What Land Preservation Income Tax Credit cap did Virginia Tax Bulletin 13-1 originally announce for 2013?

Plain-English summary

Virginia Tax Bulletin 13-1 originally set the calendar-year 2013 Land Preservation Income Tax Credit cap at $113,909,000. That amount is historical and was superseded later in 2013.

The 2006 legislation established a $100 million annual cap and provided an inflation adjustment beginning in 2008. The formula compared the average consumer price index for all urban consumers for the 12 months ending August 31 of the preceding year with the corresponding 2006 base period.

For 2013, the Department calculated that the relevant CPI-U average had increased about 13.91% over the 2006 base. Applying the statutory formula produced the announced $113,909,000 cap. The bulletin's historical table listed caps of $100 million for 2007, $102,287,000 for 2008, $106,647,000 for 2009, $106,845,000 for 2010, $108,424,000 for 2011, and $111,054,000 for 2012.

The source page expressly states that P.D. 13-74, Tax Bulletin 13-6, superseded this bulletin. The later bulletin reported that legislation removed the inflation adjustment and set the 2013 cap at $100 million.

What this means for you

• The $113,909,000 figure was the Department's original January 2013 announcement, not the final cap for that year.
• The bulletin addressed the statewide aggregate credit cap, not whether any particular donation qualified for a credit.
• Use the later P.D. 13-74 guidance for the revised historical 2013 amount and current law for any present filing.

Common questions

Q: What inflation increase did the Department calculate for 2013?
A: Approximately 13.91% over the 2006 base period.

Q: What cap did that calculation produce?
A: $113,909,000.

Q: Is that the final 2013 cap?
A: No. Tax Bulletin 13-6 later superseded this bulletin and reduced the cap to $100 million.

Citations and references

• Va. Code § 58.1-512(D)(4)(b).
• House Bill 5019, 2006 Special Session I, Chapter 4.
• P.D. 13-74, Tax Bulletin 13-6 (May 22, 2013).

Subject

Important Information Regarding the Land Preservation Income Tax Credit

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 13-8

Original ruling text

TAX BULLETIN 13-1

Virginia Department of Taxation

January 25, 2013

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 2012, 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. Therefore, for calendar year 2012, the cap was $111,054,000.

Using information obtained from United States Bureau of Labor Statistics, the average CPI-U for the 12-month period ending August 31, 2012 increased by approximately 13.91 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 $113,909,000 for calendar year 2013.

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

2013
13.91%
$113,909,000

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

This Public Document superseded by Public Document 13-74, 5/22/13 (Tax Bulletin 13-6 ).