Form Edc - Taxpayer Application For The Qualified Equity And Subordinated Debt Investments Tax Credit Page 2
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1
2Instructions for Form EDC, Application for Qualified Equity and
Subordinated Debt Investment Tax Credit
Under Va. Code § 58.1-339.4 (E), the Qualified Equity and
What to Expect from the Department
Subordinated Debt Investments Tax Credit is capped at $5 million
If the Department needs additional information, the agency will
annually. Of the amount of available credit, one-half of this amount
contact you by May 1 and you will have until May 15 to respond.
must be allocated to commercialization investments and the other half
If you have not received acknowledgement of your application by
is available for all other qualifying investments. If credit applications
May 31, call (804) 786-2992.
for either half exceed the allowed amount, the credits for that half
The Department will issue the credit by June 30. If you have not
will be prorated. If credit applications for either half are less than the
received your credit certification by July 15, call 804-786-2992.
allowed amount, the balance will be available for allocation to the
What Does the Taxpayer Need to Do
other type of credits.
Upon receiving notification of the allowable credit amount, taxpayers
See Form QBA for the list of criteria a business must satisfy in order
may claim the allowable credit amount on the applicable Virginia
to become a qualified business.
income tax return and compute any carryover credit amount.
When to Submit This Application
IMPORTANT
Submit Form EDC as soon as possible after receiving all of your
Any business entity filing Form EDC should be registered with the
Form QBA certifications for qualified investments made during the
Department before completing the form. If you are a business entity
previous taxable year and as soon as possible BEFORE your tax
and are not registered, please complete Form R-1.
filing deadline. Taxpayers making a qualified investment during a
If the tax return upon which this credit will be claimed is due on or
calendar year, MUST submit this application and all supporting
before May 1, you may need to either submit an extension payment
documentation no later than April 1 of the following year.
for any tax due or file an amended return once you have received
For any application received without a postmark, the date received
the credit certification.
by the Department will be used to determine if the application was
Required Investor Holding Period
received by the filing deadline. Please note: the postmark cannot
• Equity received in connection with a qualified business investment
be handwritten.
must be held by the taxpayer for at least 3 full calendar years
What to Attach
following the calendar year for which a tax credit is allocated.
Attach the following items:
• Subordinated debt received in connection with a qualified
• A copy of the qualified business certification (issued to the
business investment must be held by the taxpayer for at least 3
business by the Department);
• A business entity's statement, on the business' letterhead,
years from the date of issuance.
containing:
• Holding Period Exception – Liquidation of the qualified business
• the investor's name;
issuing such equity; the merger, consolidation or other acquisition
• the investment by amount (list each amount separately);
of such business; with or by a party not affiliated with such
• the investment by type (equity or debt);
business or the death of the taxpayer.
• the investment by date (specific to each investment amount);
Penalty for Not Meeting the Required Holding Period
and
If the required holding period is not met, the taxpayer must forfeit the
• verification that the investment meets the definition of a "qualified
unused credit amount and will be assessed for the credit utilized, to
investment" for purposes of claiming the credit pursuant to Va.
which shall be added interest, computed at the rate of 1% per month,
Code § 58.1-339.4. Title 23 of the Virginia Administrative Code
compounded monthly from the date the tax credits were claimed.
(VAC) 10-110-225 et seq. provide regulations on how this credit
Pass-Through Entities
applies.
Each pass-through entity must File Form PTE with the Department
• As the holder of this investment, you or any of your family
within 60 days after the credit is granted. This information should be
members (spouse, child, parent, brother or sister) or any entity
sent to: Department of Taxation, ATTN: Tax Credit Unit, P.O. Box
affiliated with you, do not and have not received compensation
715, Richmond, VA 23218-0715 or you may fax it to 804-786-2800.
from the qualified business in exchange for services provided
Please do not do both.
to such business as an employee, officer, director, manager,
All pass-through entities distributing this credit to its owner(s),
independent contractor or otherwise in connection with or
shareholders, partners or members must give each a Schedule VK-
within one year before or after the date of such investment. For
the purposes hereof, reimbursement of reasonable expenses
1, Owner’s Share of Income and Virginia Modifications and Credits.
incurred shall not be deemed to be compensation.
Where to Get Help
• The statement provided to investors must be signed by a
Write to the Virginia Department of Taxation, ATTN: Tax Credit Unit,
company officer. For investors affiliated with the qualified
P.O. Box 715, Richmond, VA 23218-0715 or call 804-786-2992.
business, such as the Corporate Officer, CFO, etc., the
To order forms or a copy of the regulations call 804-367-8031. Visit
statement should be signed by another member of the
to obtain most Virginia income tax forms and
company.
additional tax information. Forms are also available from your local
Please note: For married investors, the credit cannot be issued
Commissioner of the Revenue, Director of Finance or Director of
jointly. The investment must be made individually and a separate
Tax Administration.
Form EDC and business statement must be provided for each
Tenemos servicios disponible en Español.
spouse.
Where to Submit This Application
Submit Form EDC and any attachments to the Department of
Taxation, ATTN: Tax Credit Unit, P.O. Box 715, Richmond, VA
23218-0715 or fax it to 804-774-3902.
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