HB 656 — Income tax, state and corporate; creates tax credit for coal refuge energy and reclamation, report.

SESSION INTRODUCEDHOUSE 22101160DSUBSTITUTE I22105065D HOUSEAMENDMENT IN THE NATURE OF A SUBSTITUTE (Proposed by the House Committee on Finance on February 2, 2022) (Patron Prior to Substitute––Delegate Wampler) A BILL NO.to amend the Code of Virginia by adding in Article 13 of Chapter 3 of Title 58.1 a section numbered 58.1-439.12:13, relating to coal refuse energy and reclamation tax credit.

656 Offered January 12, 2022 N Prefiled January 11, 2022 T A Bnumbered 58.1-439.12:13, relating to coal refuse energy and reclamation tax credit.1 a sectiRn –––––––––– Patron––Wampler O –––––––––– D Referred to Committee on Finance –––––––––– U Be it enacted by the General Assembly of Virginia:

Csection 1.numbered 58.1-439.12:13 as follows:adding in Article 13 of Chapter 3 of Title 58.1 a § 58.1-439.12:13.

That the Code of Virginia is amended by adding in Article 13 of Chapter 3 of Title 58.1 a sec§ 58.1-439.12:13.

E A.

D "Eligible facility"taxpayer" means ana electrictaxpayer generatingthat facility(i) placedowns inand serviceoperates beforea Januarycoal 1,production 2022,or consistingreclamation ofbusiness onethat orwas moreauthorized unitsto placedconduct business in servicethe Commonwealth before January 1, 2022, that generatesproduces electricityor locatedreclaims onqualified thecoal samerefuse propertyin andthe thatCommonwealth, (i)to combustswhom qualifieda coaltax refusecredit oris fuelallowedOunder composedbalance of atVirginia leasttaxes 75owed percentas qualifieddetermined coalby refuseassessments by BTUthe energyDepartment valuenot insubject theto taxablea) year;has paid any pending timely appeal.

(ii)U utilizes"Qualified atcoal arefuse" minimummeans awaste circulatingcoal, fluidizedrock, bedshale, combustionslurry, unitculm, orgob, pressurizedboney, fluidizedslate, bedclay, combustionfines, unitand equippedrelated withmaterials aassociated limestonewith injectionor systemnear fora controlcoal ofseam acidthat gasesare andeither abrought fabricabove filterground particulateor emissionS controlotherwise mining-affectedremoved sitesfrom ina amountscoal equalmine toin atthe leastprocess 50of percentmining ofcoal theor ashthat producedare byseparated thefrom facilitycoal during suchcleaning, taxablepreparation, year.or reclamation operations.

BE "Eligibleother taxpayer"noncalorific meanssubstances, abut taxpayerexcluding thatexcess ownsmoisture.ng aninherent eligiblemoisture, facilityash, insulphur, theand CommonwealthB. to w5om a tax credit is issued under this section.

SuchFor taxable years beginning on and after January 1, 2023, but before January 1, 2028, an eligible taxpayer mustshall havebe filedallowed alla nonrefundable credit against the tax returnslevied andpursuant reportsto required§ underS8.1-320 Virginiaor law58.1-400 andin mustan haveamount paidequal anyto balance$2 ofper Virginiaton taxesof owedqualified ascoal determinedrefuse byproduced assessmentsor byreclaimed in the DepartmentCommonwealth notby subjectan toeligible ataxpayer pendingduring timelythe appeal.taxable year.

"QualifiedU coalC. refuse" means waste coal, rock, shale, slurry, culm, gob, boney, slate, clay, and related materials associated with or near a coal seam that are either brought above ground or during the cleaning or preparation operations.

"QualifiedThe coalamount refuse"of includescredits undergroundthat coalmay developmentbe wastes,claimed coalby processingan wastes,eligible andtaxpayer excessunder spoilthis butsection doesshalB not includeexcD. overburden from surface mining activities.

"Ton"The meansaggregate 2,000amount pounds of qualifiedcredits coalavailable refuse,under includingthis inherentsection moisture,for ash,each sulphur,taxable andyear 35shall otherbe noncalorific$2 substances,million. but excluding excess moisture.

36In B.the event that approved applications for the credit exceed such aggregate amounts in each taxable year, the Department shall issue the tax credits pro rata based upon the amount of credits approved for each eligible taxpayer.

ForI taxable: years beginning on and after January 1, 2023, but before January 1, 2028, an 37 eligible taxpayer shall be allowed a nonrefundable credit against the tax levied pursuant to § 58.1-320 38 or 58.1-400 in an amount equal to $4 per ton of qualified coal refuse used to generate electricity at an eliC.

The35 amountE. of credits that may be claimed for a single eligible facility under this section shall not exceed $1,665,000 in taxable year 2023, $2,220,000 in taxable year 2024, and $4,440,000 in taxable years 2025, 2026, and 2027.

D.The amount of the credit that may be claimed in any single taxable year shall not exceed the 36 eligible taxpayer's liability for taxes imposed by this chapter for such taxable year.

TheNo aggregatecrediT amountshall ofbe credits/ available38 underthe thiseligible sectiontaxpayer's liability for eachthe taxable year shallin which the credit is claimed, the amount thatds / 39 exceeds the tax liability may be ascarried follows:over for credit against the income taxes of the eligible taxpayer 40 in the next five taxable years or until the total amount of the tax credit has been taken, whichever is sooner.

1.The credit may only be claimed by one eligible taxpayer for the same produced or reclaiEed qualified coal refuse.

For taxable years beginning on and after January 1, 2023, but before January 1, 2024, the total amount of credits granted shall not exceed $7.5 million.

2.

For taxable years beginning on and after January 1, 2024, but before January 1, 2025, the total amo3.

For taxable years beginning on and after January 1, 2025, but before January 1, 2028, the total amount of credits granted shall not exceed $20 million.

In the event approved applications for the credit exceed such aggregate amounts in each taxable year, the Department shall issue the tax credits pro rata based upon the amount of credits approved for each eligible taxpayer.

E.

The amount of the credit that may be claimed in any single taxable year shall not exceed the eligible taxpayer's liability for taxes imposed by this chapter for such taxable year.

No credit shall be carried back to a preceding taxable year.

If the amount of the credit allowed under this section exceeds exceeds the tax liability may be carried over for credit against the income taxes of the eligible taxpayer HB656 2 of 2 in the next five taxable years or until the total amount of the tax credit has been taken, whichever is sooner.

The credit may only be claimed by one taxpayer for each eligible facility.

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

G.The Department shall compile an annual report on credits claimed in the respective taxable year and shall submit a report by November 1, 2024, and each taxable year thereafter through taxable year 2027, to the Chairmen of the House Committee on Appropriations, the House Committee on Finance,H and the Senate Committee on Finance and Appropriations.

TheIn Departmentpreparing shallsuch compilereport, an annual report on credits claimed in the respectiveDepartmen6 taxable year and shall submitconsult a report by November 1, 2024, and eachcoordinate taxablewith yearthe thereafterDepartment throughof taxableEnergy year 2027, to provide the Chairmennumber of theeligible Houseta6payers CommitteeCommonwealth onof Appropriations, the Houseproduction Committee on Finance, and thereclamation Senateof Committeequalified oncoal Financerefuse andin Appropriations.the Commonwealth.

InThiso preparing such report, the Departmentinformation shall consultbe andreported coordinatein withsummary thefashion Departmentas ofappropriate Taxation to providepreserve theconfidentiality number of eligible1 taxpayersinformation. applying for and utilizing the credit, the amount of credits approved, and data on the benefits to the Commonwealth of the use of qualified coal refuse to generate electricity at an eligible facility in the Commonwealth.

This information shall be reported in summary fashion as appropriate to preserve confidentiality of information.

The Tax Commissioner shall consult andwith the Department of Energy to develop guidelines for applying for and claiming the credit provided by this section.