Bank Franchise Tax

In Virginia, a franchise tax is imposed on the net capital of banks and trust companies.

• What to File
• When to File
• Where to File
• Assessment of Tax
  • Tax Rate and Local Credit
  • Penalty and Interest

What to file

Form 64 and Instructions

Official Report of Condition and Income

Each Bank Franchise Tax return must include a copy of the official report of condition and income of the bank or trust company that was filed with the comptroller of the currency or with the State Corporation Commission as of the close of business December 31 of the preceding year.

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When to file

Returns are due on or before March 1 of each tax year. There is no filing extension available.

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Where to file

Submit two copies of Form 64 and all schedules with the Commissioner of the Revenue for the county or city in which the principal office of the bank or trust company is located.

The bank is also required to submit one copy of Schedule C and H to the assessing officer of every city, incorporated town and county where a branch is located.

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Assessment of Tax

The Commissioner of the Revenue will certify one copy of the return and send it to the Department. The Department will issue a Notice of Assessment to each bank on or about May 1 of the taxable year. Payment is due by June 1.

Tax Rate and Local Credit

• State Tax – $1 per $100 of taxable value on January 1 of each year except for new banks.
  • New Banks – The bank franchise tax for new banks will be prorated as follows:
    • First transacting business before March 31, $1 on each $100 of net capital, no proration.
    • First transacting business between April 1 and June 30, 75 cents on each $100 of net capital.
    • First transacting business between July 1 and September 30, 50 cents on each $100 of net capital
    • First transacting business between October and December 31, 25 cents on each $100 of net capital.

• Local Tax – Any city, county or town may impose a tax not to exceed 80 percent of the state rate of taxation.
  • Local Credit – A credit is allowed for amounts paid to cities, town or counties for taxes assessed on a bank’s net capital.

Penalty and Interest

Any bank that fails to file and pay the tax will be subject to a 5 percent penalty of the tax due.

Interest is charged on any unpaid tax due from the payment due date until the Department receives the tax payment. Interest is calculated at the rate established by the current Internal Revenue Service underpayment rate plus 2 percent.
 

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Last Updated 9/20/2012 8:23