Virginia Governor Ralph Northam greeted citizens at the Town of Tazewell Town Hall for an exciting announcement on May 18, 2018. He signed into legislation the coalfield employment enhancement tax credit, HB222, which was introduced by 3rd District Delegate, Will Morefield. He was joined his Secretary of Commerce Brian Ball, Secretary of Administration Keyanna Conner, 12th District Delegate Chris Hurst, and 63rd District Delegate Lashrecse Aird.
This tax credit offers credits to companies that invest in a qualified locality, and encourages employment opportunities by encouraging localities to partner together to strengthen economic development. Town Manager Todd Day and Mayor Donald Buchanan expressed their support for this new asset and presented several gifts on behalf of our community to our 73rd Governor.
Summary as passed, per Virginia’s Legislative Information System:
Income tax; modification for certain companies; grants. Establishes an income tax modification for companies that, from 2018 through 2024, either (i) invest at least $5 million in new capital investment in a qualified locality and create at least 10 jobs paying at least 150 percent of the minimum wage in a qualified locality or (ii) create at least 50 jobs paying at least 150 percent of the minimum wage in a qualified locality. A company is eligible to claim the modification only if it had no property or payroll in Virginia on the effective date of the act.
The bill defines “qualified locality” to include (a) the Counties of Alleghany, Bland, Buchanan, Carroll, Craig, Dickenson, Giles, Grayson, Lee, Russell, Scott, Smyth, Tazewell, Washington, Wise, and Wythe and the Cities of Bristol, Galax, and Norton; (b) the Counties of Amelia, Appomattox, Buckingham, Charlotte, Cumberland, Halifax, Henry, Lunenburg, Mecklenburg, Nottoway, Patrick, Pittsylvania, and Prince Edward and the Cities of Danville and Martinsville; (c) the Counties of Accomack, Caroline, Essex, Gloucester, King and Queen, King William, Lancaster, Mathews, Middlesex, Northampton, Northumberland, Richmond, and Westmoreland; and (d) the Counties of Brunswick and Dinwiddie and the City of Petersburg. “Qualified locality” also includes certain real property owned or partly owned by such localities outside of their territorial boundaries.
The bill requires a company to obtain annual certification from the Virginia Economic Development Partnership Authority (the Authority) that the company will have a positive fiscal impact on Virginia, based on consideration of certain factors. It directs the Authority to deny certification to any company that reorganizes for the purpose of taking advantage of the tax benefits provided by the bill.
Generally, the amount of the modification is the value of the company’s property and payroll in qualified localities and its sales in Virginia. The bill provides similar modifications for industries that use different apportionment formulas, including motor carriers, financial companies, construction companies, railway companies, manufacturing companies, retailers, and businesses with enterprise data center operations.
Eligibility for the income tax apportionment modifications shall continue for six years following the year in which the company initially makes a modification to its apportionment formula. Continuing eligibility is contingent on the company’s maintaining its capital investment and jobs created in qualified localities and obtaining re-certification from the Authority.
The bill permits qualified localities to provide grants and loans to companies that qualify for the modification provided by the bill. The bill also authorizes grants and loans of up to $2,000 per job per year from the Commonwealth’s Development Opportunity Fund to an eligible company.
Full video of the meeting: