                                 CODE OF VIRGINIA

AGRICULTURAL BEST MANAGEMENT PRACTICES TAX CREDIT (§ 58.1-339.3)

A. 1. As used in this section, &#8220;agricultural best management
practice&#8221; means a practice approved by the Virginia Soil and Water
Conservation Board that will provide a significant improvement to water quality
in the state&#8217;s streams and rivers and the Chesapeake Bay and is consistent
with other state and federal programs that address agricultural, nonpoint source
pollution management. A detailed list of the standards and criteria for
agricultural best management practices eligible for credit shall be found in the
most recently approved &#8220;Virginia Agricultural BMP Manual&#8221; published
annually prior to July 1 by the Department of Conservation and Recreation.

   2. For all taxable years beginning on and after January 1, 1998, but before
   January 1, 2030, any individual who is engaged in agricultural production for
   market, or has equines that create needs for agricultural best management
   practices to reduce nonpoint source pollutants, and has in place a soil
   conservation plan approved by the local Soil And Water Conservation District
   (SWCD), shall be allowed a refundable credit against the tax imposed by &#xA7;
   58.1-320 in an amount equaling 25 percent of the first $100,000 expended for
   agricultural best management practices by the individual.

   3. For all taxable years beginning on and after January 1, 2021, but before
   January 1, 2030, any individual who is engaged in agricultural production for
   market, or who has equines that create needs for agricultural best management
   practices to reduce nonpoint source pollutants, and has in place a resource
   management plan approved by the local SWCD shall be allowed a refundable
   credit against the tax imposed by &#xA7; 58.1-320 in an amount equaling 50
   percent of the first $100,000 expended for agricultural best management
   practices implemented by the individual on the acreage included in the
   resource management plan.

B. 1. Any eligible practice approved by the local Soil and Water Conservation
District Board shall be completed within the taxable year in which the credit is
claimed. After the practice installation has been completed, the local SWCD
Board shall certify the practice as approved and completed, and eligible for
credit. The applicant shall forward the certification to the Department of
Taxation on forms provided by the Department. The credit shall be allowed only
for expenditures made by the taxpayer from funds of his own sources.

   2. To the extent that a taxpayer participates in the Virginia Agricultural
   Best Management Practices Cost-Share Program, the taxpayer may claim the
   credit under subdivision A 2 for any remaining liability after such
   cost-share, but may not claim the credit under subdivision A 3 for any such
   remaining liability, subject to the other provisions of this section. For
   purposes of this subdivision, &#8220;liability after such cost-share&#8221;
   means the limitation of the tax credits to the total costs incurred by the
   taxpayer for agricultural best management practices reduced by any funding
   received by participation in the Virginia Agricultural Best Management
   Practices Cost-Share Program.

C. 1. The aggregate amount of such credit claimed under subdivisions A 2 and 3
shall not exceed $75,000 or the total amount of the tax imposed by this chapter,
whichever is less, in the year the project was completed, as certified by the
Board. Any taxpayer claiming a tax credit under this section shall not claim a
credit under any similar Virginia law for costs related to the same eligible
practices. A taxpayer may not claim credit for the same practice in the same
management area under both subdivisions A 2 and A 3.

   2. If the amount of the credit exceeds the taxpayer&#8217;s liability for such
   taxable year, the excess may be refunded by the Tax Commissioner. Tax credits
   shall be refunded by the Tax Commissioner on behalf of the Commonwealth for
   100 percent of face value. Tax credits shall be refunded within 90 days after
   the filing date of the income tax return on which the individual applies for
   the refund.

D. For purposes of this section, the amount of any credit attributable to
agricultural best management practices by a pass-through entity such as a
partnership, limited liability company, or electing small business corporation
(S Corporation) shall be allocated to the individual partners, members, or
shareholders in proportion to their ownership or interest in such entity.

E. A pass-through tax entity, such as a partnership, limited liability company
or electing small business corporation (S corporation), may appoint a tax
matters representative, who shall be a general partner, member-manager or
shareholder, and register that representative with the Tax Commissioner. The Tax
Commissioner shall be entitled to deal with the tax matters representative as
representative of the taxpayers to whom credits have been allocated by the
entity under this article with respect to those credits. In the event a
pass-through tax entity allocates tax credits arising under this article to its
partners, members or shareholders and the allocated credits shall be disallowed,
in whole or in part, such that an assessment of additional tax against a
taxpayer shall be made, the Tax Commissioner shall first make written demand for
payment of any additional tax, together with interest and penalties, from the
tax matters representative. In the event such payment demand is not satisfied,
the Tax Commissioner shall proceed to collection against the taxpayers in
accordance with the provisions of Chapter 18 (&#xA7; 58.1-1800 et seq.).

HISTORY: 1996, c. 629; 2006, c. 440; 2011, c. 352; 2021, Sp. Sess. I, cc. 39,
40; 2024, cc. 212, 233.