codes involved.

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“Major Business Facility Job Tax Credit, Department of Taxation (November 1, 2023).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2023-rd563-5214360419/, SHA-256 23e00a4cbcba59301cabc7e9bfcaec03923d5421399a66d9b15ccf635cbf4fff.

Full text

                   COMMONWEALTH of VIRGINIA
                                       Dep artment ofTaxation

                                         November 1, 2023

TO:           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


FROM:         Craig M. Bur
              Tax CommiCKC"·..___.,.

       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 2021
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
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
Report on the Major Business Facility Job Tax Credit
November 1, 2023
Page 2


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 Year 2021 Credits

         The Department issued a total of $1.02 million in Major Business Facility Tax
Credits to taxpayers for Taxable Year 2021. 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 2019 and 2020.

         The credits issued for Taxable Year 2021 accounted for 2,043 qualified full-time
employees. The credit was issued to facilities located in eight different localities, and by
facilities with six different NAICS codes, as shown below:

              Taxable Year 2021 Major Business Facility Job Tax Credits
                 Locations                               NAICS Codes
                                           General Warehousing and Storage
                                           (493110)
                                                Insurance Agencies and Brokerages
                                                (524210)
                                                Offices of Other Holding Companies
       The Localities of Augusta,               (551112)
Chesapeake, Fairfax, Goochland, Henrico,        All Other General Merchandise Stores
   Richmond, Suffolk, Virginia Beach            (452319)
                                                Employment Services (561300)
                                                Paper and Paper Product Merchant
                                                Wholesalers (424100)



       The General Fund revenue impact of the Major Business Facility Tax Credit for
credits claimed on Taxable Year 2021 returns processed during Calendar Year 2022
was $652,636. This amount includes the amount of credit issued by the Department for
Taxable Year 2021 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 2021 that could not be applied against tax liability on the
Taxable Year 2021 return and, therefore, will be carried over to future taxable years. It
also does not include credits claimed on returns processed after Calendar Year 2022.


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

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