Bill Text: VA SB47 | 2022 | Regular Session | Comm Sub
Bill Title: Income tax, state; housing opportunity tax credits.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Engrossed - Dead) 2022-03-12 - Continued to 2022 Sp. Sess. 1 pursuant to HJR455 [SB47 Detail]
Download: Virginia-2022-SB47-Comm_Sub.html
Be it enacted by the General Assembly of Virginia:
1. That §58.1-439.30 of the Code of Virginia is amended and reenacted as follows:
§58.1-439.30. Tax credit.
A. A Subject to the provisions of subsection H, a
housing opportunity tax credit shall be allowed for each qualified project for
each year of the credit period, in an amount equal up to the
amount of federal low-income housing tax credit allocated or allowed by the
Authority to such qualified project, except that there shall be no reduction
in the tax credit allowable in the first year of the credit period due to the
calculation in 26 U.S.C. §42(f)(2). The credit shall be allowed ratably
for each qualified project, with one-tenth of the credit amount allowed
annually for 10 years over the credit period, except that there shall be a
reduction in the tax credit allowable in the first year of the credit period
due to the calculation in 26 U.S.C. §42(f)(2) and any reduction by reason of 26
U.S.C. §42(f)(2) in the credit allowable for the first taxable year of the
credit period shall be allowable for the first taxable year following the
credit period.
B. 1. For taxable years beginning on and after January
1, 2021, but before January 1, 2026, a qualified taxpayer may claim a housing
opportunity tax credit against its Virginia tax liability prior to reduction by
any other credits allowed the taxpayer. The housing opportunity tax credit may
be allocated by pass-through entities to some or all of its partners, members,
or shareholders in any manner agreed to by such persons, regardless of whether
or not any such person is allocated or allowed any portion of any federal
low-income housing tax credit with respect to the qualified project, whether or
not the allocation of the housing opportunity tax credit under the terms of the
agreement has substantial economic effect within the meaning of §704(b) of the
Internal Revenue Code, and whether or not any such person is deemed a
partner for federal income tax purposes as long as the partner or member would
be considered a partner or member as defined under applicable state law, and
has been admitted as a partner or member on or prior to the date for filing the
qualified taxpayer's tax return, including any amendments thereto, with respect
to the year of the housing opportunity tax credit. Such pass-through entities
or qualified taxpayer may assign all or any part of its interest, including its
interest in the tax credits, to one or more pass-through entities or qualified
taxpayers, and the qualified taxpayer shall be able to claim the housing
opportunity tax credit so long as its interest is acquired prior to the filing
of its tax return claiming the housing opportunity tax credit.
2. If a housing opportunity tax credit has been awarded according to the terms of subsection G prior to January 1, 2026, such credit may continue to be claimed on a return for taxable years on and after January 1, 2026, but only pursuant to the applicable credit period specified in § 58.1-439.29.
C. The housing opportunity tax credit authorized by this article shall not be refundable. Any housing opportunity tax credit not used in a taxable year may be carried forward by a qualified taxpayer for the succeeding five years.
D. A qualified taxpayer claiming a housing opportunity tax
credit shall submit a copy of the eligibility certificate at the time of filing
its tax return with the Department. If the owner of the qualified project has
applied to the Authority for the eligibility certificate but the Authority has
not yet issued the eligibility certificate at the time the qualified taxpayer
files its original tax return claiming the housing opportunity tax credit, the
taxpayer may claim the housing opportunity tax credit based upon the amount of
tax credit set forth in the carryover allocation or 42(m) letter, as
applicable, award letter issued by the Authority for the housing
opportunity tax credit issued to the qualified project and shall amend its
tax return to include the eligibility certificate upon its receipt. If the
amount of tax credit in the eligibility certificate is different than the
amount of tax credit previously claimed, the taxpayer shall adjust the tax
credit amount claimed on the amended tax return.
E. If under §42 of the Internal Revenue Code, as amended, a portion of any federal low-income housing credits taken on a qualified project is required to be recaptured or is otherwise disallowed during the credit period, the taxpayer claiming housing opportunity tax credits with respect to such project shall also be required to recapture a portion of any tax credits authorized by this article. The percentage of housing opportunity tax credits subject to recapture shall be equal to the percentage of federal low-income housing credits subject to recapture or otherwise disallowed during such period. Any tax credits recaptured or disallowed shall increase the income tax liability of the qualified taxpayer who claimed the tax credits in a like amount and shall be included on the tax return of the qualified taxpayer submitted for the taxable year in which the recapture or disallowance event is identified. The balance of any tax credits recaptured or disallowed shall be allocated by the Authority for any qualified project in accordance with subsection G.
F. The Authority shall administer the housing opportunity tax
credit program and shall be authorized to promulgate the regulations and
guidelines necessary to implement and administer the provisions of this
article. Such regulations and guidelines may include the imposition of
application, allocation, certification, and monitoring fees designed to recoup
the costs of the Authority in administering the housing opportunity tax credit
program. The Authority may also promulgate regulations and guidelines in
consultation with the Department to allow a qualified project to elect in its
application to the Authority to sell all or any portion of its credits awarded
pursuant to this article to one or more unrelated taxpayers. Regulations and guidelines
regarding the sale of credits, if promulgated, shall not take effect prior to
January 1, 2023, and shall not apply to credits awarded prior to January 1,
2023.
G. 1. Any housing opportunity tax credit amounts authorized in a calendar year that are subsequently (i) canceled and returned to the Authority or (ii) recaptured or disallowed pursuant to subsection E may be awarded in the following calendar year, but no later than December 31, 2025. If the amount of housing opportunity tax credits authorized in a calendar year for qualified projects is less than the total amount of credits available for qualified projects under subdivision H 2, the balance of such credits, in an amount not greater than 20 percent of the amount of credits available for qualified projects under subdivision H 2, (i) shall be allocated by the Authority for any qualified project in the following calendar year, (ii) shall not be allocated at any time after such following calendar year, and (iii) shall be allocated no later than December 31, 2025.
2. Such housing opportunity tax credits issued pursuant to this subsection shall be allowed ratably, with one-tenth of the total amount of credits allowed annually for 10 years over the credit period, except that there shall be a reduction in the tax credit allowable in the first year of the credit period due to the calculation in 26 U.S.C. §42(f)(2) and any reduction by reason of 26 U.S.C. §42(f)(2) in the credit allowable for the first taxable year of the credit period shall be allowable for the first taxable year following the credit period.
H. 1. The total amount of housing opportunity tax
credits authorized for qualified projects under this article shall not
exceed $15 million per for calendar year 2021.
2. For calendar years 2022 through 2025, the total amount of housing opportunity tax credits authorized for qualified projects under this article shall not exceed $15 million per calendar year. Such credits issued each calendar year shall be allowed ratably, with one-tenth of the total amount of credits allowed annually for 10 years over the credit period, except that there shall be a reduction in the tax credit allowable in the first year of the credit period due to the calculation in 26 U.S.C. §42(f)(2) and any reduction by reason of 26 U.S.C. §42(f)(2) in the credit allowable for the first taxable year of the credit period shall be allowable for the first taxable year following the credit period.
3. Notwithstanding any other provision of law to the contrary, the aggregate amount of housing opportunity tax credits authorized for all qualified projects under this article shall not exceed $75 million across all calendar years.
2. That notwithstanding any provision of law or regulation to the contrary, only housing opportunity tax credits awarded in calendar year 2021, up to a maximum of $15 million total for all taxpayers in all taxable years, may be claimed pursuant to the provisions of §58.1-439.30 of the Code of Virginia as set forth in Chapter 495 of the Acts of Assembly of 2021, Special Session I, prior to amendment by this act. Nothing in this enactment shall apply to §58.1-439.30 of the Code of Virginia as amended by this act.
3. That the Virginia Housing Development Authority (the Authority) shall, upon request from the Chairs of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance and Appropriations, provide information, data, and any other requested advisement on the potential structure and cost of a separately authorized certificated credit program that would allow a qualified project to sell all or any portion of its Virginia housing opportunity tax credits, to one or more unrelated taxpayers based on findings in the report of the Department of Housing and Community Development and the Authority stakeholder advisory group submitted pursuant to Chapter 517 of the Acts of Assembly of 2020.
4. Of the $15 million of housing opportunity tax credits authorized per calendar year from 2022 through 2025 for qualified projects by the Virginia Housing Development Authority (the Authority) pursuant to Article 13.4 (§58.1-439.29 et seq.) of Chapter 3 of Title 58.1 of the Code of Virginia, as amended by this act, $5 million of such credits shall be first allocated exclusively for qualified projects located in a locality with a population no greater than 35,000 as determined by the most recent United States census. Such allocation of housing opportunity tax credits shall constitute the minimum amount of such tax credits to be allocated for qualified projects in such localities. However, if the amount of such tax credits requested for qualified projects in such localities is less than the total amount of such credits available for qualified projects in such localities, the balance of such credits shall be allocated for any qualified project, regardless of location. In allocating or allowing such credits to qualified projects in such localities, the Authority shall give equal consideration to qualified projects allocated or allowed a federal low-income housing credit in an amount equal to the 10-year present value calculation of the percentages prescribed under 26 U.S.C. §§ 42(b)(1)(B)(i) and 42(b)(1)(B)(ii).
