304: Major Business Facility Job Tax Credit and Instructions (2024)
Virginia · Virginia Tax · Used for tax years 2024
Virginia Form 304 is the Major Business Facility Job Tax Credit Application. It reports qualifying employees for a new or expanded Virginia facility and calculates the credit allowed, the current-year credit, and any credit that must be recaptured.
Who files this form
Form 304 is for taxpayers applying for Virginia’s Major Business Facility Job Tax Credit for qualifying jobs created by establishing or expanding a major business facility in Virginia.
- File a separate Form 304 for each major business facility or qualified job expansion.
- File for a total of 6 taxable years following each expansion.
- You cannot first file and claim the credit until the taxable year after the year the facility was established or expanded.
For expansion years beginning on or after January 1, 2010, the qualifying threshold is 50 new jobs for Tier 1 or 25 new jobs for Tier 2. Tier 2 applies to facilities in an enterprise zone or a locality identified as economically distressed by the Virginia Economic Development Partnership. Qualified job expansion requires jobs to be created within a continuous 12-month period ending within the taxpayer’s taxable year. The credit applies to qualifying jobs above the threshold.
A facility does not qualify if retail trade is its principal activity. You cannot use the same jobs for this credit and the Green and Alternative Energy Job Creation Tax Credit, International Trade Facility Tax Credit, or Enterprise Zone Job Creation Grant.
What you'll need
Have your company name, FEIN, address, entity type, NAICS code, facility location, and establishment or expansion details ready. Fiscal-year filers must provide their federal tax period.
Include these schedules and supporting details:
- Schedule A and the Schedule A Worksheet: Required for every filing year, years 1 through 6.
- Employee list: Use the required format, including employee names, hire dates, Social Security numbers, full months employed during the credit year, position descriptions or numbers, and weekly hours for qualifying part-time employees.
- Schedule B: Complete for the credit year to calculate qualifying employees.
- Schedule C: Required for Tier 1 and Tier 2 pass-through entities for each year a credit is earned.
- Virginia Schedule 500AC: Include if applicable.
- Physical addresses: Provide each business location for all expansion facilities.
Use current-year quarterly employment tax reports filed with the Virginia Employment Commission to calculate current-year qualifying employees.
If affiliated companies combine jobs to qualify, include a schedule with their names, Virginia account numbers, FEINs, NAICS codes, and voting percentages. If those companies file separate Virginia returns, also include a statement showing each company’s prorated current-year credit.
Identify contractor and affiliated-company employees on the employee list and include a separate schedule identifying the corresponding company or contractor. For contractor or subcontractor employees, you must be able to provide evidence of an agreement preventing the contractor or subcontractor from also claiming those employees for this credit.
If Line 3b is less than Line 3a, enclose a schedule showing the recapture calculation.
How to file
Complete Form 304 and the required schedules. An officer or another person authorized to act for the business must sign the declaration.
Send the completed application at least 90 days before your tax return’s due date to the address printed under “Where to File Form 304”:
Tax Credit Unit
Virginia Department of Taxation
P.O. Box 715
Richmond, Virginia 23219
You will receive a certification letter confirming your credit amount. Do not enclose Form 304 with your tax return.
Pass-through entities
When allocating the credit to participants, file Form TCA within 30 days after the credit is granted, but at least 90 days before participants file their income tax returns. Send that information to:
Virginia Department of Taxation
ATTN: Tax Credit Unit
P.O. Box 715
Richmond, VA 23218-0715
Alternatively, fax the Form TCA information to (804) 774-3902. Do not both mail and fax it.
Pass-through entities must also complete Form 502 and give each participant Schedule VK-1 and a copy of the credit certification letter to enclose with the participant’s income tax return.
Common mistakes
- Sending Form 304 with the tax return. The form expressly says not to do this.
- Skipping later-year filings or required schedules. Form 304 must be filed for 6 taxable years following each expansion, with Schedule A and the Schedule A Worksheet every year.
- Claiming overlapping benefits for the same jobs. The form warns that jobs used for the listed job credits or Enterprise Zone Job Creation Grant do not qualify for this credit.
- Combining too many part-time employees. No more than two qualifying part-time employees may count as one equivalent full-time employee.
- Counting excluded positions. Seasonal or temporary jobs, jobs shifted from an existing Virginia location, and ancillary positions such as building maintenance, grounds maintenance, and security do not qualify.
- Overlooking possible recapture. A decrease in average qualifying employees during the 5 years after the credit year may require repayment of some or all of the credit.
- Failing to file Form TCA when distributing a credit. This may cause the credit claim to be disallowed or delay processing of a participant’s return.
Questions people ask
How is the credit calculated?
Subtract the qualifying threshold from the credit-year qualifying employee count, then multiply the result by $1,000. The credit is computed in the credit year and allowed over a 2-year period.
Can I receive a refund for unused credit?
No. This credit is nonrefundable. Any unused amount may be carried forward for the next 10 taxable years.
Does employee turnover automatically trigger recapture?
No. Recapture is based on the average number of qualifying full-time employees, not specific employees. Turnover does not cause recapture if average employment does not decrease.
Can affiliated companies combine their new jobs to qualify?
Yes. Affiliated companies may elect to combine jobs created through their individual establishments or expansions. The definition requires at least 80% voting ownership by one company in the others, or at least 80% voting ownership of two or more companies by the same interests.
Where can I get help with Form 304?
Call the Virginia Department of Taxation’s Tax Credit Unit at (804) 786-2992. Forms and instructions are available at www.tax.virginia.gov or by calling (804) 367-8031.