My representative was supposed to mail my Virginia investment-credit application but it arrived after the deadline -- can the Department make an exception?

Plain-English summary

This ruling is a near-identical companion, issued the same day, to P.D. 24-135 — same credit, same deadline, and essentially the same fact pattern with a different (redacted) taxpayer. A taxpayer made a qualified equity and subordinated debt investment in a qualified business venture during the 2022 taxable year and was entitled to apply for a credit under Virginia Code § 58.1-339.4 (50% of the investment, for individual and fiduciary income tax, subject to a $5 million annual cap allocated pro rata once requests exceed it). The taxpayer's representative filed the application after the April 1, 2023 deadline that 23 VAC 10-110-288 sets for a 2022 investment, and asked the Department for an exception, stating that future applications would be sent by certified mail, fax, or electronic mail rather than regular mail.

Same outcome, same reasoning as P.D. 24-135. The Department denied the exception request on the same grounds: because the credit is capped annually and allocated pro rata among approved applicants, the Department must maintain — and consistently enforces — a hard filing deadline for every capped credit it administers (citing the same string of prior rulings: P.D. 04-201, P.D. 13-189, P.D. 15-201, P.D. 20-26, and P.D. 20-193). And that hard deadline applies regardless of whether the taxpayer or a third-party representative was responsible for the late filing (citing P.D. 22-46 and P.D. 23-33). See P.D. 24-135 for the fuller discussion of this doctrine, including why reliance on a representative doesn't create an exception.

What this means for you

Anyone using a representative to file a capped Virginia tax credit application

See the companion write-up at P.D. 24-135: delegating the filing to an accountant, attorney, or other representative doesn't create any slack in the deadline. If they miss it on your behalf, the Department treats that the same as if you had missed it yourself.

Common questions

Q: Is this a different rule than the one in P.D. 24-135?
A: No — same credit, same deadline, same hard-deadline doctrine, and the same result (denial). This ruling involves a different taxpayer but a nearly identical fact pattern.

Q: Can I get an exception if my representative was the one who filed late?
A: No. The Department has consistently held this deadline applies regardless of whether a taxpayer relied on a third party to file.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-339.4 — 50% credit for a qualified equity and subordinated debt investment, subject to a $5 million annual cap with pro rata allocation
• 23 VAC 10-110-288 — Form EDC application deadline of April 1 of the year following the investment

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 24-138

Original ruling text

December 13, 2024

Re: § 58.1-1821 Appeal: Individual Income Tax

Dear *:

This will respond to the letter submitted by * on behalf of you (the “Taxpayer”), in which she contested the denial of an application for the and ** (the “Credit”) for the taxable year ended December 31, 2022.

FACTS

The Taxpayer filed an application for the Credit related to an investment made in a qualified business during the 2022 taxable year. The Department denied the application because it was not filed by the April 1, 2023 deadline for the 2022 taxable year. The Taxpayer’s representative requested an exception to the deadline, stating that she would send future applications by certified mail, fax, or electronic mail instead of using regular mail.

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 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 have a 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 policy of establishing a hard deadline 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 reliance on a third party to file the application. See P.D. 22-46 (3/15/2022) and P.D. 23-33 (3/29/2023). Accordingly, the Department cannot accept the Taxpayer’s application for the Credit because it was filed after the deadline.

The Code of Virginia sections and regulations 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 and Legal Affairs, Tax Adjudication and Resolution Division, at () * or **@tax.virginia.gov.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

Related Documents

04-20

13-189

15-201

20-26

20-193

22-46

23-33