Barge and Rail Usage Tax Credit
The Barge and Rail Usage Tax Credit is available for international trade facilities that transport containers by barge or rail, rather than by trucks or other motor vehicles on Virginia’s highways. The amount of the credit is $25 per 20-foot equivalent unit (TEU), or 16 tons of non-containerized cargo, or one unit of roll-on/roll-off cargo moved by barge or rail.
The credit has a spending cap of $500,000 per fiscal year. Unused credits may be carried forward for five years. Application for credits must be made to, and the credits are issued by, the Commonwealth of Virginia Tax Commissioner.
The company must be an international trade facility. For purposes of this credit, “international trade facility” is defined as a company:
- Doing business in Virginia.
- Engaged in port-related activities including, but not limited to, warehousing, distribution, freight forwarding and handling, and goods processing.
- With sole discretion and authority to choose the method used to move cargo originating or terminating in Virginia.
- Using maritime port facilities located in Virginia.
- Using barges and rail systems to move cargo containers through port facilities in Virginia rather than trucks or other motor vehicles on Virginia’s highways (see Code of Virginia § 58.1-439.12:09(A)).
- Cargo qualifying for this credit must result from a diversion of shipments from Virginia’s highways.
The company entitled to claim the credit is the company that:
- Has ownership of the cargo at some point while it is being transported through Virginia (including upon shipment or on delivery).
- Has control over the method used to move the cargo in Virginia. Ownership is determined by the terms of the contract between the two parties and is evidenced by the bill of lading.
Only cargo being shipped through maritime port facilities qualifies for purposes of this credit. A maritime port facility is the port in Virginia where the cargo is first loaded to or unloaded from a ship or barge. Shipments through inland ports or any other facility where cargo may be reshipped do not qualify for a second credit.
Only international shipments qualify for the Barge and Rail Usage Tax Credit. Shipments to a Virginia port from another state, or domestic exports from Virginia, do not qualify for this credit.
- Taxpayers apply to the Department of Taxation by completing Form BRU. This form and any supporting documentation must be completed and mailed no later than April 1 of the year following the taxable year during which credits were earned.
- Taxpayers verify containers shipped through Virginia Port Authority-operated port facilities on the Virginia Port Authority’s website.
- A validation summary must then be attached to Form BRU. If any containers were shipped through facilities not owned by the Virginia Port Authority, these containers should be listed on a schedule that must be attached to Form BRU.
- The Department of Taxation reviews all applications for completeness and notifies taxpayers of any errors by June 1 of the calendar year in which Form BRU was submitted.
- If any additional information is needed, it must be provided no later than June 15 of that year to be considered for the tax credit.
- The Department of Taxation notifies all eligible taxpayers of the amount of allocated credits by June 30 of the calendar year in which Form BRU was submitted.
- Upon receiving notification of the allowable credit amount, taxpayers may claim this amount on the applicable Virginia income tax return. Taxpayers are responsible for retaining documentation regarding the number of containers shipped by barge and rail during each taxable year, including a bill of lading for each container transferred by barge or rail. The bill of lading must contain the following information: port of entry, shipment date, container numbers, and origin and destination of shipments. Taxpayers are also responsible for retaining any other necessary supporting documentation. This information must be provided by the taxpayer upon request.
Can the allowable credit exceed a taxpayer’s tax liability?
No, the allowable credit may not exceed the taxpayer’s tax liability.
Do domestic exports qualify for this credit?
No, only international shipments qualify for the Barge and Rail Usage Credit.
What is considered a “maritime port facility”?
A maritime port facility is the port in Virginia where the cargo is first loaded to or unloaded from a ship or barge. Only cargo being shipped through maritime port facilities qualifies for purposes of this credit.
What is an “LCL”?
A less than container load (LCL) is cargo insufficient in either weight or volume to qualify for the freight rates that apply to a standard shipping container and is therefore combined with cargo owned by other shippers or with cargo intended for at least one other consignee. An LCL does not qualify as a TEU for purposes of this credit.
What is the maximum amount of credits that may be claimed in a year?
The total amount of Barge and Rail Usage Tax Credits granted cannot exceed $500,000 in any fiscal year. If the amount of credits applied for exceeds $500,000, the Department will allocate all credits on a pro rata basis.
Where must applications for the tax credit be sent?
All applications must be sent to:
Virginia Department of Taxation
Tax Credit Unit
P.O. Box 715
Richmond, VA 23218-0715