2023 Vermont Statutes › Title 32 - Taxation and Finance › Chapter 151 - Income Taxes › § 5930ll. Machinery and equipment tax credit

§ 5930ll. Machinery and equipment tax credit
(a) Definitions. As used in this subchapter:
(1) “Full-time job” means a permanent position filled by an employee who works at least 35 hours per week.
(2) “Investment period” means the period commencing January 1, 2010 and ending December 31, 2014.
(3) “Qualified capital expenditures” means expenditures properly chargeable to a capital account by a qualified taxpayer during the investment period, totaling at least $20 million for machinery and equipment to be located and used in Vermont for creating, producing, or processing tangible personal property for sale.
(4) “Qualified taxpayer” means a taxpayer that:
(A) is an existing business on January 1, 2010 with an aggregate average annual employment, including all employees of its related business units with which it files a combined or consolidated return for Vermont income tax purposes, during the investment period of no fewer than 200 full-time jobs in Vermont;
(B) is a taxable corporation under Subchapter C of the Internal Revenue Code;
(C) is a business whose operations at the time of application to the Vermont Economic Progress Council are located in a Rural Economic Area Partnership (REAP) zone designated by the U.S. Department of Agriculture Rural Development Authority, engaged primarily in the creation, production, or processing of tangible personal property for sale; and
(D) proposes to make qualified capital expenditures in a Vermont REAP zone and such expenditures will contribute substantially to the REAP zone’s economy.
(5) “Qualified taxpayer’s Vermont income tax liability” means the corporate income tax otherwise due on the qualified taxpayer’s Vermont net income after reduction for any Vermont net operating loss as provided for under section 5832 of this title. For a qualified taxpayer that is a member of an affiliated group and that is engaged in a unitary business with one or more other members of that affiliated group, its Vermont net income includes the allocable share of the combined net income of the group.
(b) Certification.
(1) A qualified taxpayer may apply to the Vermont Economic Progress Council for a machinery and equipment investment tax credit certification for all qualified capital expenditures in the investment period on a form prescribed by the council for this purpose.
(2) The Council shall issue a certification upon determining that the applicant meets the requirements set forth in subsection (a) of this section.
(c) Amount of credit. Except as limited by subsections (e) and (f) of this section, a qualified taxpayer shall be entitled to claim against its Vermont income tax a credit in an amount equal to ten percent of the total qualified capital expenditures.
(d) Availability of credit.
(1) The credit earned under this section with respect to qualified capital expenditures shall be available to reduce the qualified taxpayer’s Vermont income tax liability for its tax year beginning on or after January 1, 2012 or, if later, the first tax year within which the qualified taxpayer’s aggregate qualified capital expenditures exceed $20,000,000.00. A taxpayer claiming a credit under this subchapter shall submit with the first return on which a credit is claimed a copy of the qualified taxpayer’s certification from the Vermont Economic Progress Council.
(2) The credit may be used in the year earned or carried forward to reduce the qualified taxpayer’s Vermont income tax liability in succeeding tax years ending on or before December 31, 2026.
(e) Limitations.
(1) The credit earned under this section, either alone or in combination with any other credit allowed by this chapter, may not be applied to reduce the qualified taxpayer’s Vermont income tax liability in any one year by more than 80 percent, and in no event shall the credit reduce the taxpayer’s income tax liability below any minimum tax imposed by this chapter.
(2) The total amount of credit authorized under this section shall be $8,000,000.00, and in no event shall the credit in any one tax year exceed $1,000,000.00. The credit shall be available on a first-come, first-served basis by certification of the Vermont Economic Progress Council pursuant to subsection (b) of this section.
(f) Recapture.
(1) A qualified taxpayer who has earned credit under this section with respect to its qualified capital expenditures shall notify the Vermont Economic Progress Council in writing within 60 days if the taxpayer’s trade or business is substantially curtailed in any calendar year prior to December 31, 2023.
(2) A qualified taxpayer’s business shall be considered to be substantially curtailed when the average number of the taxpayer’s full-time jobs in Vermont for any calendar year prior to December 31, 2023, is less than 60 percent of the highest average number of its full-time jobs in Vermont for any calendar year in the investment period. For purposes of the preceding calculation, the qualified taxpayer’s full-time jobs in Vermont shall include all full-time jobs in Vermont of its related business units with which it files a combined or consolidated return for Vermont income tax purposes. A business shall not be considered to be substantially curtailed when the assets of the business have been sold but the business continues to be located in Vermont, provided that the employment test of this subdivision is met.
(3) In the event that a qualified taxpayer has substantially curtailed its trade or business, then:
(A) the credit certification for such tax year and all succeeding tax years of the taxpayer shall be terminated;
(B) any credit previously earned and carried forward shall be disallowed; and
(C) any credit that has been previously used by the taxpayer to reduce its Vermont income tax liability shall be subject to recapture in accordance with the following table:
Years between the close of the tax year
Percent of credits
credit was earned and year
to be when repaid (%):
business was substantially curtailed:
2 or less
100
More than 2, up to 4
80
More than 4, up to 6
60
More than 6, up to 8
40
More than 8, up to 10
20
More than 10
0
(4) The recapture shall be reported on the income tax return of the taxpayer who claimed the credit for the tax year in which the taxpayer’s trade or business was substantially curtailed, or the Commissioner may assess the recapture in accordance with the assessment and appeal provisions provided for in subchapter 8 of this chapter.
(5) Within 60 days of the close of the qualified taxpayer’s tax year in which the taxpayer’s trade or business was substantially curtailed, the taxpayer may petition the Commissioner for a reduction in the amount of the credit subject to recapture and the disallowance of credit previously earned and carried forward. The Commissioner shall hold a hearing within 45 days of the receipt of the taxpayer’s petition. The Commissioner shall have the discretion to reduce the amount of the credit subject to recapture and disallowance upon a showing of circumstances that contributed to the substantial curtailment of the taxpayer’s trade or business. The decision of the Commissioner shall be final and shall not be subject to judicial review.
(g) Reporting.
(1) Any qualified taxpayer who has been certified under subsection (b) of this section shall file a report with the Vermont Economic Progress Council on a form prescribed by the Council for this purpose and provide a copy of the report to the Commissioner of Taxes.
(2) The report shall be filed for each year following the certification until the year following the last year the taxpayer claims the credit to reduce its Vermont income tax liability, or 2027, whichever occurs first.
(3) The report shall be filed by February 28 each year for activity the previous calendar year and include, at a minimum:
(A) the number of full-time jobs in each quarter and the average number of hours worked per week;
(B) the level of qualifying capital investments made if reporting on a year within an investment period; and
(C) the amount of tax credit earned and applied during the previous calendar year. (Added 2009, No. 156 (Adj. Sess.), § H.1; amended 2015, No. 157 (Adj. Sess.), § H.8, eff. Jan. 1, 2017; repealed on July 1, 2026 pursuant to 2009, No. 156 (Adj. Sess.), § H.2.)