The Washington Department of Revenue has provided guidance regarding changes to the Main Street Tax Credit program. Effective January 1, 2018, the statewide annual Main Street Tax Credit increases from $1.5 million to $2.5 million. Other changes made to the program include:
- Application process opens the second Monday in January.
- For the first quarter of each year, the individual organization’s cap is based on an even allocation method.
- Credit forfeiture for businesses that do not make the total approved contribution by November 15.
Main Street Tax Credit Program
Under the Main Street Tax Credit Program, businesses can contribute to local downtown organizations participating in:
- the Washington State Main Street Program; or
- the Main Street Trust Fund.
In return, businesses receive a credit against their Business and Occupation (B&O) or Public Utility Tax (PUT) liability. The credit equals:
- 75% of the contribution made to a qualifying non-profit organization in the Main Street Program; or
- 50% of the contribution made to the Main Street Trust Fund.
Obtaining the Credit
To qualify for the credit, the business must file electronically (E-file) with the Department of Revenue. To receive a credit, businesses must apply with the department, beginning the second Monday in January. When applying for the tax credit, a business needs to know:
- how much it intends to contribute; and
- to which program or trust fund.
The department must approve or deny applications applying within 45 days. The department approves applications on a first-come basis.
Total contributions made per business to qualifying programs and the Main Street Trust Fund may not exceed $250,000 in a calendar year. The total credits allowed for contributions made to each qualified program may not exceed $100,000 in a calendar year. For the first quarter of each year, the individual organization’s cap is based on an even allocation method—the total statewide cap of $2.5 million is divided by the number of eligible organizations and the Main Street Trust Fund.
The department evenly allocates the credits applied for between the second Monday of January through March 31 of each year. On April 1, eligible Main Street Communities may receive additional contributions. The department distributes the funds on a first-come basis up to the $133,333.33 individual program cap.
A business must make their total approved contribution to the designated Main Street Community or Main Street Trust Fund by November 15 of the same year they applied for the credit. If a business misses the November 15 deadline, the business forfeits the credits, and they become available to new applicants. A business approved for credit after November 15 must make the total contribution by the end of the calendar year in which the contribution was approved.
Taking the Credit
A business may use the credit by reporting it on any excise tax return(s) that are due during the calendar year after the year in which it was approved and contributed. However, for a business to use the full credit, they must have a B&O tax/PUT liability equal to or exceeding the amount of the credit. Taxpayers cannot carry credits forward from year-to-year or get a refund.
Special Notice, Washington Department of Revenue, October 11, 2017, ¶204-293