January 18, 2023
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you appeal the denial of the application for the Farm Wineries and Vineyards Tax Credit (the “Credit”) that you (the “Taxpayer”) submitted for the 2021 taxable year.
FACTS
The Department received the Taxpayer’s Form FWV, Application for Farm Wineries and Vineyards Tax Credit (the “Application”), for the 2021 taxable year on April 12, 2022. The Application was postmarked April 7, 2022. The Department denied the Application on the basis that the Taxpayer had not submitted the Application by the April 1, 2022, deadline. The Taxpayer appealed, contending that his late submission was due to the slowness of receiving information to complete the required forms due to the COVID-19 pandemic.
DETERMINATION
Virginia Code § 58.1-339.12 allows Virginia farm wineries and vineyards to claim a credit in an amount equal to 25 percent of the cost of all qualified capital expenditures made in connection with the establishment of new Virginia farm wineries and vineyards and capital improvements made to existing Virginia farm wineries and vineyards. The total amount of the Credit available for all taxpayers for each calendar year is limited to $250,000. If applications for the Credit exceed $250,000, the Department allocates the Credit to all applicants on a pro rata basis.
An eligible taxpayer must submit Form FWV and any supporting documentation to the Department no later than April 1 in order to claim the Credit for the preceding taxable year. This requirement is clearly set forth in the instructions for the application and in the corporate and individual income tax instructions.
Because the Credit is subject to an annual cap, the Department must have a hard deadline for tax credit applications. Adopting a policy of approving late applications for the Credit could result in the amount of tax credits exceeding the tax credit cap for a particular year. The Department’s policy of establishing a hard deadline for capped tax credits has been applied to all capped tax credits that are administered by the Department. See Public Document (P.D.) 04-201 (11/4/2004), P.D. 13-189 (10/18/2013), P.D. 15-201 (10/19/2015) and P.D. 20-26 (2/27/2020).
In this case, the application was postmarked on April 7, 2022, after the April 1, 2022 deadline had passed. While I empathize with the Taxpayer’s situation, because the Application was received after the deadline, the Application was properly denied.
The Code of Virginia section and public documents cited are available online at www.tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/4248.B