What annual cap applied to Virginia Land Preservation Income Tax Credits issued during calendar year 2012?

Subject

2012 Land Preservation Income Tax Credit cap

Plain-English summary

Virginia's calendar-year 2012 cap for Land Preservation Income Tax Credits was $111,054,000. The underlying law began with a $100 million annual cap and required an inflation adjustment based on the Consumer Price Index for All Urban Consumers.

The Department calculated that the average CPI-U for the 12 months ending August 31, 2011 was about 11.05% higher than the corresponding 2006 base period. Applying the statutory formula produced the 2012 cap.

This was the total amount of credits the Department could issue statewide during 2012. The bulletin did not decide whether any particular donation qualified or announce the cap for a later year.

What this means for you

• The $111,054,000 figure applied to credits issued during calendar year 2012.
• It was a statewide annual issuance cap, not an individual taxpayer's credit limit.
• The statute adjusted the original $100 million cap by the CPI-U increase over the 2006 base period.
• The bulletin is historical; a transaction in another year requires the law and cap for that year.

Historical cap table

Citations and references

• Va. Code § 58.1-512(D)(4)(b).
• House Bill 5019, Chapter 4, Special Session I of 2006, as identified in the bulletin.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Tax Bulletin 12-2: P.D. 12-12

Original ruling text

TAX BULLETIN 12-2

Virginia Department of Taxation

March 2, 2012

IMPORTANT INFORMATION REGARDING

THE LAND PRESERVATION INCOME TAX CREDIT

New Cap Amount

House Bill 5019 (Chapter 4, Special Session I of 2006) made several changes to the

Land Preservation Tax Credit. One of these changes established a $100 million cap on the amount of total credits that may be issued by the Department of Taxation (“the Department”) during a calendar year.

In addition, the legislation provided a mechanism by which this cap may be increased because of inflation. Under Va. Code § 58.1-512 D 4b, beginning with calendar year 2008, the $100 million cap must be increased by an amount equal to $100 million multiplied by the percentage by which the consumer price index for all-urban consumers published by the United States Department of Labor (CPI-U) for the 12-month period ending August 31 of the preceding year exceeds the CPI-U for the 12-month period ending August 31, 2006.

For example, for calendar year 2011, the average CPI-U for the 12-month period ending August 31, 2010 increased by approximately 8.4 percent over the average for the 12-month period ending August 31, 2006. Therefore, for calendar year 2011, the cap was $108,424,000.

Using information obtained from United States Bureau of Labor Statistics, the average CPI-U for the 12-month period ending August 31, 2011 increased by approximately 11.05 percent over the average for the 12-month period ending August 31, 2006. As a result, the cap for the Land Preservation Income Tax Credit will be increased to $111,054,000 for calendar year 2012.

The following chart depicts the growth in the CPI-U from 2006 through the applicable year for each year that the $100,000,000 has been increased. It also shows the amount of the cap for each applicable year.

Year
CPI-U Amount Over 2006 Base Year
Cap Amount

2007

$100,000,000

2008
2.29%
$102,287,000

2009
6.6%
$106,647,000

2010
6.8%
$106,845,000

2011
8.4%
$108,424,000

2012
11.05%
$111,054,000

If you have additional questions, please visit our website at www.tax.virginia.gov , or contact the Tax Credit Unit at (804) 786-2992 .