SENATE BILL NO. 990 Offered January 10, 2007 Prefiled January 9, 2007 A BILL to amend and reenact § 58.1-439.7 of the Code of Virginia, relating to tax credits for machinery and equipment used in the process of producing goods from recyclable materials. ---------- Patron-- Blevins ---------- Referred to Committee on Finance ----------

Be it enacted by the General Assembly of Virginia:

1.  That § 58.1-439.7 of the Code of Virginia is amended and reenacted as follows:

§ 58.1-439.7. Tax credit for purchase of machinery and equipment for processing recyclable materials.

A. For taxable years beginning on and after January 1, 1999, but before January 1, 2007 2015, a corporationtaxpayer shall be allowed a credit against the tax imposed pursuant to § 58.1-400 Articles 2 (§ 58.1-320 et seq.) and 10 (§ 58.1-400 et seq.) of Chapter 3 in an amount equal to 10 percent of the purchase price paid by the taxpayer during the taxable year for machinery and equipment used by the taxpayer exclusively in or on the premises of manufacturing facilities or plant units which manufacture, process, compound, or produce items of tangible personal property from recyclable materials, within the Commonwealth, for sale. For purposes of determining "purchase price paid" under this section, the taxpayer may use the original total capitalized cost of such machinery and equipment, less capitalized interest. The Department of Environmental Quality shall certify that such machinery and equipment are integral to the recycling process before the corporation taxpayer shall be entitled to the tax credit under this section. The corporation taxpayer shall also submit to the Department of Environmental Quality purchase receipts, invoices, and such other documentation as may be necessary to confirm the taxpayer's statement of purchase price paid, with the income tax return to verify the amount of purchase price paid for the recycling machinery and equipment. If the Department of Environmental Quality finds that the machinery and equipment are integral to the recycling process, the Department of Environmental Quality shall determine the purchase price paid for such machinery and equipment and shall issue a certificate thereof to the taxpayer. The taxpayer shall attach the certificate to the Virginia tax return on which the credit is claimed.

B. The total credit allowed under this section in any taxable year shall not exceed 40 percent of the Virginia income tax liability of such taxpayer.

C. Any tax credit not used for the taxable year in which the purchase price on recycling machinery and equipment was paid may be carried over for credit against the corporation's taxpayer's income taxes in the 10 succeeding taxable years until the total credit amount is used.

D. A taxpayer claiming the tax credit provided by § 58.1-439.8 shall not be eligible for the tax credit provided by this section.

E. Credits earned by a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders, respectively, for their individual income tax, as the partners, members, or shareholders mutually agree as provided in an executed document, the form of which shall be prescribed by the Director of the Department of Environmental Quality. If such document has not been executed, such credits shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership or interest in such business entities.

2.  That the provisions of this act shall become effective for taxable years beginning on or after January 1, 2007.

3.  That the Director of the Department of Environmental Quality shall, in consultation with the Commissioner of the Department of Taxation, and by no later than October 1, 2007, develop and make publicly available the form for an executed document that is to be used by taxpayers allocating their tax credits in accordance with a mutual agreement pursuant to subsection E of § 58.1-439.7 of the Code of Virginia.