METALLURGICAL COAL TAX CREDITS FOR VIRGINIA JOBS

The Governor of Virginia recently signed significant legislation passed by the Virginia General Assembly hat targets the success of metallurgical coal development in Virginia and the employment of coal miners and support staff in the coal industry. The tax credit statute enacted on May 22 provides for aa state tax credit for coal operators who mine metallurgical coal in Virginia. The credit is effective through December 31, 2022. The credit is $2.00 per ton from deep mines producing coal which has a coal seam height no more than 36 inches and a credit of $1.00 per ton for deep mines producing coal when the coal seam exceeds 36 inches. For metallurgical coal mined by surface methods the credit is forty cents ($0.40) per ton. The statute also provides a coalbed methane credit of one cent ($0.01) per million BTUs of gas produced and sold. The coal credits reach back to earlier tax years, but specifically exclude the 2017 tax year. The statute requires that any future availability of the credit must be based on an increase in the number of mining jobs that the operator provides on a percentage basis for the producer to have the credit available. Accordingly, the tax credits will benefit operators who are increasing employment on an annual basis as well as new operators. The statute has significant timing requirements that will require each operator to look closely at the opportunity available based on mining and employment data.

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