Form 306 - Virginia Coal Related Refundable Tax Credits - 2012 Page 6
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7Instructions for Completing Schedule 306B - 2012
Schedule of Tax Credit Application for the Coalfield Employment Enhancement Tax Credit
and the Virginia Coal Employment and Production Incentive Tax Credit
General Information
Part II - Credit Designation
Important: Read these instructions before completing Part II.
You may claim only the Coalfield Employment Enhancement Tax
Lines 3 - 8: Complete Lines 3 through 7, listing each qualifying
Credit OR the Virginia Coal Employment and Production Incentive
current year state tax paid to the Virginia Department of
Tax Credit that has been allocated to you per ton of coal.
Taxation or any other state agency during the taxable year,
The Coalfield Employment Enhancement Tax Credit is claimed
then enter the total of Lines 3 through 7 on Line 8. Taxes
based on a redemption schedule. If the total credit is larger than the
paid to federal or local government agencies do not qualify.
sum of all state taxes paid during the taxable year, 85% of the excess
Qualifying state taxes are those incurred and paid by
credit will be redeemed by the Department of Taxation to you as a
you. Examples of qualifying taxes paid to the Virginia
refund on your income tax return. The remaining 15% of the credit will
Department of Taxation are the corporate income tax,
be deposited in a regional economic development fund administered
tire tax, and retail sales tax (to the extent that the sales
by the Coalfields Economic Development Authority. The credit will
tax was paid for nonexempt purchases for use by you).
be administered and redeemed only by the Virginia Department
Taxes which are merely collected, held in trust and then
of Taxation, regardless of which Virginia agency received the tax
remitted to the Department of Taxation do not qualify for this
payments. Note that this credit applies only to state taxes paid in
credit. Examples of non-qualifying taxes include employer
the current taxable year; it does not apply to prior year or future year
withholding tax and retail sales tax paid by your customers.
taxes, any addition to tax, penalty or interest, local taxes or license
In addition, this credit may not include any addition to tax
fees. After filing your Virginia income tax return, if you discover that
(computed on Form 760C or Form 500C), penalty, interest
you overpaid or underpaid a tax on which this credit was computed
or prior year taxes.
(Lines 2 through 7), you must file an amended income tax return
The credit must first be applied against the income tax
with the Virginia Department of Taxation to reflect the change. See
shown on your income tax return and then against all other
the instructions for Form 306 for details on required attachments.
taxes imposed by the Commonwealth of Virginia incurred
In instances where a combined or consolidated Virginia corporation
and paid by you during the taxable year.
income tax is filed which includes corporations which were not eligible
When completing Line 3, enter the tax shown on your
to claim the credit, special rules apply. In such cases, the credit as
income tax return, less any other tax credits claimed which
calculated above is utilized to offset the combined or consolidated
have a higher priority. (As a general rule, credits are claimed
Virginia corporate income tax liability. Any remaining credit,
in the order in which they provide the best tax advantage.
however, can only be used to offset other state taxes incurred by the
For example, credits without carryover provisions are
corporations in the consolidated or combined group which actually
generally claimed before credits with carryover provisions.)
earned the credit or meet the criteria of the 80% test described in
Public Document 00-186.
Column A: Enter the name of the state tax for which credit is claimed
for tax paid. For example: “corporation income tax.”
The Virginia Coal Employment and Production Incentive Tax
Credit may be allocated between a qualifying electricity generator and
Column B: Enter the name of the state agency to which the tax in
qualifying person with an economic interest in coal. The allocation of this
Column A was paid.
credit may not exceed $3 per ton. All credits earned on or after January
Column C: Enter the taxpayer name and account number under
1, 2006 but prior to July 1, 2016, which are allocated to persons with an
which the tax was paid. For example, if the tax was paid to
economic interest in coal may be redeemed by the Tax Commissioner
the Virginia Department of Taxation, enter your name and
if the credits exceed the taxpayer’s state tax liability for the applicable
account number used when making the payment. If credit is
taxable year.
claimed for a pass-through distribution from a partnership,
limited liability company or subchapter S corporation, enter
Instructions for Completing Schedule B (Form 306 - 2012)
the name and account number shown on the statement
from that entity.
Part I - Allowable Portion Of the Coalfield Employment
Column D: Enter the date that the payment was made and the
Enhancement Tax Credit and Virginia Coal Employment and
taxable period for which the payment was applied. For
Production Incentive Tax Credit
example, if claiming credit for a payment on April 15, 2012
Line 1: (a) Enter 100% of the Coalfield Employment Enhancement
of use tax for the period January through March, enter “1st
Tax Credit earned and reported on your 2009 Form 306.
quarter use tax paid April 15, 2012.” If additional space is
required, use an additional page.
(b) Enter 100% of the Virginia Coal Employment and Production
Incentive Credit from 2012 Schedule 306C, Line 21.
Column E: Enter the amount of tax that was reported in Column D.
Line 2: Enter the total of Lines 1(a) and 1(b).
Lines 9 through 17: Use the instructions on Schedule 306B to
complete Lines 9 through 17, then transfer the amounts to
the front of Form 306 as directed.
Page 6
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