Vermont § 5830c - Tax credits; charitable investments in housing

§ 5830c. Tax credits; charitable investments in housing

• (a) Credit authorized. A charitable investment approved by the Commissioner of Housing and Community Affairs
  in an eligible housing charity shall entitle a Vermont taxpayer to a credit against
  the tax imposed by sections 5822 (individual income), 5832 (corporate income), 5836
  (banks and financial institutions), or 8551 (insurance companies) of this title. The
  credit may be claimed for any year in which a charitable investment is made and for
  each year thereafter until the principal is repaid, or the investment is transferred,
  or the taxpayer is notified or agrees or the Commissioner of Housing and Community
  Affairs determines that the principal is not likely to be repaid, or until the end
  of the year in which the housing charity ceases to be eligible, whichever is earlier. (b) Amount of credit. The amount of the credit shall be equal to the difference between the net income that
  would have been received by the taxpayer at the charitable threshold rate during the
  taxable year and the actual net income received by or credited to the taxpayer from
  a charitable investment in an eligible housing charity. However, the credit shall
  not exceed three percent of the average outstanding principal balance of the investment
  during the taxable year. (c) Definitions. As used in this section: (1) “Affordable housing” shall be defined by rule adopted by the Department of Housing
  and Community Affairs. The rule shall include the following provisions: (A) At least 50 percent of the units shall be occupied by households whose income does
  not exceed 100 percent of the greater of State or area median income. (B) The goal shall be to provide housing at a cost of no more than 30 percent of a household’s
  gross income. (C) The affordability of the unit shall be protected for a period of time not less than
  the term of any loan made pursuant to subdivision (d)(4) of this section for the unit
  or units or at least 15 years, whichever is greater, through a housing subsidy covenant
  or other legally binding instrument, which shall terminate upon the issuance of a
  judgment of foreclosure or a transfer of the property in lieu of foreclosure. This
  rule may also include additional provisions consistent with this section. (2) “Bank prime loan rate” means the March average prime loan rate, as of March 31 each
  year, used by insured U.S. chartered commercial banks to price short-term business
  loans, as published in the Federal Reserve Board’s statistical release. (3) “Charitable investment” means a loan or deposit made to an eligible housing charity,
  on which the actual annual rate of return is at or below the charitable threshold
  rate. (4) The “charitable threshold rate” means, for each year beginning July 1, a rate that
  is the greater of: two percentage points below the most recent bank prime loan rate
  or one percent. (5) “Eligible housing charity” means a governmental agency or private nonprofit organization
  determined eligible by the Commissioner of Housing and Community Affairs according
  to subsection (d) of this section. (6) “Net income” means interest income received or credited to the taxpayer. (d) Eligibility. Any organization seeking eligibility shall apply to the Commissioner of Housing and
  Community Affairs, who is authorized to issue certificates of eligibility for tax
  credits to eligible housing charities in specific amounts. In no event shall certificates
  of eligibility for tax credits for charitable investments be issued in excess of $5,000,000.00
  in the aggregate for any fiscal year. The Commissioner by rule shall establish procedures
  and criteria for application to ensure the equitable distribution of tax credit certificates
  among eligible applicants. Subject to this limit, the Commissioner shall issue a certificate
  of eligibility to receive tax credit investments to an organization if it meets all
  of the following criteria: (1) It is either an agency or instrumentality of the State, or a private not-for-profit
  organization that has applied for and has not been denied tax-exempt status by the
  U.S. Internal Revenue Service. (2) It has as a major purpose to provide affordable housing. (3) It can demonstrate that as of the date of its application, it had loaned or invested
  at least $50,000.00 for the provision of affordable housing. (4) At least 70 percent of all investments subject to this section are disbursed within
  12 months for: (A) the acquisition, rehabilitation, or construction of affordable housing in Vermont
  by the eligible housing charity; or (B) loans for affordable housing in Vermont; or (C) loans to individual borrowers in Vermont having no more than 100 percent of median
  income of the State or area, whichever is greater. (5) Loans of charitable investments made pursuant to subdivision (4) of this subsection
  shall be at an average rate of interest not more than two percent above the bank prime
  loan rate. (6) It can demonstrate that it has the administrative capacity to segregate funds to comply
  with and account for the requirements of subdivision (4) of this subsection. (e) Revocation. The Commissioner of Housing and Community Affairs may revoke the eligibility of any
  organization under this section after a hearing, upon a finding that it fails to meet
  substantially all of the criteria required for eligibility. Such organization shall
  immediately notify all investors of the revocation. Such organization shall reimburse
  the State for the full amount of any tax credits allowed its investors after revocation
  of eligibility, and shall pay to investors the full amount of any tax credits claimed
  by an investor but disallowed by the Commissioner due solely to revocation of eligibility.
  Any person aggrieved by the denial or revocation of eligibility may appeal to Superior
  Court. (f) Procedure for claiming tax credit. (1) Each eligible housing charity accepting investment funds for which a tax credit may
  be claimed by the investor under this section shall furnish investors with a copy
  of its certificate of eligibility to receive tax credit investments, plus a statement
  of the amount and terms of the investment on a form to be provided by the Commissioner
  of Taxes. The eligible housing charity shall keep a current list of the names, current
  addresses, and taxpayer identification numbers of all investors who may claim a tax
  credit under this section. (2) On or before January 31 of each year, the eligible housing charity shall furnish all
  investors who may claim a tax credit under this section with three copies of a tax
  credit statement, in a form specified by the Commissioner of Taxes, showing the principal
  balance of the investment at the beginning of the previous calendar year or at the
  date of the investment if made during that year, the principal balance at the end
  of the calendar year, the average outstanding principal balance during the year, the
  income that would have been received at the charitable threshold rate, the actual
  income received by or credited to the investor from the eligible housing charity during
  the calendar year and the amount of the tax credit. (3) On or before January 31 of each year, the eligible housing charity shall furnish the
  Commissioner of Taxes with a list of all investors who may claim a tax credit under
  this section, in a form specified by the Commissioner, showing the principal balance
  of the investment at the beginning of the previous calendar year or at the date of
  the investment if made during that year, the principal balance at the end of the calendar
  year, the average outstanding principal balance during the year, the income that would
  have been received at the charitable threshold rate, the actual income received by
  or credited to the investor from the eligible housing charity during the calendar
  year and the amount of the tax credit. (4) Each investor who claims a tax credit under this section shall claim the credit on
  a form to be provided by the Commissioner, which may be combined with the tax credit
  statement furnished by the eligible housing charity pursuant to subdivision (2) of
  this subsection. Each claimant shall also submit with his or her tax return a copy
  of the certificate of eligibility of the eligible housing charity and a copy of the
  tax credit statement furnished by the eligible housing charity. (5) If the amount of allowed tax credit exceeds the taxpayer’s income tax liability for
  the taxable year, the amount thereof that exceeds such tax liability may be carried
  over for deduction from the taxpayer’s income tax liability in the next succeeding
  taxable year or years until the total amount of the tax credit has been deducted from
  tax liability; provided, however, that no tax credit shall be carried over for deduction
  after the third taxable year succeeding the taxable year in which the credit was earned. (6) Investors in an eligible housing charity whose eligibility to receive tax credit investments
  is revoked during any calendar year may receive the credit for the year during which
  the revocation occurs, but not for any succeeding year unless eligibility is reinstated
  by the Commissioner of Housing and Community Affairs. (Added 1989, No. 240 (Adj. Sess.), § 2; amended 2001, No. 144 (Adj. Sess.), §§ 39, 40, eff. June 21, 2002; 2005, No. 116 (Adj. Sess.), §§ 3, 4, eff. April 26, 2006.)