                                 CODE OF VIRGINIA

WORKER RETRAINING TAX CREDIT (§ 58.1-439.6)

A. As used in this section, unless the context clearly requires otherwise:
			&#8220;Eligible worker retraining&#8221; means retraining of a qualified
employee that promotes economic development in the form of (i) noncredit courses
at any of the Commonwealth&#8217;s comprehensive community colleges or a private
school or (ii) worker retraining programs undertaken through an apprenticeship
agreement approved by the Commissioner of Labor and Industry.
			&#8220;Manufacturing&#8221; means processing, manufacturing, refining,
mining, or converting products for sale or resale.
			&#8220;Qualified employee&#8221; means an employee of an employer eligible
for a credit under this section in a full-time position requiring a minimum of
1,680 hours in the entire normal year of the employer&#8217;s operations if the
standard fringe benefits are paid by the employer for the employee. Employees in
seasonal or temporary positions shall not qualify as qualified employees. A
qualified employee (i) shall not be a relative of any owner or the employer
claiming the credit and (ii) shall not own, directly or indirectly, more than
five percent in value of the outstanding stock of a corporation claiming the
credit. As used herein, &#8220;relative&#8221; means a spouse, child,
grandchild, parent or sibling of an owner or employer, and &#8220;owner&#8221;
means, in the case of a corporation, any person who owns five percent or more of
the corporation&#8217;s stock.
			&#8220;STEM or STEAM discipline&#8221; means a science, technology,
engineering, mathematics, or applied mathematics related discipline as certified
by the Virginia Economic Development Partnership Authority in consultation with
the Superintendent of Public Instruction. The term shall include a health
care-related discipline.

B. 1. For taxable years beginning on and after January 1, 1999, but prior to
January 1, 2019, an employer shall be allowed a credit against the taxes imposed
by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.), and 10 (§
58.1-400 et seq.) of Chapter 3; Chapter 12 (§ 58.1-1200 et seq.); Article 1 (§
58.1-2500 et seq.) of Chapter 25; or Article 2 (§ 58.1-2620 et seq.) of Chapter
26 in an amount equal to 30 percent of all expenditures paid or incurred by the
employer during the taxable year for eligible worker retraining. For taxable
years beginning on or after January 1, 2013, but prior to January 1, 2019, if
the eligible worker retraining consists of courses conducted at a private
school, the credit shall be in an amount equal to the cost per qualified
employee, but the amount of the credit shall not exceed $200 per qualified
employee annually, or $300 per qualified employee annually if the eligible
worker retraining includes retraining in a STEM or STEAM discipline, including
but not limited to industry-recognized credentials, certificates, and
certifications.

   2. For taxable years beginning on and after January 1, 2018, but prior to
   January 1, 2019, a business primarily engaged in manufacturing shall be
   allowed a credit against the taxes imposed by Articles 2 (&#xA7; 58.1-320 et
   seq.) and 10 (&#xA7; 58.1-400 et seq.) in an amount equal to 35 percent of its
   direct costs incurred during the taxable year in conducting orientation,
   instruction, and training in the Commonwealth relating to the manufacturing
   activities undertaken by the business. In no event shall the credit allowed to
   a business under this subdivision exceed $2,000 for any taxable year. The
   Department shall allow credit only for programs that (i) provide orientation,
   instruction, and training solely to students in grades six through 12; (ii)
   are coordinated with the local school division; and (iii) are conducted either
   at a plant or facility owned, leased, rented, or otherwise used by the
   business or at a public middle or high school in Virginia. The taxpayer shall
   include in its direct costs only the following expenditures: (a) salaries or
   wages paid to instructors and trainers, prorated for the period of instruction
   or training; (b) costs for orientation, instruction, and training materials;
   (c) amounts paid for machinery and equipment used primarily for such
   instruction and training; and (d) the cost of leased or rented space used
   primarily for conducting the program.

   3. The total amount of tax credits granted under this section for each fiscal
   year shall not exceed $1 million.

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

D. 1. An employer shall be allowed a credit pursuant to subdivision B 1 only for
those courses at a comprehensive community college or a private school for which
courses have been certified as eligible worker retraining to the Department of
Taxation by the Virginia Economic Development Partnership Authority. The
Virginia Economic Development Partnership Authority shall review requests for
certification submitted by employers and shall advise the Tax Commissioner
whether a course or program qualifies as eligible worker retraining and, if it
qualifies, whether the course or program is in a STEM or STEAM discipline.

   2. A business shall be allowed the credit pursuant to subdivision B 2 only for
   an orientation, instruction, and training program that has been approved by
   the local school division and certified as eligible by the Virginia Economic
   Development Partnership Authority. A business seeking a tax credit under
   subdivision B 2 shall include in its application reviewed by the Virginia
   Economic Development Partnership Authority an approval from the local school
   division. The Virginia Economic Development Partnership Authority shall review
   requests for certification submitted by businesses and shall advise the Tax
   Commissioner whether an orientation, instruction, and training program
   qualifies as relating to the manufacturing activities undertaken by the
   business and meets other applicable requirements.

   3. The Tax Commissioner shall develop guidelines (i) establishing procedures
   for claiming the credit provided by this section, (ii) defining eligible
   worker retraining, which shall include only those courses and programs that
   are substantially related to the duties of a qualified employee or that
   enhance the qualified employee&#8217;s job-related skills, and that promote
   economic development, and (iii) providing for the allocation of credits among
   employers and businesses requesting credits in the event that the amount of
   credits for which requests are made exceeds the available amount of credits in
   any year. Such guidelines shall be exempt from the provisions of the
   Administrative Process Act (&#xA7; 2.2-4000 et seq.).

E. Any credit not usable for the taxable year may be carried over for the next
three taxable years. The amount of credit allowed pursuant to this section shall
not exceed the tax imposed for such taxable year. No credit shall be carried
back to a preceding taxable year. If an employer or business that is subject to
the tax limitation imposed pursuant to this subsection is allowed another credit
pursuant to any other section of this Code, or has a credit carryover from a
preceding taxable year, such employer or business shall be considered to have
first utilized any credit allowed which does not have a carryover provision, and
then any credit which is carried forward from a preceding taxable year, prior to
the utilization of any credit allowed pursuant to this section.

F. No employer or business shall be eligible to claim a credit under this
section for worker retraining or manufacturing orientation, instruction, and
training undertaken by any program operated, administered, or paid for by the
Commonwealth.

G. The Department shall review certifications received from the Virginia
Economic Development Partnership Authority pursuant to subsection D and, if it
determines a taxpayer meets the applicable requirements, shall issue a credit in
the amount specified in subsection B.

H. The Virginia Economic Development Partnership Authority shall report annually
to the Chairmen of the House Committee on Finance and the Senate Committee on
Finance and Appropriations on the status and implementation of the credit
established by this section, including certifications for eligible worker
retraining.

HISTORY: 1997, c. 726; 2013, cc. 294, 482; 2014, c. 734; 2017, cc. 177, 454;
2018, c. 500; 2019, c. 189.