Current through Register Vol. 41, No. 3, September 23, 2024
A. Every eligible entity desiring to be
designated as a qualified business for purposes of this tax credit must make an
application on the Application for Designation as a Qualified Business for the
Qualified Equity and Subordinated Debt Investments Tax Credit to the Department
of Taxation. Such application must be made prior to the issuance of any equity
or subordinated debt; otherwise, the issuance shall not qualify for the tax
credit, except as provided in subsection B of this section.
1. A qualified business application must be
made at least 90 days prior to the issuance of any equity or subordinated debt
to ensure that the Department of Taxation's determination regarding the
entity's qualification will be made prior to the issuance date.
2. A qualified business application may be
made less than 90 days prior to the issuance of any equity or subordinated
debt; however, the Department of Taxation cannot ensure that its determination
regarding the entity's qualification will be made prior to the issuance
date.
B. A qualified
business application will not be accepted after the issuance date of any equity
or subordinated debt, except in the following instances:
1. Issuances of equity or subordinated debt
made between January 1, 2001, and before September 1, 2001, the qualified
business application is made by October 1, 2001;
2. Issuances of equity or subordinated debt
made on or after September 1, 2001, and before January 1, 2002, the qualified
business application is made prior to the issuance date as described in
subdivisions A 1 and 2 of this section. (For example, issuances made on
September 1, 2001 and before January 1, 2002, will require a qualified business
application no later than June 1, 2001, to ensure that the Department of
Taxation's determination will be made prior to the issuance date);
and
3. Issuances of equity or
subordinated debt made on or after January 1, 2002, but within three months of
the end of the most recently completed taxable year of the qualified business,
the application is made by the first business day of the fourth month following
the end of the most recently completed taxable year.
C. The entity seeking designation as a
qualified business shall make application by completing and submitting the
Application for Designation as a Qualified Business for the Qualified Equity
and Subordinated Debt Investments Tax Credit to the Department of
Taxation.
D. If the Department of
Taxation determines the entity is a qualified business, the Department of
Taxation shall issue a certification to the entity stating the same. Such
designation shall be valid only for the calendar year of issuance.
E. Upon issuance of equity or subordinated
debt to taxpayers, the qualified business shall issue a statement to each
taxpayer for attachment to the taxpayer's tax credit application. Such
statement shall contain the following information:
1. The qualified business certification
granted by the Department of Taxation;
2. The type of investment at issue (i.e.,
equity or subordinated debt) and the amount; and
3. That the investment at issue meets the
definition of a qualified investment for purposes of this credit.
a. If the investment at issue is equity, the
statement must also indicate that such issuance is an original issuance which
provides new capital to the qualified business, and that it is not required or
subject to an option on the part of the taxpayer to be redeemed by the issuer
within five years from the date of issuance.
b. If the investment at issue is subordinated
debt, the statement must also indicate that such issuance is an original
issuance which provides new capital to the qualified business, and that (i) by
its terms requires no repayment of principal for the first three years after
issuance; (ii) is not guaranteed by any other person or entity, or secured by
any assets of the issuer or any other person or entity; and (iii) is
subordinated to all indebtedness and obligations of the issuer to national or
state-chartered banking or savings and loan institutions.
Statutory Authority
§§ 58.1-203 and 58.1-339.4 of the Code of
Virginia.
