2014 Virginia Code
Title 58.1 - Taxation
§ 58.1-439.11. Employees with disabilities tax credit

A. As used in this section, unless the context clearly requires otherwise:

"Qualified employee" means an otherwise qualified person with a disability who has completed or is completing rehabilitative services from the Department for Aging and Rehabilitative Services, the Department for the Blind and Vision Impaired or the U.S. Department of Veterans Affairs. An otherwise qualified person with a disability (i) shall not be a relative of any owner or the employer claiming the credit and (ii) shall not own, directly or indirectly, more than five percent in value of the outstanding stock of a corporation claiming the credit. As used herein, "relative" means a spouse, child, grandchild, parent or sibling of an owner or employer, and "owner" means, in the case of a corporation, any person who owns five percent or more of the corporation's stock.

"Wages" means wages, within the meaning of § 51(c)(1), (2) and (3) of the Internal Revenue Code without regard to § 51(c)(4) of the Internal Revenue Code, that are paid by an employer to an employee for services performed in the employer's trade or business.

B. Except as provided in subsection D, an employer may claim a tax credit in the amounts determined under subsection C for the wages of a qualified employee that are paid in the taxable year for which the employer claims the credit. The same tax credit shall not be applied more than once against different taxes by the same taxpayer.

C. For taxable years beginning on and after January 1, 1999, but before December 31, 2002, an employer shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.), and 10 (§ 58.1-400 et seq.) of Chapter 3; Chapter 12 (§ 58.1-1200 et seq.); Article 1 (§ 58.1-2500 et seq.) of Chapter 25; or Article 2 (§ 58.1-2620 et seq.) of Chapter 26 in an amount equal to 20 percent of the first $6,000 of wages paid annually to each qualified employee during the first two taxable years of such employee's employment.

D. An employer shall not claim the credit allowed under this section for a qualified employee who is on strike or for whom the employer simultaneously receives federal or state employment training benefits. Furthermore, the credit allowed under this section shall be based on actual wages paid during the applicable taxable year.

E. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.

F. An employer shall be entitled to the credit granted under this section only for those qualified employees who have been certified as otherwise qualified persons with disabilities to the Department of Taxation by the Department for Aging and Rehabilitative Services, the Department for the Blind and Vision Impaired or the U.S. Department of Veterans Affairs. The Tax Commissioner shall promulgate regulations, in accordance with the Administrative Process Act (§ 2.2-4000 et seq.), establishing procedures for claiming the credit provided by this section. The Department for Aging and Rehabilitative Services, the Department for the Blind and Vision Impaired or the U.S. Department of Veterans Affairs shall review requests for certification submitted by employers and shall advise the Tax Commissioner whether an employee qualifies.

G. Any credit not usable for the taxable year may be carried over for the next three taxable years. The amount of credit allowed pursuant to this section shall not exceed the tax imposed for such taxable year. No credit shall be carried back to a preceding taxable year. If an employer that is subject to the tax limitation imposed pursuant to this subsection is allowed another credit pursuant to any other section of this Code, or has a credit carryover from a preceding taxable year, such employer shall be considered to have first utilized any credit allowed which does not have a carryover provision, and then any credit which is carried forward from a preceding taxable year, prior to the utilization of any credit allowed pursuant to this section.

H. No employer shall be eligible to claim a credit under this section if the employer is claiming a tax credit for the same employee under § 58.1-439.

I. The Tax Commissioner shall report annually to the Chairmen of the House Finance and Senate Finance Committees on the status and implementation of the credit established by this section, including certifications for otherwise qualified persons with disabilities.

1999, c. 304; 2012, cc. 803, 835.