I filed my Qualified Equity and Subordinated Debt Investments Tax Credit application a couple weeks late because I thought the deadline was April 15 -- can the Department still grant the credit?

Plain-English summary

A byte-for-byte twin of this corpus's already-enriched P.D. 24-84, issued the same day with consecutive internal reference numbers. An individual made a qualifying investment in a Virginia business during 2023 and applied for the Qualified Equity and Subordinated Debt Investments Tax Credit (50% of the investment, Va. Code § 58.1-339.4) by filing Form EDC on April 18, 2024 -- 17 days after the April 1, 2024 deadline set by 23 VAC 10-110-288. He explained he assumed the deadline was April 15, matching the regular individual income tax filing date.

Same hard deadline, no exceptions. Because this credit is capped at $5 million per year and allocated pro rata among approved applicants when demand exceeds the cap, the Department enforces a strict, bright-line deadline for every capped credit it administers -- regardless of whether the taxpayer was actually aware of the exact date. The Department expressed sympathy but could not grant the credit because the application arrived after the deadline had passed.

What this means for you

Anyone planning to claim the Qualified Equity and Subordinated Debt Investments Tax Credit

See this corpus's fuller companion ruling, P.D. 24-84, for the complete deadline rule and citations -- the facts and analysis here are identical, just applied to a different taxpayer who made the same April 15/April 1 mistake.

Common questions

Q: Does mixing up this credit's deadline with the income tax filing deadline ever excuse a late application?
A: No. As in this corpus's P.D. 24-84 (the same fact pattern, decided the same day), the Department enforces the April 1 deadline regardless of a taxpayer's awareness of it.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-339.4 -- Qualified Equity and Subordinated Debt Investments Tax Credit; 50% of the investment, capped at $5 million annually with pro rata allocation
• 23 VAC 10-110-288 -- application (Form EDC) due no later than April 1 of the calendar year following the investment

Prior rulings the Department relied on (described here, not linked): P.D. 04-201 (11/4/2004), P.D. 13-189 (10/18/2013), P.D. 15-201 (10/19/2015), P.D. 20-26 (2/27/2020), and P.D. 20-193 (11/24/2020). This ruling is a byte-for-byte twin of this corpus's P.D. 24-84 -- same taxable year, same April 18, 2024 filing date, same April 15/April 1 deadline confusion, same day of issuance, a different taxpayer.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 24-82

Original ruling text

September 13, 2024

Re: § 58.1-1821 Appeal: Individual Income Tax

Dear *:

This will respond to your letter in which you appeal the denial of an application for the Qualified Equity and Subordinated Debt Investments Tax Credit (the “Credit”) submitted by * (the “Taxpayer”), for the taxable year ended December 31, 2023.

FACTS

The Taxpayer filed an application for the Credit, Form EDC, related to an investment made in a qualified business during the 2023 taxable year. The Department denied the application because it was not filed by the April 1, 2024, deadline. The Taxpayer states that he assumed the deadline for filing was April 15 and requests that the Department grant the Credit.

DETERMINATION

Virginia Code § 58.1-339.4 provides a credit for individual and fiduciary income tax equal to 50% of a qualified equity and subordinated debt investment made during the taxable year in a qualified business venture. Under the statute, when the aggregate amount of requests for the Credit for a calendar year exceeds $5 million, the Department allocates the available Credit pro rata among the approved applicants.

Title 23 of the Virginia Administrative Code (VAC) 10-110-288 provides that, “[f]or any taxable year that ends after January 1, and on or before December 31 of a calendar year, eligible taxpayers must submit an application and supporting documentation requesting the tax credit no later than April 1 of the subsequent calendar year.” Therefore, in order to receive the Credit, an eligible taxpayer must submit an application for the Credit (currently Form EDC) and any supporting documentation to the Department no later than April 1 of the year following the investment. This requirement is also clearly set forth in the instructions for the application.

Because the Credit is subject to an annual cap, the Department must impose a strict deadline for tax credit applications. Adopting a policy of approving late applications for the Credit could result in the amount of tax credit exceeding the tax credit cap for a particular year. The Department’s deadline policy for capped 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), P.D. 20-26 (2/27/2020), and P.D. 20-193 (11/24/2020). This hard deadline applies without regard to a taxpayer’s awareness of the deadline. See P.D. 15-201.

In this case, the application was submitted on April 18, 2024, after the April 1, 2024, deadline had passed. While the Department empathizes with the Taxpayer’s situation, because the application was received after the deadline, the Credit cannot be granted.

The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. The public documents cited are available at 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,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

AR/4917.X

Related Documents

04-201

13-189

15-201

20-26

20-193