Virginia Virginia Coal Related Refundable Tax Credits

Virginia Coal Related Refundable Tax Credits
2021 Form 306 - Application for Virginia Coal-Related Tax Credits
2021 Virginia
Form 306

Application for
Virginia Coal-Related Tax Credits

*VA0306121888*

For Calendar Year 2021. FISCAL YEAR filers: Enter beginning date ___________, _____ and ending date ____________, _____ and check here.
Name of Company

FEIN / SSN

Use Form 306 to calculate the Coalfield Employment Enhancement Tax Credit and the Virginia Coal Employment and Production Incentive Tax
Credit earned in the 2021 taxable year. Read the instructions prior to completing this form and related schedules.

Part I – Qualifications
	

Coalfield Employment Enhancement Tax Credit (also check applicable boxes below)
  Coal Credit	

	

  Coal Bed Methane Credit

Virginia Coal Employment and Production Incentive Tax Credit: Check this box if you meet the qualifications for this credit.

If you do not qualify directly for this credit, but qualify by receiving a credit distribution from a pass-through entity, go to Part III, Line 10

Part II – Tons of Coal Sold
Show the total tonnage of each type of qualifying metallurgical coal for the taxable year for which the Coalfield Employment Enhancement Tax Credit
is to be computed in Part III.
Column A
Underground Seam
36” or Less

Column B
Underground
Seam Over 36”

Column C
Surface Mined

1.	 Enter the number of tons of qualifying coal sold during the taxable year.. . . . . . 
2.	 Enter, from Schedule 306A, the number of tons of qualifying coal sold during the
taxable year for which the purchaser is eligible for the Virginia Coal Employment
and Production Incentive Tax Credit.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
3.	 Subtract Line 2 from Line 1.
Enter the result below in the “Number of Tons Sold” column.. . . . . . . . . . . . . . . 

Part III – Credit Computation
A. Coal Credit Base (see instructions for definitions)
Enter the qualifying tonnage on which the coal credit base is computed. If claiming this credit, and you also sold qualifying tonnage and issued a
certificate to the purchaser, complete Schedule 306A. Do not include amounts from Schedule 306A, Column E, in this section.
Number of Tons Sold

Multiplier

1.	 Underground mining method: Seam thickness 36” or less:
Enter amount from Part II, Line 3, Col. A, above.. . . . . . . . . . . 

x  $2.00 =

2.	 Underground mining method: Seam thickness over 36”:
Enter amount from Part II, Line 3, Col. B, above.. . . . . . . . . . . 

x  $1.00 =

3.	 Surface mining method:
Enter amount from Part II, Line 3, Col. C, above.. . . . . . . . . . . 

x  $0.40 =

4.	 Total Credit Base (add Lines 1, 2, and 3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B. Employment Factor (See instructions for definitions.)
5.	 Total number of Virginia coal mining jobs for the calendar year ending within the taxable year. . . . . . . . . . . . . . . .
6.	 Total number of Virginia coal mining jobs for the preceding calendar year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.	 Employment Factor (divide Line 5 by Line 6). Do not enter more than 100%.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C. Credit Computations and Credit Distributions Earned for 2021 (Report credit on 2024 return.)
8.	 Tentative coal mining credit (multiply Line 4 by the percentage on Line 7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.	 Coal bed methane gas producer credit ($.01 per million BTU of coal bed methane gas produced in Virginia).. . . .
10.	Credit distributions from pass-through entities (see instructions).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.	2021 Coalfield Employment Enhancement Tax Credit earned. Enter the total of Lines 8, 9, and 10 here.
Also enter this amount on the Coalfield Employment Enhancement Tax Credit earned line of your tax return or
credit schedule.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

D. Application of Coal Related Tax Credits Earned (From 2021 Form 306B.)
12.	Full tax credit: Enter amount from 2021 Form 306B, Line 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.	Excess tax credit (85%): Enter amount from 2021 Form 306B, Line 15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.	Total credit allowable this year. Add Lines 12 and 13.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Va. Dept. of Taxation  2601152-W  Rev. 07/21

Credit Earned

2021 Form 306 Instructions
Application for Virginia Coal-Related Tax Credits
TAX BULLETIN: See Virginia Tax Bulletin 97-1 for additional information on coal-related tax credits. The bulletin is available
by writing to the Virginia Department of Taxation, P.O. Box 1317, Richmond, VA 23218-1317; calling (804) 367-8031
(individuals) or (804) 367-8037 (businesses); or visiting the Department’s website, www.tax.virginia.gov.

General Information
Coalfield Employment Enhancement Tax Credit
The Coalfield Employment Enhancement Tax Credit provides
a composite tax credit for metallurgical coal mined in Virginia
and coal bed methane gas produced in Virginia based on a
per ton or per million BTU rate and an employment factor.
The credit can be earned in taxable years beginning on or
after January 1, 1996, but before January 1,  2017 and on
or after January 1, 2018, but before January 1, 2022. The
credit may be claimed based on the Credit Redemption
Schedule below. If the amount of the credit exceeds the
taxpayer’s income tax liability for a year in which it redeems
credits, the excess credit will be applied to any other taxes
imposed by the Commonwealth of Virginia. The Department
of Taxation will redeem any remaining credit as follows: 85%
will be refunded directly to the taxpayer and the remaining
15% will be deposited in a regional economic development
fund administered by the Virginia Coalfield Economic
Development Authority.

Credit Redemption Schedule
Taxable Year Earned

Taxable Year to Claim

2015

2018

2016

2019

2017 (No credit allowed) 2020 (No credit allowed)*
2018

2021

2019

2022

2020

2023

2021

2024

Virginia Coal Employment and Production Incentive
Tax Credit
For tax years beginning on and after January 1, 1988, but
before January 1, 2022, this credit may be allocated between
a qualifying electricity generator and qualifying person with
an economic interest in coal. The allocation of this credit may
not exceed $3 per ton. Electricity generators that originally
earned the credit may carry forward amounts of credit for up
to 10 taxable years or until the full amount is used, whichever
is sooner. A taxpayer claiming carryover credits on a return
for taxable years beginning on and after January 1, 2022
may not claim more than $1 million in credits for a single
taxable year. No taxpayer may amend a return for a taxable
year beginning before January 1, 2022 to claim more credits
than the amount included on such return before amending
it. Persons with an economic interest in coal that receive a
transfer of credits may not receive refunds of credits and
may not carry forward unused amounts of credits for use
in future taxable years. You may claim only the Coalfield

Employment Enhancement Tax Credit or the Virginia Coal
Employment and Production Incentive Tax Credit that has
been allocated to you per ton of coal.

Part I – Qualifications
Qualifications for the coal credit and coal bed methane
credit are listed separately below. If additional guidance is
needed to determine if you qualify for either credit, see the
box above.

Coal Credit Qualifications
Check this box on Form 306, Part I, if you meet all coal credit
qualifications below.
1.	 The person (individual, partnership, corporation, estate,
or trust) earning this credit has an economic ownership
interest in coal mined in Virginia for which the coal
credit is claimed. “Economic interest” is defined as the
economic ownership interest required by IRC § 611 as
of December 31, 1977, in order to claim the depletion
deduction. Note that a party who only receives an arm’s
length royalty is not considered as having an economic
interest in coal mined in Virginia. Coal is considered
“mined in Virginia” if the portal through which the coal
is brought to the surface is located in Virginia. Coal
mined by surface methods will be considered “mined
in Virginia” if mined from within the boundaries of the
permit area defined in Va. Code § 45.2-1000.
2.	 The same ton of coal used to compute this credit is not
being used to compute the Virginia Coal Employment
and Production Incentive Credit (Va. Code § 58.1-433.1
or 58.1-2626.1). For purposes of this credit, “ton” means
the same as customarily used in transactions between a
knowledgeable buyer and seller.
3.	 The seam thickness of coal mined using underground
mining methods (Part III, Section A) is based on the
weighted average isopach mapping of actual coal
seam thickness by mine as certified by a professional
engineer. Isopach maps must have been provided to the
Virginia Department of Energy within the time frames
specified in Virginia Tax Bulletin 97-1. (If claiming this
credit for coal mined from a seam 36” thick or less, the
Virginia Department of Energy acknowledgment must be
enclosed with the income tax return of the entity which
qualified for this credit.) All information upon which the
isopach mapping is based will be available for review by
the Virginia Department of Energy.
4.	 The employment factor (Part III, Section B) is the ratio of
the number of Virginia coal mining jobs, for the calendar
year ending during the taxable year in which the credit
is earned, to the number of Virginia coal mining jobs
for the prior calendar year. It is computed on the total

number of Virginia coal mining jobs and not on a per
mine basis. Results are always rounded up. Taxpayers
who file consolidated or combined returns will calculate
the employment factor and corresponding credit on a
separate company basis.
5.	 A Virginia coal mining job will be considered to be any
job required to be reported on the Mine Safety and
Health Administration (MSHA) Form 7000-2 pursuant to
30 CFR Part 50 as of January 1, 1995, and for which
wages are properly reported on Form VEC‑FC-20
pursuant to the Virginia Unemployment Compensation
Act (Va. Code § 60.2-100 et seq.). The total hours
worked at these jobs during each quarter, calculated in
accordance with 30 CFR Part 50 and reported on the
Virginia Department of Energy tonnage report (Form
DM-CM-2), will be aggregated for the calendar year. The
total hours from all tonnage reports filed by the entity will
be divided by 1,920 equivalent hours per job to derive
the number of coal mining jobs for the employment
factor computation.
Note: A taxpayer with facilities that do not have
an assigned Mine Index Number from the Virginia
Department of Energy, such as stand alone preparation
plants, coal handling facilities, shops or administrative
or engineering facilities, who wishes to file employment
data from these facilities for the purpose of calculating the
employment factor, may file a separate annual tonnage
report (Form DM‑CM‑2) with the Virginia Department of
Energy, inserting “none” in the space for the mine index
number and leaving the tonnage spaces blank. When
completing the form, if coal mining jobs are allocated to
one or more contractor(s), enclose an explanation with
Form DM‑CM-2.
6.	 The person earning this credit may not also claim the
Virginia Coal Employment and Production Incentive Tax
Credit unless received as a distribution from a different
entity.

Coal Bed Methane Credit Qualifications
Check this box on Form 306, Part I, if you meet the
qualification below.
A coal bed methane gas producer is the person who was
issued a permit by the Virginia Department of Energy to
operate a coal bed methane well.

Virginia Coal Employment and Production Incentive
Tax Credit Qualifications
Check this box on Form 306, Part I, if you meet the
qualification below.
The person (individual, partnership, corporation, estate, or
trust) has an economic ownership interest in coal mined in
Virginia as described in the Coal Credit Qualifications section
and has been allocated this credit by a qualifying electricity
generator. The allocation must be executed by December 31
of the year that the coal was purchased. Schedule 306C
AND all corresponding Forms 306T must be completed and
enclosed with this return.

Part II – Tons of Coal Sold
Special Instructions for Line 2 (and Schedule 306A)
If coal was sold during the taxable year and a statement
was supplied to the purchaser that the coal is Virginia mined
coal for purposes of claiming another coal credit, complete
Schedule 306A to determine the tonnage amounts to enter
on Line 2. Instructions for completing Schedule 306A are
provided on the schedule. The other coal credit referenced
above is the Virginia Coal Employment and Production
Incentive Credit (Va. Code §§ 58.1-433.1 and 58.1-2626.1).

Form 306, Part II, Line Instructions
1.	 Enter the number of tons of qualifying coal sold during
the taxable year. Complete Columns A, B, and C to
report this tonnage by each mining method.
2.	 Enter the number of tons of qualifying coal sold during
the taxable year for which the purchaser is eligible for a
coal credit. Complete Columns A, B, and C to report this
tonnage by each mining method.
3.	 Subtract Line 2 from Line 1 for each column. The
amounts from this line will be entered on Part III, Lines
1, 2, and 3.

Part III – Credit Computation
Sections A, B, and C
Complete Part III using the instructions provided for each
line, the definitions and guidelines provided in Part I, and
Virginia Tax Bulletin 97-1.

Special Instructions
Line 1	 Enter the amount from Part II, Line 3, Col. A.
Line 2	 Enter the amount from Part II, Line 3, Col. B.
Line 3	 Enter the amount from Part II, Line 3, Col. C.
Line 5	 The total number of coal mining jobs of the person
(entity) filing the return includes the jobs of contract
operators as reflected in the annual tonnage reports
filed with the Virginia Department of Energy for the
year the credit is earned. The entity claiming the
credit is responsible for obtaining the contractor’s
annual tonnage reports filed with the Virginia
Department of Energy.
Line 6	 The total number of coal mining jobs is the number
reflected in the annual tonnage reports for the year
prior to the year that the credit was earned. This
amount includes jobs of contract operators.
Line 10	Enter the credits distributed to you from another
entity. This is the current year credit distribution
from the pass-through entity. If claiming credits for
more than one entity, enclose separate Forms 306
for each entity. Add Line 10 from each additional
Form 306 and enter the total on this line.
If a distributive share includes coal tonnage from coal
mined using the underground mining method with a

seam of 36” or less, a copy of the acknowledgment
document from the Virginia Department of Energy
must be provided to each recipient.
Line 11	Credit to report on the 2024 return: Instructions
for this line are on Form 306. This credit may be
claimed against the income tax in future years
based on the credit redemption schedule (see the
Coalfield Employment Enhancement Tax Credit
section above). Apply the credit as follows:
•	 Apply the credit to the current year income tax,
then
•	 Offset other state taxes incurred during that
taxable year.
Any remaining excess credit for that taxable year will be
redeemed at 85% of face value by the Virginia Department of
Taxation. The balance of the excess credit will be deposited in
a regional economic development fund administered by the
Virginia Coalfield Economic Development Authority. Since
this is a refundable credit, it has no carryforward feature.
See Virginia Tax Bulletin 97-1 for additional information.
Distributions made to pass-through entities are reported on
the current year Form 306 even though the credit may not be
claimed until a future year.

Section D
Complete Part III, Section D, using the instructions provided
for each line. Instructions for completing Form 306B are on
a separate page. This schedule must be completed before
completing Part III, Section D of Form 306.

What to Enclose
All taxpayers claiming the credit must complete Forms 306
and 306B and enclose completed Schedules 306A, 306C,
and 306T if appropriate. Taxpayers must also enclose a
copy of the document filed with the applicable state agency
showing payment of the tax for which credit is claimed.
Taxpayers claiming a credit for coal sold that was mined
from an underground seam of 36” or less must enclose
a copy of the statement from the Virginia Department of
Energy acknowledging that isopach mapping was received.

Corporations, S corporations (or shareholders of
S corporations that are taxed as partnerships), partners
in partnerships, members in limited liability companies,
and sole proprietors must also enclose a copy of the
Form DM-CM-2 filed with the Virginia Department of Energy
(partners and members will enclose a copy of the entity’s
Form DM‑CM-2). If more than one Form DM-CM-2 was
filed, a summary schedule may be substituted that identifies
the same information as on the Form DM-CM-2. If the total
number of tons reported on all Forms DM-CM-2 does not
agree with the total number of tons sold as reported on Form
306, Part II, Line 1. Enclose a detailed explanation of the
difference.
Fiscal year filers should refer to the back of Form DM-CM-2
for filing requirements.

Information for Pass-Through Entities
Pass-through entities must provide their shareholders,
partners or members with a copy of the entity’s Form 306 to
enclose with their returns. In addition, pass-through entities
distributing this credit to its participants, including owners,
shareholders, partners, or members, must give such
participant a Schedule VK‑1, Owner’s Share of Income and
Virginia Modifications and Credits.
Each partnership or limited liability company distributing this
credit must also send a copy of the same partner or member
information directly to the Virginia Department of Taxation,
ATTN: Coalfield Employment Enhancement Tax Credit
Distribution, P.O. Box 5126, Richmond, Virginia
23220‑0126 within 60 days of making the distribution.

Where to Get Help
For additional information or to order forms, write to
the Virginia Department of Taxation, P.O. Box 5126,
Richmond, VA 23220-0126 or call (804) 367-8031
(individuals) or (804) 367-8037 (businesses). Tenemos
servicios disponible en Español. You can obtain most
Virginia income tax forms and additional tax information by
visiting www.tax.virginia.gov. Forms are also available
from the office of your local Commissioner of the Revenue,
Director of Finance, or Director of Tax Administration.

2021 Virginia
Schedule 306A

Coalfield Employment Enhancement Tax Credit
Coal Sold for Coal Credit to Qualified Purchasers

*VA306A121888*

The Coalfield Employment Enhancement Tax Credit is based in part on the number of tons of metallurgical coal sold during the taxable year which were mined in
Virginia. Any person who grants a certificate to a purchaser certifying that the coal purchased was Virginia-mined for purposes of claiming another coal related credit
(the Virginia Coal Employment and Production Incentive Credit) and also claims the Coalfield Employment Enhancement Tax Credit must complete this schedule.
Use the instructions below to complete Columns A through F. Enclose a separate schedule if more space is needed.
Column A:	

Date of coal sale and certification

Column B:	

Invoice number for the sale

Column C:	

Name of the purchasing firm

Columns D-F: 	

Mining method used to extract the metallurgical coal sold: (1) underground: seam thickness 36” or less, (2) underground: seam thickness over
36”, or (3) surface mining. If a sale involved more than one mining method, use a separate line for each method. If you are unable to identify
the mining method because the coal was commingled, allocate the tonnage to each mining method and enclose a statement explaining the
allocation method. State the number of tons sold to the firm in Column C for which the certificate of qualification was issued. If more than one
mining type is shown, specify the tons mined by mining type.

TOTAL ROWS:	

After entering all sales, add the total tonnage amount for each mining type and enter the totals on the TOTAL rows at the bottom of the page.
Transfer the totals to Form 306, Part II, Line 2, as directed for each row.

Column A

Column B

Column C

Column D

Column E

Column F

Date Coal Was Sold

Invoice Number

Name of Firm Purchasing Coal

Number of Tons
Sold Mined from
Underground Seams
36” or Less

Number of Tons
Sold Mined from
Underground Seams
Over 36”

Number of Tons Sold
Mined by Surface
Mining Method

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Total Tons from Column D:	 Seam 36” or Less. Enter here and on Form 306, Part II, Line 2, Col. A.. . .
Total Tons from Column E:	 Seam Over 36”. Enter here and on Form 306, Part II, Line 2, Col. B.. . . . . . . . . . . . . . . . . . . . . . . . .
Total Tons from Column F:	 Surface Mining Method. Enter here and on Form 306, Part II, Line 2, Col. C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2021 Virginia
Form 306B

Coal-Related Tax Credit
Computation Schedule

*VA306B121888*

Read the instructions before completing Form 306B. If additional space is needed, use an additional schedule or page.
For Calendar Year 2021. FISCAL YEAR filers: Enter beginning date ___________, _____ and ending date ____________, _____ and check here.
Name

FEIN or SSN

The Coalfield Employment Enhancement Tax Credit allows 100% refunds for previously paid taxes imposed by the
Commonwealth of Virginia that were incurred during the taxable year, up to the face value of the Coalfield Employment
Enhancement Tax Credit. If any credit remains, it will be refunded at 85% of its face value. The remaining balance of the
credit will be deposited into a regional fund administered by the Virginia Coalfield Economic Development Authority.
The amount of Virginia Coal Employment and Production Tax Credits you claim cannot exceed the amount of your total
tax liability for the year during which the credit will be claimed. Electricity generators that originally earned the credit may
carry forward amounts of credit for up to 10 taxable years or until the full amount is used, whichever is sooner. A taxpayer
claiming carryover credits on a return for taxable years beginning on and after January 1, 2022 may not claim more than
$1 million in credits for a single taxable year. No taxpayer may amend a return for a taxable year beginning before January 1,
2022 to claim more credits than the amount included on such return before amending it. Persons with an economic interest
in coal that receive a transfer of credits may no longer receive refunds of such credits and may not carry forward unused
amounts of credits for use in future taxable years.
Form 306B is used to list each state tax which the Coalfield Employment Enhancement Tax Credit and the Virginia Coal
Employment and Production Tax Credit will offset. The Coalfield Employment Enhancement Tax Credit earned and reported
on the 2018 Form 306 will be allowable as a credit on the 2021 income tax return. You must have earned and reported the
credit on your 2018 income tax return in order to claim the credit on your 2021 return. To claim the Virginia Coal Employment
and Production Incentive Tax Credit, the credit must be allocated by December 31 of the year the coal was purchased. If you
have received a transfer of Virginia Coal Employment and Production Incentive Tax Credits from an electricity generator,
you must complete and enclose the Schedule 306C and all corresponding Forms 306T. Enclose a copy of the document
showing payment of each tax amount claimed in Column E below.

Part I — Maximum Credit
1. (a)	 100% of the Virginia Coal Employment and Production Incentive Tax Credit.. . . . . . . . . . . . . . . . . . 1(a).
(b)	 100% of the Coalfield Employment Enhancement Tax Credit from 2018 Form 306, Line 11. . . . . . . 1(b).
2. Total 100% Credit – Add Line 1(a) and Line 1(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2.

Part II — Credit Designation
See Form 306B instructions to complete Lines 3 through 8 below. Do not include local taxes, taxes incurred by your
customers, prior year taxes, addition to tax, penalty or interest paid, if any.
Column A
Type of State Tax Paid for
Taxable Year 2021

Column B
State Agency
Administering Tax

Column C

Column D

Name of Taxpayer Earning Credit
Date(s) Paid and Tax Tax Paid in Current
and Taxpayer Identification Number
Period
Taxable Year
Under Which 2021 Payment(s) Made

3.
4.
5.
6.
7. Enter the total taxes paid from all additional pages here. (If additional space is needed,
include additional pages.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
8. Total Tax Liability. Add Lines 3-7 above and enter here. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
Va. Dept. of Taxation  2601152-W  Rev. 07/21

Column E

2021 Virginia
Form 306B
Page 2

Coal-Related Tax Credit
Computation Schedule

Name

*VA306B221888*
FEIN or SSN

Part III — Credit Calculation
9. Are you claiming the Virginia Coal Employment and Production Incentive Tax Credit?

  Yes 	 (Go to Section A)
 No	 (Go to Section B)

SECTION A — VIRGINIA COAL EMPLOYMENT AND PRODUCTION INCENTIVE CREDIT
10. Current Year Credit.
(a)	 If the amount on Line 1(a) is greater than Line 8, enter the amount from Line 8. Then, go to Line 11.
(b)	 If the amount on Line 8 is greater than Line 1(a), enter the amount from Line 1(a). Then, skip to
Line 12.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.

11. Excess Credit Amount. Subtract Line 8 from Line 1(a).
If you are claiming only the Virginia Coal Employment and Production Incentive Credit, stop here. This
is your carryover amount. Note: Taxpayers who receive a transfer of credits may not carry forward such
credits.
If you are also claiming the Coalfield Employment Enhancement Credit, complete Lines 13 through 16. . . . 

11.

12. Remaining Tax Liability.
Subtract Line 1(a) from Line 8 and enter here. This is the amount of tax you owe. If you are claiming only
the Virginia Coal Employment and Production Incentive Credit, stop here.
If you are also claiming the Coalfield Employment Enhancement Tax Credit, go to Section B.. . . . . . . . . 

12.

SECTION B — COALFIELD EMPLOYMENT ENHANCEMENT CREDIT
Full Credit
13 (a)	 If you are only claiming the Coalfield Employment Enhancement Credit and Line 1(b) is greater than
the amount on Line 8, enter the amount from Line 8.
If you are also claiming the Virginia Coal Employment and Production Incentive Credit and Line 1(b)
is greater than the amount on Line 12, enter the amount from Line 12.
Enter the result here and on Schedule CR, Section 3, Part 1, Line B (individuals) or Schedule 500CR,
Section 3, Part 1, Line B (corporations). Then go to Line 14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
13 (b)	 If you are only claiming the Coalfield Employment Enhancement Credit and Line 8 is greater than
Line 1(b), enter the amount on Line 1(b).

13.

If you are also claiming the Virginia Coal Employment and Production Incentive Credit and Line 12
is greater than Line 1(b), enter the amount on Line 1(b).
Enter this amount on Schedule CR, Section 3, Part 1, Line B (individuals) or Schedule 500CR, Section 3, Part 1, Line B (corporations). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Excess Credit
14. If you are only claiming the Coalfield Employment Enhancement Credit subtract Line 8 from Line 1(b).
If you are also claiming the Virginia Coal Employment and Production Incentive Credit subtract Line 12
from Line 1(b).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

14.

15. Multiply the amount on Line 14 by 85% (0.85). Enter here and on Schedule CR, Section 3, Part 1, Line C
(individuals) or Schedule 500CR, Section 3, Part 1, Line C (corporations).. . . . . . . . . . . . . . . . . . . . . . . . 

15.

16. Multiply the amount on Line 14 by 15% (0.15). This amount is deposited into a fund administered by the
Virginia Coalfield Economic Development Authority.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

16.

Instructions for Completing 2021 Form 306B,
Coal-Related Tax Credit Computation Schedule
General Information
You may claim only the Coalfield Employment Enhancement
Tax Credit OR the Virginia Coal Employment and Production
Incentive Tax Credit that has been allocated to you per ton
of coal.

Virginia Coal Employment and Production Incentive
Tax Credit
For tax years beginning on and after January 1, 1988, but
before January 1, 2022, electricity generators in Virginia may
earn the Virginia Coal Employment and Production Incentive
Tax Credit in an amount equal to $3 per ton for each ton of
coal purchased and consumed by such electricity generator.
The person who sold the coal to the electricity generator
must certify that it was mined in Virginia. The Virginia Coal
Employment and Production Incentive Tax Credit may be
allocated between a qualifying electricity generator and
qualifying person with an economic interest in coal. The
amount of Virginia Coal Employment and Production Tax
Credits you claim may not exceed the amount of your total
tax liability for the year during which the credit will be claimed.
Electricity generators that originally earned the credit may
carry forward amounts of credit for up to 10 taxable years
or until the full amount is used, whichever is sooner. A
taxpayer claiming carryover credits on a return for taxable
years beginning on and after January 1, 2022 may not claim
more than $1 million in credits for a single taxable year. No
taxpayer may amend a return for a taxable year beginning
before January 1, 2022 to claim more credits than the amount
included on such return before amending it. Persons with an
economic interest in coal that receive a transfer of credits
may not receive refunds of credits and may not carry forward
unused amounts of credits for use in future taxable years.

Coalfield Employment Enhancement Tax Credit
The Coalfield Employment Enhancement Tax Credit allows
100% refunds for previously paid taxes imposed by the
Department of Taxation that were incurred during the taxable
year up to the face value of the credit. If the total credit is
larger than the sum of all state taxes paid during the taxable
year, 85% of the excess credit will be redeemed by the
Department of Taxation to you as a refund on your income
tax return. The remaining 15% of the credit will be deposited
in a regional economic development fund administered by
the Virginia Coalfield Economic Development Authority. The
credit can be earned in taxable years beginning on or after
January 1, 1996, but before January 1, 2017 and on or after
January 1, 2018, but before January 1, 2022. The credit is
claimed based on a redemption schedule (see the Credit
Redemption Schedule below).
The credit will be administered and redeemed only by the
Virginia Department of Taxation, regardless of which Virginia

agency received the tax payments. This credit applies only
to state taxes paid in the current taxable year; it does not
apply to prior year or future year taxes, any addition to tax,
penalty or interest, local taxes, or license fees. After filing your
Virginia income tax return, if you discover that you overpaid or
underpaid a tax on which this credit was computed (Lines 3
through 7), you must file an amended income tax return with
the Virginia Department of Taxation to reflect the change.
In instances where a combined or consolidated Virginia
corporation income tax return is filed which includes
corporations which were not eligible to claim the credit, special
rules apply. In such cases, the credit as calculated above is
used to offset the combined or consolidated Virginia corporate
income tax liability. However, any remaining credit can only be
used to offset other state taxes incurred by the corporations
in the consolidated or combined group which actually earned
the credit or meet the criteria of the 80% test described in
Public Document 00-186. See Virginia Tax Bulletin 97-1 for
additional information about this credit.

Credit Redemption Schedule
Taxable Year Earned

Taxable Year to Claim

2015

2018

2016

2019

2017 (No credit allowed) 2020 (No credit allowed)*
2018

2021

2019

2022

2020

2023

2021

2024

Line Instructions for 2021 Form 306B
The instructions for lines not mentioned below are selfexplanatory.

Part I – Maximum Credit
Line 1:	 (a)	 Enter 100% of the Virginia Coal Employment
and Production Incentive Credit. For electricity
generators who have not allocated this tax
credit, Line 1(a) is calculated by multiplying the
number of tons of qualifying coal purchased and
consumed during the taxable year by $3.00. For
electricity generators who have allocated this
tax credit to persons with an economic interest
in coal, Line 1(a) equals the amount of the credit
that has been retained by them for the taxable
year, if any. For persons with an economic
interest in coal, Line 1(a) equals the amount from
2021 Schedule 306C Line 21.

	

(b)	 Enter 100% of the Coalfield Employment
Enhancement Tax Credit earned and reported
on your 2018 Form 306.

Line 2:	Add Lines 1(a) and 1(b). This is the total coal-related
credit amount that can be claimed for the current
taxable year.

Part II – Credit Designation
Complete Lines 3-7, listing each qualifying current year state
tax paid to the Virginia Department of Taxation or any other
state agency during the taxable year, then enter the total of
Lines 3-7 on Line 8. Taxes paid to federal or local government
agencies do not qualify.
Qualifying state taxes are those incurred and paid by you.
Examples of qualifying taxes paid to the Virginia Department of
Taxation are the corporate income tax, tire tax, and retail sales
tax (to the extent that the sales tax was paid for nonexempt
purchases for use by you). Taxes which are merely collected,
held in trust, and then remitted to the Department of Taxation
do not qualify for this credit. Examples of non-qualifying taxes
include employer withholding tax and retail sales tax paid by
your customers. In addition, this credit may not include any
addition to tax (computed on Forms 760C, 760F, or 500C),
penalty, interest, or prior year taxes.
The credits must first be applied against the income tax shown
on your income tax return and then against all other taxes
imposed by the Commonwealth of Virginia that were incurred
and paid by you during the taxable year.
When completing Lines 3-7, enter the tax shown on your
income tax return, less any other tax credits claimed which
have a higher priority. (As a general rule, credits are claimed
in the order in which they provide the best tax advantage. For
example, credits without carryover provisions are generally
claimed before credits with carryover provisions.)
Column A	 Enter the name of the state tax for which credit
is claimed for tax paid. For example: “corporation
income tax.”
Column B: 	Enter the name of the state agency to which the
tax in Column A was paid.
Column C:	Enter the taxpayer name and account number
under which the tax was paid. For example,
if the tax was paid to the Virginia Department
of Taxation, enter your name and the account
number used when making the payment. If
credit is claimed for a pass-through distribution
from a partnership, limited liability company, or
subchapter S corporation, enter the name and
account number shown on the statement from
that entity.
Column D:	Enter the date that the payment was made and
the taxable period for which the payment was
applied. For example, if claiming credit for a use
tax payment made on April 15, 2021, for the
period January through March, enter “1st quarter
use tax paid April 15, 2021.” If additional space
is required, use an additional page.

Column E: 	Enter the amount of tax that was reported in
Column D.
Line 8:	Add the amounts reported in Column E, Lines 3-7.
This is your total tax liability for the taxable year in
which the credit will be claimed.

Part III – Credit Calculation
Section A — Virginia Coal Employment and Production
Incentive Tax Credit
Line 9:	Check the appropriate box to identify the credit(s) you
are claiming. If you are claiming the nonrefundable
Virginia Coal Employment and Production Tax Credit,
go to Line 10. If you are claiming only the refundable
Coalfield Employment Enhancement Tax Credit, skip
to Line 13.
Line 10:	Compute the amount of the Virginia Coal Employment
and Production Tax Credit that can be claimed on
your return for the current taxable year as follows:
	
	

–	 If the amount on Line 1(a) is greater than Line 8,
enter the amount from Line 8. Then, go to Line 11.
–	 If the amount on Line 8 is greater than Line 1(a),
enter the amount from Line 1(a). Then, skip to
Line 12.

Line 11:	Subtract the amount on Line 8 from the amount on
Line 1(a). If you are the electricity generator that
originally earned the credit, this amount can be
carried over for 10 years or until the total remaining
credit is taken, whichever is sooner. If you are a
person with an economic interest in coal that received
a transfer of credits, you may not carry over unused
credits or receive refunds of such credits.
If you are only claiming the Virginia Coal Employment
and Production Incentive Credit, stop here. If you are
also claiming the Coalfield Employment Enhancement
Tax Credit, proceed to Section B.
Line 12:	If the tax liability on Line 8 exceeds the amount of
allowable credit for the current tax year, subtract
Line  8 from Line 1(a). This is your tax liability
remaining after the credit is applied.
Section B — Virginia Coalfield Employment Enhancement
Tax Credit
Line 13:	Determine the amount of the Coalfield Employment
Enhancement Tax Credit that can be redeemed at
100% of face value as follows:
Compare the amount on Line 8 (or Line 12 if also
claiming the Virginia Coal Employment and Production
Incentive Credit) to the amount on Line 1(b).
	

–	 If you are only claiming the Coalfield Employment
Enhancement Credit and Line 1(b) is greater than
the amount on Line 8, enter the amount from
Line 8.
If you are also claiming the Virginia Coal
Employment and Production Incentive Credit and
Line 1(b) is greater than the amount on Line 12,
enter the amount on Line 12.

This is the amount of Coalfield Employment
Enhancement Tax Credit that can be redeemed
at 100% of face value. Proceed to Line 14 to
determine the amount of credit than can be
refunded at 85% of face value.
	

–	 If the tax liability on Line 8 (or Line 12 if also
claiming the Virginia Coal Employment and
Production Incentive Credit) is greater than Line
1(b), enter the amount from Line 1(b). The amount
remaining after the credit is applied is your tax
liability for the current taxable year.

Line 14:	Subtract Line 8 (or Line 12 if also claiming the Virginia
Coal Employment and Production Incentive Credit)
from Line 1(b) to determine the excess credit.
Line 15:	Multiply the amount on Line 14 by 85% (0.85). This
is the excess credit amount that can be refunded at
85% of face value.
Line 16:	Multiply the amount on Line 14 by 15% (0.15). This
amount will be deposited into a regional economic
development fund.

Filing the 2021 Form 306B
What to Enclose
Taxpayers claiming coal-related credits must submit:
•	 Form 306
•	 Form 306B
•	 Schedules 306A, 306C, and 306T, if applicable.
•	 A copy of the document filed with the applicable state
agency showing payment of the tax for which the credit
is claimed.

Where to Get Help
For additional information or to order forms, write to the
Virginia Department of Taxation, P.O. Box 5126, Richmond,
VA 23220‑0126 or call (804) 367-8031 (individuals) or
(804) 367-8037 (businesses). You can obtain most Virginia
income tax forms and additional tax information by visiting
www.tax.virginia.gov.

Information for Pass-Through Entities
Pass-through entities must provide their shareholders,
partners or members with a copy of the entity’s Forms 306 and
306B to enclose with their returns. In addition, all pass-through
entities distributing this credit to their owners, shareholders,
partners or members must give each a Schedule VK-1,
Owner’s Share of Income And Virginia Modifications And
Credits.
Each partnership or limited liability company distributing
this credit must also send a copy of the same partner or
member information directly to the Virginia Department of
Taxation, ATTN: Coalfield Employment Enhancement Tax
Credit Distribution, P.O. Box 5126, Richmond, Virginia
23220‑0126 within 60 days of making the distribution.

2021 Virginia
Schedule 306C
Page ____ of ____

Recapitulation of Virginia Coal
Employment and Production
Incentive Tax Credit Allocation

Name of Company

*VA306C121888*
FEIN or SSN

Use this schedule to summarize the information from your Forms 306T. Enclose a separate schedule if more space is needed.
Column A:	

Transferor Name (Form 306T, Section II, B)

Column B:	

Transferor FEIN (Form 306T, Section II, C)

Column C:	

Date coal was sold. (Form 306T, Section I, A)

Column D:	

Invoice Number (Form 306T, Section I, B)

Column E: 	

Number of tons sold to transferor (Form 306T, Section I, C)

Column F:	
	

Amount of credit that is to be allocated to you. This may not exceed $3 per ton of coal.
(Form 306T, Section IV, C)

Enclose Schedule 306C and all Forms 306T with Form 306B.
Column A
Transferor Name

(Form 306T, Section II, B)

Column B
Transferor FEIN
(Form 306T,
Section II, C)

Column C
Date of Sale
(Form 306T,
Section I, A)

Column D
Invoice Number
(Form 306T,
Section I, B)

Column E
Number of Tons
Sold
(Form 306T,
Section I, C)

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

Total Credit:
Enter here and on Form 306B, Line 1(a).

Column F
Portion of Credit
(Form 306T,
Section IV, C)