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State Tax Credit News Briefs – May 2019

Virginia Gov. Ralph Northam approved S.B. 1656 March 8. The bill expands the Virginia Community of Opportunity tax credit, effective July 1. A landlord renting a qualified housing property in a census tract in which less than 10 percent of residents live below the poverty level and who participates in the Housing Choice Voucher program are now eligible for the credit. The credit is currently available only to landlords with qualified housing properties within census tracts in the Richmond Metropolitan Statistical Area. Eligible areas are within the Virginia Beach-Norfolk-Newport News Metropolitan Statistical Area.

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Virginia H. 1816 was introduced March 5, providing that the allowable time to claim the state land preservation tax credit has been extended. For a conveyance made before Jan. 1, 2020, the credit application must be completed by Dec. 31 of the third year following the calendar year of conveyance. For a conveyance made after Jan. 1, 2020, a complete credit application must be filed with the Department of Taxation by Dec. 31 of the second year following the calendar year of conveyance. The bill is effective July 1.

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The Arkansas Department of Finance and Administration released Arkansas Administrative Hearing Decision, Dkt. No. 19-231 March 15, properly disallowing a portion of previously approved InvestArk tax credits based on the purchase of machinery and equipment that was used at multiple facilities rather than at a single facility as required under the credit provisions. The taxpayer’s approved incentive application provided for an investment for the expansion of a facility at a specified Arkansas location. However, a portion of the machinery and equipment purchased was used at multiple facilities that were not approved for the project pursuant to the incentive application. The taxpayer argued that the relevant equipment benefited the project facility and should therefore qualify for the credit. Arkansas Economic Development Commission regulations further clarify that while a physical location may consist of more than one facility located on non-contiguous property within the same incorporated city. However, the multiple facilities at which the taxpayer’s equipment is used are not located in the same incorporated city. Therefore, the expenditures for the equipment used at the multiple facilities do not qualify as eligible project costs and were properly disallowed.

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Kentucky S.B. 246 was signed into law March 26, creating the farmer small business credit. Beginning Jan. 1, 2020, farmer small business tax credits may be approved for farmers who sell to beginning farmers. The maximum amount of the credit for an approved selling farmer in each calendar year may not exceed $25,000, and the maximum amount of credit an individual may claim over a lifetime may not exceed $100,000. The credit must be claimed on the tax return for the year during which the credit was approved. Unused credits may be carried forward for up to five years. The maximum amount of credits that can be committed and shared between the small business tax credit and the farmer small business tax credit is $3 million annually.

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Virginia’s H.B. 2003 extends sunset date for major business facility job tax credit from Jan. 1, 2020, to July 1, 2022. Under current law, a taxpayer may claim the Major Business Facility Job Tax Credit if the taxpayer creates at least 50 new full-time jobs in connection with the establishment or expansion of a major business facility and the company is engaged in a qualifying industry in Virginia. If a taxpayer is located in an enterprise zone or in an economically distressed area, the threshold is reduced from 50 jobs to 25. The bill will be effective July 1. 

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Virginia S.B. 1634, effective July 1, allows any town, by ordinance, to establish one or more economic revitalization zones for the purpose of providing incentives to private entities to purchase real property and interests in real property to assemble parcels suitable for economic development. This authority is currently available only to cities. Incentives may extend for a period of up to 10 years from the date of initial establishment of the economic revitalization zone. The regulatory flexibility provided in an economic revitalization zone may include special zoning for the district, the use of a special permit process and exemptions from certain specified ordinances.  

Journal Category:

State Tax Credits

Authors:

Novogradac

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