Document Number
76-182
Tax Type
General Provisions
Description
1976 Legislative Digest
Topic
Reports
Date Issued
07-01-1976

1976
Legislative Digest

VIRGINIA DEPARTMENT OF TAXATION
































CONTENTS




PREFACE

PART I. HOUSE OF DELEGATES BILLS

PART II. SENATE BILLS

PART III. JOINT RESOLUTIONS

INDEX
PREFACE

This digest is published by the Department of Taxation as a convenient reference guide to bills affecting state and local taxation that were enacted by the 1976 Session of the General Assembly. It is not intended as a definitive interpretation of the law, but should be useful to state and local officials as well as citizens in understanding the legislation.

For each bill, accompanied by its chapter number in the 1976 Acts of Assembly, an explanation is given as briefly as possible. Each summary concludes with the effective date of the act.

Bills are ordered numerically in the digest, House bills beginning on page 1, Senate bills on page 12, and joint resolutions on page 18. A subject index to the digest is also provided on page 19.

PART I

HOUSE OF DELEGATES BILLS

HOUSE BILL NO. 33 (Chapter 174)

This act amends § 15.1-773 to provide that in certain localities with departments of assessment the board of supervisors shall appoint a board of equalization composed of not less than three nor more than nine members for terms varying in duration, but not to exceed four years. The act is effective July 1, 1976.

HOUSE BILL NO. 102 (Chapter 485)

This act amends § 58-381.1 to subject each nonprofit antique, art, or craft show and sale to a $30 state license tax. Each antique, art, or craft show and sale operated for profit would be subject to a $200 state license tax along with other shows and sales. This act is effective for tax years beginning on and after January 1, 1977.

HOUSE BILL NO. 116 (Chapter 486)

This act amends Chapter 612 of the 1975 Acts of Assembly to extend the deadline for compiling the inventory of tax exempt real property for each county, city, or town. Under Chapter 612, which had added the new § 58-14.1 to the Code, all localities must complete this inventory by January 1, 1978. This act delays the requirement to inventory and assess the fair market value of tax exempt or tax immune real estate until the completion of the next annual or general reassessment of real estate after July 1, 1975.

HOUSE BILL NO. 152 (Chapter 58)

This act adds a new § 58-769.6:1 to allow a city to provide for the special assessment of the agricultural, horticultural, forest and open space real estate only in an area newly annexed by the city and only for the tax year immediately following annexation. The act contains an emergency clause and is effective March 13, 1976.

HOUSE BILL NO. 160 ( Chapter 53)

This act amends § 58-266.1:1 to authorize a county or city to increase the local option license tax rate on the severance of coal and gas from the present one-half of one percent to one percent of the gross receipts. The act also amends § 58-774 to authorize a county or city that does not impose the license tax but elects to impose a severance tax on coal and gas in lieu of assessing the mineral lands that are improved and under development, to increase its rate from one-half of one percent to one percent. The act is effective July 1, 1976.

HOUSE BILL NO. 166 (Chapter 751)

This act provides for the submission of amendments to the Constitution of Virginia to the voters in a referendum to be held on the Tuesday after the first Monday in November, 1976. The amendments were proposed by the 1975 Session (House Joint Resolution No. 209 - Chapter 653) and by the 1976 Session (House Joint Resolution No. 10), and include four amendments to § 6 of Article X relating to property exempt from taxation.

The amendments would authorize the General Assembly to exempt from state and local taxation land subject to a perpetual easement permitting inundation by water and to exempt the following property from local real property taxes, or a portion thereof: real estate owned and occupied by persons permanently or totally disabled; any property, including real or personal property, equipment, facilities, or devices, used for the purpose of transferring or storing solar energy; and tangible farm property and products. If these constitutional amendments are approved by the voters, they will become effective on January 1, 1977.

HOUSE BILL NO. 192 (Chapter 489)

This act amends § 58-441.2 to exclude from the sales and use tax tangible personal property purchased for use or consumption by nonprofit hospital cooperatives or nonprofit hospital corporations which are operated solely for the purpose of providing services to nonprofit hospitals. The act is effective July 1, 1976.

HOUSE BILL NO. 228 (Chapter 311)

This act amends § 58-1130, concerning the correction of erroneous assessments of taxes administered by the Department of Taxation. The act changes the word "person" to "taxpayer," making it clear that it is to the county or city in which the taxpayer resides, as opposed to any other interpretation of "person," that the taxpayer may apply for relief. The act is effective July 1, 1976.

HOUSE BILL NO. 334 (Chapter 567)

This act amends §§ 58-685.11, 58­685.12, and 58-685.23, to increase as of January 1, 1977, the state motor vehicle sales tax from two percent to three percent on the sale of mobile homes, exclusive of the value of any trade-in at the time of sale. The revenue collected from the sales tax on mobile homes will no longer be state special fund revenue but will be distributed to the city, county, or town in which the mobile home is to be situated as a dwelling.

The act also amends §§ 58-829.3 and 58-851 to provide that as of January 1, 1977, mobile homes are separate items of tangible personal property for local taxation, provided that the ratio of assessment and the rate of tax on the mobile home category are the same as the ratio and rate on real property. The act further provides that any city or county to which a mobile home is delivered or moved after January 1 of the tax year and used as a full-time residence, may quarterly prorate any property taxes which would have been due if the mobile home had been situated there on January 1.

The act also repeals as of December 31, 1979, §§ 35-61, 35-62, and 35­63, sections which permit counties to regulate and impose a license tax upon the operation of a trailer camp. The act repeals as of December 31, 1979, § 35-62.1, permitting a county adjoining a county having a population of more than 1,000 per square mile to impose a tax not exceeding $100 per year on house trailers kept on property other than that owned by the person residing in such trailer. § 58­766.2, allowing a city or county to require a permit for the parking of a mobile home, is also repealed as of December 31, 1979. § 58-­829.4, authorizing a tax on owners of mobile homes in Culpeper County only, is also repealed as of December 31, 1979.

Also, §§ 35-64.1 through 35-64.6, permitting any political subdivision to impose license taxes on the operator or owner of trailer parks, trailer camps, and on the person parking a trailer on an individual lot not in a park or camp, are repealed as of December 31, 1979. However, effective January 1, 1977, and until the repeal of § 35-64.5, the license tax rates are frozen at the December 31, 1975 level, and any taxes imposed or increased under this section since that date must be refunded.

The act is effective January 1, 1977, except that the repealing of sections repealed by the act is effective on December 31, 1979.

HOUSE BILL NO. 386 (Chapter 518)

This act amends § 58-847 to authorize counties, cities, and towns to impose a penalty for failure to obtain local licenses on time; to increase the maximum penalty from two dollars to ten dollars for delinquent license applications and other local tax returns; and to provide that the penalty for failure to file an appli­cation or return may be assessed when it is one day late. The act is effective July 1, 1976.

HOUSE BILL NO. 402 (Chapter 519)

This act amends § 58-476.6 to change from February 1 to March 1 the date for filing copies of the bank stock tax return in counties, cities, or towns where branches are located, thereby coinciding with the date that the original return is required to be filed in the main office location. The act is effective July 1, 1976.

HOUSE BILL NO. 426 (Chapter 716)

This act amends § 58-834.1 to establish that certain receptacles used for the storage of cargo, merchandise, or equipment do not acquire or establish situs for the purpose of personal property taxation when employed by vessels engaged in interstate or foreign commerce. The act also adds a new § 58-834.2 to provide that goods imported in foreign commerce do not acquire a situs for property taxation in the Commonwealth or any county, city, or town until they lose their status as imports. They would lose their status as imports when the container in which they were shipped is opened, or, for goods which are not packaged, when such property has reached its second place of rest or storage after being unloaded, after initial sale, or after such goods have been committed by the importer to current operational needs.

This bill is intended to clarify the situs of tangible personal property for tax purposes in light of the U. S. Supreme Court's 1976 decision in Michelin Tire v. Wages.

The act contains a severability clause so that if any part or applica­tion of the act is held invalid by a court of record from which no appeal may be taken, then all other parts and applications of the act would still be in full force and effect insofar as possible. The act is effective July 1, 1976.

HOUSE BILL NO. 441 (Chapter 521)

This act amends § 58-266.1 to continue the local license tax freeze that was enacted at the 1975 session of the General Assembly but expired on December 31, 1975. The freeze will now expire on April 1, 1977. Any jurisdiction that has increased its license tax rates beyond the rates applicable on February 1, 1976, would be required to roll them back to that level. This bill applies not only to local license taxes imposed pursuant to § 58-266.1, but also to licenses imposed pursuant to any other provisions of law or charter. The only exception to this application is the local severance tax on coal and gases in § 58-266.1:1. The act contains an emergency clause and is effective April 6, 1976.

HOUSE BILL NO. 450 (Chapter 523)

This act amends § 58-412 to treat the machinery and tools used in the dry cleaning and laundry business the same as machinery and tools used in manufacturing, mining, processing or reprocessing, radio or television broadcasting or dairy business, and to tax it as machinery and tools rather than tangible personal property. Motor vehicles and delivery equipment of dry cleaning and laundry businesses will continue to be taxed as tangible personal property. All other tangible personal property of dry cleaning and laundry businesses, such as fixtures and furniture, will be taxed by the state as capital. The act is effective January 1, 1977.

HOUSE BILL NO. 455 (Chapter 757)

This act adds new §§ 10-197 through 10-213 to establish the Virginia Litter Control Act, to impose a litter tax, and to provide penalties for littering. A litter tax, effective only for the taxable years beginning in 1976, is to be levied at the flat rate of two dollars and fifty cents on every manufacturer, wholesaler, distributor, or retailer of litter related products which include but are not limited to the fifteen categories listed in the act. The tax will be collected by the Department of Taxation in the same manner as the income tax, as provided by regulations promulgated by the department. The act also supersedes and preempts, until June 30, 1977, any local ordinance not enacted prior to January 1, 1976, which requires a deposit on a disposable container or package.

The act requires three state agencies, the Departments of Highways and Transportation, Taxation, and Conservation and Economic Development, to study the various aspects of litter control and litter taxation and to report their findings by November 30, 1976, to the Governor and the General Assembly.

The act also amends § 18.2-140 to delete references to littering. The act is effective July 1, 1976.

HOUSE BILL NO. 491 (Chapter 527)

This act amends § 58-847 to provide that no penalty may be imposed on a taxpayer when the commissioner of the revenue or the assessing officer makes an assessment on real or personal property, machinery and tools, or merchants' capital within the two weeks prior to the day the taxes are due, provided that the late assessment is made through the fault of a local official, and provided that the assessment is paid within two weeks after the notice is mailed. This provision, however, excludes penalties for assessment of omitted taxes or levies under §§ 58-1164 or 58-1165. The act is effective July 1, 1976.

HOUSE BILL NO. 502 (Chapter 717)

This act amends §§ 58-764, 58-776, 58-776.1, 58-778, 58-784.3, 58-784.5, 58-792, and 58-795. The act requires cities and counties to reduce the time between general reassessments of real estate from 4 to 2 years in cities, and from 6 to 4 years in counties. The act also adds a new § 58-778.1 to enable counties and cities to decide for themselves if annual or biennial reassessments would better serve their needs. The biennial assessment, which may be completed during an entire two year period, must employ the same standards of value for all appraisals made during the period, and there must be employed a full time real estate appraiser or assessor certified by the State Tax Commissioner.

The act also repeals §§ 58-776.5, 58-776.6, 58-776.7, 58-780, 58-780.1, 58-782, 58-783, 58-784, 58-784.2, 58-784.4, 58-792.1, 58-792.2, 58­792.3, 58-792.4, 58-792.5, and 58-795.1, relating to general reassessments of real estate in cities and counties. The act is effective January 1, 1977.

HOUSE BILL NO. 507 (Chapter 528)

This act amends § 58-151.013 to permanently freeze the Virginia standard deduction provisions at the levels in existence on December 31, 1974, in § 141 of the Internal Revenue Code of 1954. The temporary freeze enacted during the 1975 General Assembly expired for taxable years beginning after December 31, 1975. The extended, permanent freeze avoids a state revenue loss of at least $51 million during the 1976-78 biennium, which would have resulted from the state's conforming to the increasingly liberal standard deduction provisions of the federal income tax law. The act is effective for taxable years beginning on and after January 1, 1976.

HOUSE BILL NO. 556 (Chapter 675)

This act amends §§ 58-847 and 58-963 to allow the governing body of a locality to waive penalties and interest assessed for failure to file a return or pay any real estate, tangible personal property, or intangible personal property taxes, if such failure was not in any way the fault of the taxpayer. This act is effective July 1, 1976.

HOUSE BILL NO. 564 (Chapter 676)

This act amends § 58-760 to clearly indicate that all real estate shall be assessed at 100 percent of fair market value, except certain public service corporation property under § 58-512.1, beginning with the general reassessment or annual assessment which is effective on or after January 1, 1977. Furthermore, the act provides that during any year when the equalized portion of public service corporation property is assessed at a different ratio than the true local assessment ratio for that year as determined by the Department of Taxation's ratio study, the difference and interest will be applied to the public service corporation's subsequent year's tax liability. The rate of interest will be that as established by § 6621 of the Internal Revenue Code of 1954, as amended. This rate, presently 7 percent, is tied to the prime rate of interest charged by banks to major high quality corporations.

The act also amends §§ 58-786, 58-787, and 58-790 to specify that the circuit court of each county or city will appoint the assessors responsible for performing the general reassessment. If the court is not in session, a judge of the court may make this appointment. Moreover, this appointment must be made on or after July 1 of the year immediately preceding the year in which the general reassessment is required to be performed.

Finally, the act allows the people designated to perform the general reassessment to begin the work as soon as practicable after appointment, instead of after January 1 of the year they are appointed to serve. The act is effective July 1, 1976.

HOUSE BILL NO. 606 (Chapter 532)

This act amends § 58-806 to place a deadline by which date a commissioner of the revenue must deliver copies of the land book to the treasurer of his county or city and to the Department of Taxation. The deadline is September 1 or within 90 days from the date on which the rate of tax on real property has been determined, whichever is later. The Department of Taxation may extend the time limits for good cause. The act is effective for tax years beginning on and after January 1, 1977.

HOUSE BILL NO. 679 (Chapter 543)

This act amends § 58-760.1 to change the dates for filing applications for exemption or deferral of real estate taxes by certain elderly persons. The act retains the opening filing date of February 1, but provides that the latest date for filing is May 1, or a later date as may be fixed by local ordinance. The act contains an emergency clause and is effective April 6, 1976.

HOUSE BILL NO. 687 (Chapter 679)

This act amends § 58-903 to permit the governing body of any county or city, by local ordinance, to set a filing deadline for applications of relief to the local board of equalization. This deadline, however, may not be earlier than 30 days after the termina­tion of the date set by the assessing officer to hear objections to the assessments. The act also allows the governing body, by local ordinance, to establish a deadline by which all applications must be finally disposed of by the board of equalization. Finally, the act requires that all such deadlines be clearly stated on the notice of assessment. The act is effective July 1, 1976.

HOUSE BILL NO. 704 (Chapter 764)

This act amends § 58-441.6 to create an exemption from Virginia sales or use taxes for "advertisement and promotional materials, catalogs, envelopes used in distributing such materials and other similar material temporarily stored in this state for future distribution outside the state either singly or physically attached to other tangible personal property."

This exemption would apply to advertising brochures, mail order catalogs, price lists, and advertising flyers. In addition, it would apply to an promotional material given away, such as pens, pencils, calendars, note pads, date books, rulers, rain caps, matches, candy, golf balls, and paperweights. Any of these could be purchased from Virginia suppliers or out-of-state suppliers and temporarily stored in Virginia for future distribution outside the state. Many types of firms will be granted an exemption on the purchase of the above listed items and include manu­facturers, distributors, wholesalers, transportation firms, trade asso­ciations, financial institutions, life insurance companies, some large retailers, major hotels and motels, and tourist attractions. The act is effective July 1, 1976.

HOUSE BILL NO. 718 (Chapter 547)

This act amends § 58-837 to require every person who has leased tangible personal property or machinery and tools from an owner on January 1 to file a return with the commissioner of the revenue of the county or city where such property is located. The return must include the name and address of the owner. An exception is provided for lessees of motor vehicles subject to the 2 percent titling tax. The act is effective January 1, 1977.

HOUSE BILL NO. 731 (Chapter 680)

This act amends §§ 22-223, 22-228, 37.1-96, and 58-441.48 to include in the school age population all persons between the ages of two and twenty-one that the Department of Mental Health and Mental-Retardation determines could benefit from a program of education or training. This act is effective July 1, 1976.

HOUSE BILL NO. 893 (Chapter 686)

This act amends § 58-512.1 to permit localities which assess periodically and also assess at 100 percent of fair market value to set a tax rate on unequalized public service corporation property so that the effective tax rate on it is no higher than the effective tax rate on all other property. At the present time, because unequalized public service corporation property is assessed at 40 percent while all other property is assessed at 100 percent, the effective tax rate on unequalized public service corporation property is lower than all other. This act allows the nominal rate on unequalized property to be increased to the point where the effective tax rates on all property would be equal. The act also requires that when a city or county assesses at 100 percent of fair market value pursuant to § 58-760, it must report this to the State Corporation Commission by the effective date of the assessment. This act is effective for tax years beginning on and after January 1, 1977.

HOUSE BILL NO. 894 (Chapter 687)

This act amends § 58-514.2 to clarify that a locality may continue to tax classes of public service corporation property assessed as tangible personal property before January 1, 1966, as tangible personal property at rates no higher than those on other tangible personal property on January 1, 1966. The act contains an emergency clause and is effective for tax years beginning on and after January 1, 1976.

HOUSE BILL NO. 950 (Chapter 770)

This act amends § 58-441.6 and adds new §§ 58-441.5:1 and 58-441.52 to allow multi-member transportation districts to impose by local ordinance up to a 4 percent tax on the retail sales price of all motor fuel subject to the motor fuel tax under Chapters 13 and 14 of Title 58, which is to be added to the retail pump price of such motor fuel where applicable. This act would apply only to those transportation districts existing on January 1, 1973. The revenues would be distributed back to the transportation districts imposing this tax by point of sale, with revenues earmarked for roads and other transportation purposes as determined by the local governing bodies for a uniform use within the district. The new law is subject to all provisions of the Retail Sales and Use Tax Act and allows dealers a three percent discount on the tax collected for the expense of collecting and remitting the tax for all returns that are filed on time. The act is effective July 1, 1976, and expires on July 1, 1978.

HOUSE BILL NO. 1008 (Chapter 55)

This act amends § 58-769.11 to clarify that the suggested ranges of use-values submitted by the State Land Evaluation Advisory Committee on or before October 1 of each year are to be effective the following January 1, or July 1 in the case of localities with a fiscal year assessment. The act is effective July 1, 1976.

HOUSE BILL NO. 1012 (Chapter 558)

This act amends § 58-54.1 to exempt from the recordation tax grantors who convey real estate to the state or any county, city, town, district or other political subdivision, if such political unit is required by law to reimburse the party or parties taxable pursuant to this section. This act contains an emergency clause and is effective April 6, 1976.

HOUSE BILL NO. 1066 (Chapter 560)

This act adds a new § 58-­829.1:1 to add a section classifying farm animals, certain grains and feeds, farm machinery, and farm implements and allowing a locality to exempt in whole or in part from tangible personal property taxation all or any of the listed classes. The act is effective January 1, 1977, provided that the Constitution of Virginia is amended on that date to permit exemption of farm property and products. (According to the provisions of House Bill No. 166 and House Joint Resolution No. 10 enacted at the 1976 Session, this amendment to the Constitution will be referred to the voters in the November, 1976, referendum.)

HOUSE BILL NO. 1076 (Chapter 690)

This act amends § 58-1152.1 to provide that a locality may by ordinance permit a commissioner of the revenue to exonerate erroneous local levies. The commissioner of the revenue shall certify to the tax collecting official the amount erroneously assessed, and such official shall refund the amount paid in error together with any penalties or interest paid thereon. No refund can be made more than two years after payment. The act is effective July 1, 1976.

HOUSE BILL NO. 1090 (Chapter 719)

This act amends §§ 58-266.1, 58-356, 58-357, 58-359, 58-360, and 58-361.1, and repeals §§ 58-355, 58-361, 58-362, 58-362.1, 58-365, 58-366, 58-367, 58-367.1, 58-367.2, 58-368, 58-369, 58-369.1, 58-397, 58-397.1, and 58-397.2. The act abolishes the state license taxes on coin machines and on coin machine operators, including merchants placing vending machines, and allows instead only localities to impose the taxes. The local license tax may be levied on any person, firm, or corporation who owns three or more coin machines and who operates them on property not owned or leased by him. The license tax may be imposed in any amount not exceeding $200. The act requires that localities issue license stickers to be attached to the machines as evidence of payment. In addition, the act permits localities to levy a tax on the gross receipts of coin machine operators. The act is effective January 1, 1978.

HOUSE BILL NO. 1219 (Chapter 568)

This act adds new §§ 58-759.1 and 58-759.2 to require separate classifications of property for rehabilitated residential buildings and for rehabilitated commercial or industrial buildings. The act permits a local governing body to set a tax rate on such classifications of property which is less than the tax rate on all other real estate. "Rehabilitated" residential buildings are those that are at least 30 years old and which are improved to such an extent that their value increases by at least $5,000. Commercial and industrial buildings qualify if they are more than 45 years old and have increased in value by at least $25,000 through improvements. These separate classifications could be used for a ten year period of time. The act is effective January 1, 1977.

HOUSE BILL NO. 1241 (Chapter 564)

This act amends § 56-304.5 to ensure compliance on Virginia income taxes by all motor carriers, both resident and nonresident, by forbidding the issuance of any warrant, exemption card, registration card, or stamp by the State Corporation Commission until all income taxes due are paid. The State Tax Commissioner would be required to notify the State Corporation Commission of all applicants who have failed to pay all due Virginia income taxes. The act is effective July 1, 1976.

HOUSE BILL NO. 1245 (Chapter 781)

This act amends § 58-151.013 and adds a new § 58-151.014:1 to eliminate the current retirement income exclusions and to replace them with a Virginia retirement income tax credit for persons age 62 and over who meet specific income limitations. It would grant tax relief to low and middle income elderly taxpayers with all types of taxable income instead of granting relief solely on the basis of retirement income from a particular sector such as the military or federal civil service.

The maximum base of the credit would be set equal to the maximum social security benefit payable and would be adjusted annually for any changes. The maximum base of the credit would be reduced by actual social security and/or railroad retirement benefits that the individual has received during the year and by twice the amount of adjusted gross income in excess of $12,000. The credit would be computed at the rate of 5 percent and would be limited to no more than the actual tax liability of the individual. Benefits paid by the Virginia Supplemental Retirement System would remain fully excludable, provided the taxpayer does not opt to claim the credit. Thus, VSRS annuitants would be able to choose the form of tax relief most beneficial to them but would be unable to take advantage of both forms of tax relief. These changes will have no effect on state revenues. The act is effective for taxable years beginning on and after January 1, 1976.

HOUSE BILL NO. 1252 (Chapter 565)

This act amends §§ 58-587.1 and 58-617.2 to change the date of the so-called "grandfather clause" on the maximum limit of the local consumer utility tax. Under the current law if a locality, prior to January 1, 1972, had a rate higher than the maximum limit, the locality could continue to impose the tax at the higher rate. This bill would make the effective date July 1, 1972, rather than January 1, 1972. The act is effective July 1, 1976.

HOUSE BILL NO. 1253 (Chapter 720)

This act amends §§ 58-151.067 and 58-151.090 to conform the extension of time provisions for filing the state income tax return to the federal provisions. The act requires that before an extension for filing is granted, the taxpayer -- individual, fiduciary, or corporation -- file a tentative tax return prior to the due date for filing the return in question and pay in full the estimated tax due based on the tentative return. A penalty would be assessed for underestimation of tax due on a tentative return if the underestimation exceeds 10 percent of total tax liability. The act is effective July 1, 1976.
PART II

SENATE BILLS

SENATE BILL NO. 31 (Chapter 418)

This act amends § 58-758.1 to clarify the leasehold interest statute. The act allows an exemption from property taxation for only a leasehold interest in the tax exempt property of a governmental agency where the property is leased to a marine terminal operator or other person whose use of the property promotes the governmental purposes set out in Chapter 10 of Title 62.1, as amended. The act also includes in the formula for computation of a leasehold interest all renewal terms that can be invoked without the consent of the lessor. The act contains an emergency clause and is effective January 1, 1976.

SENATE BILL NO. 82 (Chapter 663)

This act adds a new § 58-46.3 to authorize the Department of Taxation, according to existing departmental regulations, to continue to require a taxpayer to supply his social security account number for any purpose relating to taxes administered by the department, including verification of the taxpayer's identity. Furthermore, the act provides that these numbers are confidential tax information protected by § 58-46 of the Code of Virginia, relating to secrecy of tax information.

This act is necessary in light of the limitations placed on governmental use of the social security account number by the 1974 Federal Privacy Act. Since the social security account number is used by Virginia for matching state income tax records against the federal, as well as for record identification purposes for other state taxes, it is necessary to ensure that Virginia's instructions and regulations requiring the social security account number have the authority of law. The act is effective July 1, 1976.

SENATE BILL NO. 83 (Chapter 422)

This act amends § 58-435 to place a statute of limitations in the capital tax law, giving the Department of Taxation authority to make additional assessments on capital not otherwise taxed during the entire current year for any of the three prior tax years. In other words, assessments can be made within three years from December 31 of the year in which the tax became due and payable. The act further provides that assessments may be made for as many as six years in those cases where no returns were filed. The act also deletes the unnecessary words "corporation or hustings court." Under the reorganization of the court system in 1973, the term "circuit court" applies now in cities as well as in counties. The act is effective for tax years beginning on and after January 1, 1976.

SENATE BILL NO. 87 (Chapter 456)

This act amends §§ 58-1140.1 and 58-1160 to conform all interest provisions on reporting and payment of taxes and on overpayments of taxes administered by the Department of Taxation to the interest rate established by § 6621 of the Internal Revenue Code of 1954, as amended. The interest rate established by this act will apply to all overpayments of tax refunded on and after July 1, 1976, and to all amounts outstanding and payable to the department on July 1, 1976, or arising thereafter.

SENATE BILL NO. 89 (Chapter 375)

This act amends § 58-441.3 to define "motor vehicle" in the Retail Sales and Use Tax Act as a "motor vehicle" as it is defined in the Motor Vehicle Sales and Use Tax Act at § 58-­685.11(3). This act is necessary in order to grant the Department of Taxation the authority to impose the four percent sales or use tax on such vehicles as mini-bikes, trail bikes, and any other vehicles not titled or required to be titled by the State Division of Motor Vehicles. The act is effective July 1, 1976.

SENATE BILL NO. 92 (Chapter 423)

This act amends § 58-162 to ensure that the Virginia inheritance tax imposed on a limited power of appointment will not be considered in computing the federal credit for state death taxes. This will not result in any tax increase, but rather will allow Virginia to take complete advantage of the federal credit. The bill also updates the references to the Internal Revenue Code by striking the obsolete table of rates. The act is effective July 1, 1976.

SENATE BILL NO. 148 (Chapter 693)

This act amends § 4-15.1 to increase the tax on alcoholic beverages and wines sold in A.B.C. stores from 14 to 15 percent and the tax on wines sold by retailers from 10 to 11.5 percent. The act also provides that the local share of A.B.C. profits shall be at least the amount distributed to localities for fiscal year 1975-76. The rate increases provided for by this act will generate approximately $4 million in additional general fund revenue for the 1976-78 biennium. After July 1, 1978, the tax increases will be appropriated to the Commissioner of Mental Health and Retardation for the program of prevention and treatment of alcoholism. The act is effective August 1, 1976.

SENATE BILL NO. 170 (Chapter 427)

This act amends § 58-16.2 to correct a typographical error in the section as it had been amended by the 1975 Session. The act deletes a comma between the words "private" and "educational" to clear up any questions regarding the applicability of a service charge to property used for private as well as other educational purposes. The act contains an emergency clause and is effective July 1, 1975, and for the following taxable years.

SENATE BILL NO. 195 (Chapter 694)

This act amends § 58-151.013 to make taxable the dividends paid by all corporations, including state and national banks, except those paid by Domestic International Sales Corporations (DISCs). This act will generate approximately $8 million for the 1976-78 biennium in additional income tax revenue. The act is effective for taxable years beginning on and after January 1, 1976.

SENATE BILL NO. 200 (Chapter 428)

This act amends § 58-983 to extend the length of time that the local treasurer has to collect delinquent real estate taxes from the present three years from the original due date to the December 31st immediately following the third year from the original due date. This extended time is permitted only if the clerk has not recorded a lien on the property in the delinquent land book. The act is effective July 1, 1976.

SENATE BILL NO. 233 (Chapter 711)

This act adds a new § 58-778.1 to allow any city or county with at least one full-time real estate appraiser or assessor certified by the State Tax Commissioner to provide by ordinance for the biennial assessment of real estate. The act further provides that any locality utilizing this option has two years to complete the assessment and must use the same standards of value for all appraisals made during this period. (See House Bill 502 - Chapter 717.) The act is effective July 1, 1976.

SENATE BILL NO. 235 (Chapter 777)

This act amends § 58-519 to decrease the state's franchise tax on railway companies from the present 1.5 percent to 1.0 percent of gross Virginia transportation receipts. The reduction is to be phased in over a five year period starting on January 1, 1979:
          • Calendar Year Tax Rate
            1978 (present rate) 1.5 percent
            1979 1.4 percent
            1980 1.3 percent
            1981 1.2 percent
            1982 1.1 percent
            1983 and thereafter 1.0 percent

This act will cause a loss of state general fund revenue estimated to be as follows: -$0.3 million (1978-79); -$0.8 million (1979-80); -$1.5 million (1980-81); -$2.2 million (1981-82); -$3.0 million (1982-83).

SENATE BILL NO. 238 (Chapter 695)

This act amends §§ 4-40 and 4-108 to increase the excise tax on beer and 3.2 beverages by 0.6 cent per twelve ounce bottle or can. This represents a 30 percent increase in the tax. A proportionate increase would be imposed on all other container sizes in which beer and 3.2 beverages are sold. The act contains a floor tax provision whereby the increased rate will be applicable to beer and 3.2 beverages in the hands of retailers on the effective date of the act. This will prevent retailers from building up their inventories in anticipation of the increase.

The act also repeals §§ 4-40(j) and 4-108(g) which are no longer applicable. These provisions were needed in making refunds at the time when beer tax collection methods were changed from the tax-paid lid and crown system to the reporting method.

The tax increases provided for by this act will generate approximately $13 million in additional general fund revenue for the 1976-78 biennium. The act is effective July 1, 1976. The tax rates created by the act will expire on July 1, 1978, and on and after that date, the tax rates imposed on June 30, 1976, will be levied.

SENATE BILL NO. 256 (Chapter 712)

This act amends § 58-441.3 to exclude from the definition of the term "lease or rental" the leasing, renting or licensing of copyright films for public exhibition at motion picture theatres and copyright audio or video tapes by licensed radio and television stations. This would exempt from the four percent sales and use tax the lease or rental fee of motion picture films by distributors to motion picture theatres and copyright audio and video tapes leased by radio and television stations. The act is effective July 1, 1976.

SENATE BILL NO. 291 (Chapter 431)

This act adds new §§ 58-165.1 and 58-218.2 to clarify provisions of the Code pertaining to the assess­ment of inheritance or gift taxes on the interest of a decedent or a donor in partnership property. The bill specifies in § 58-165.1 that a decedent's interest in partnership property, real, personal or mixed, is considered an intangible asset for purposes of inheritance taxes. The bill specifies in § 58-218.2 that a donor's interest in partnership property, real, personal or mixed, is considered an intangible asset for purposes of gift taxes.

A resident decedent's (or donor's) interest in partnership property, real, personal or mixed, wherever located, would be considered an intan­gible asset and subject to Virginia inheritance (or gift) tax. However, a nonresident decedent's (or donor's) interest in partnership property, real, personal or mixed, located in Virginia, would be considered an intangible asset and not subject to Virginia inheritance (or gift) tax.

The act is effective for all estates of decedents dying on and after July 1, 1976, and for transfers made on and after July 1, 1976.

SENATE BILL NO. 306 (Chapter 728)

This act amends §§ 2.1-177, 2.1-192, and 58-28, relating to certain officers and departments subordinate to the Secretary of Administration and Finance. The act provides that the State Tax Commissioner and Department of Taxation; the State Treasurer and Department of the Treasury; and the Comptroller and Department of Accounts shall be subordinate to the Secretary of Administration and Finance. The act is effective July 1, 1976.

SENATE BILL NO. 307 (Chapter 432.)

This act requires the Department of Taxation to abate any outstanding sales and use tax assessment against a corporation operating as an agent of the Virginia Port Authority or to refund any sales and use taxes which may have been collected on trans­actions that were taxable prior to the July 1, 1974, amendment to § 62.1-145. The 1974 amended provisions to § 62.1-145 would now be retroactive back to September 1, 1966. The act is effective July 1, 1976.

SENATE BILL NO. 399 (Chapter 436)

This act amends § 58-151.035 and adds new §§ 58-151.050:1 and 58-151.050:2 to prescribe new allo­cation formulas for purposes of corporate income taxation for financial institutions and for construction companies reporting on the completed contract basis. The one-factor formula for the apportionment of business income by financial corporations is specific so that only those-corpora­tions in the business of loaning and investing money are included. The act requires construction corporations using the completed contract basis for reporting income to apportion income to the state through a one-factor formula of gross receipts in this state to gross receipts everywhere during the taxable period. The act is effective for taxable years beginning on and after January 1, 1976.

SENATE BILL NO. 407 (Chapter 778)

This act amends §§ 58-580 and 58-603. It would lead to an equalization of the state gross receipts tax on telephone, water, heat, light and power companies at 2 percent in 1983. There would be no change in the lowest amount to which the lowest rate applies (i.e. telephone companies would still pay one and nine­-sixteenths percent on their first $65,000 of gross receipts and the water and power companies would still pay one and one-eighth percent on their first $100,000 of gross receipts).

The amended rates and their effective dates are as follows:

Water, Heat, Light
Year Telephone Tax Rate and Power Tax Rate
                • (Percent) (Percent)
1978 (present rates) 3.0 3.5
1979 2.8 3.2
1980 2.6 2.9
1981 2.4 2.6
1982 2.2 2.3
1983 and thereafter 2.0 2.0

The act also adds a new § 58-514.2:1 to direct the State Corporation Commission, when reviewing requests for company rate increases between 1979 and 1983, to consider the tax savings to the utilities resulting from the decreased gross receipts tax rates. The act is effective on and after January 1, 1979.

This bill will cost the state general fund $133.0 million in revenues from the largest public utilities between now and the time that the public utilities file their 1983 gross receipts tax returns.

SENATE BILL NO. 417 (Chapter 439)

This act amends § 58-66.1 to provide that the person submitting a will for probate or requesting the grant of administration shall state to the best of his knowledge and belief the estimated value of a decedent's personal property and the value of a decedent's real estate based on the actual value, if known, or if the actual value is not known, the appraised value of such real property. The act is effective July 1, 1976.

SENATE BILL NO. 422 (Chapter 666)

This act amends § 58-441.6 to impose the four percent sales and use tax on those persons who are refunded the special fuel tax under § 58-753.1 on fuel purchased for non-highway use. The sales and use tax would not apply, however, to fuel bought and used for agricultural purposes. The act is effective July 1, 1976.

SENATE BILL NO. 526 (Chapter 478)

This act amends § 58-769.8 to change the application date for special assessment of agricultural, horticultural, forest or open space land from the present November 1 deadline to sixty days preceding the tax year for which such application is sought. This would provide a more realistic filing date for fiscal year assessment localities. The act also specifies that in any year a general reassessment is being made, the application deadline must extend to 30 days after the assessment notice is mailed. This change would permit the property owner to know the fair market value assessment before the deadline for applying for a use-value assessment.

Finally, the act contains a special provision so that any county that had an annual assessment of all real estate in 1975 under § 58-769.2 may extend, and any city employing a calendar tax year must extend, the deadline for use-value assessment application until May 1, 1976. The act contains an emergency clause and is effective April 5, 1976.




PART III

JOINT RESOLUTIONS

HOUSE JOINT RESOLUTION NO. 10 (Chapter 782)

This act proposes certain amendments to the Constitution of Virginia, among which are four amend­ments to § 6 of Article X relating to property exempt from taxation. (See House Bill No. 166 - Chapter 751.)

HOUSE JOINT RESOLUTION NO. 45

This resolution memorializes Congress to reenact the General Revenue Sharing Program.

HOUSE JOINT RESOLUTION NO. 85

This resolution memorializes Congress to decline to permit the government of the City of Washington, D. C., to impose a tax on persons residing in Virginia but working in the-District of Columbia.

HOUSE JOINT RESOLUTION NO. 89

This resolution requests that the Division of Motor Vehicles, the Department of Taxation, and the State Corporation Commission cooperate in an effort to inform foreign motor carriers of their responsibility to pay tax to Virginia and that these agencies collect the appropriate income taxes from such corporations. (See also House Bill No. 1241 - Chapter 564 - which ensures compliance on Virginia income taxes by all motor carriers.)
INDEX

Bills are in order numerically in the digest, House bills beginning on page 1, Senate bills on page 12, and joint resolutions on page 18.

ADMINISTRATION - LOCAL

House Bill No. 1076 Exoneration of erroneous local levies.

ADMINISTRATION - STATE

House Bill No. 228 Correction of erroneous assessments of state taxes.
Senate Bill No. 82 Requirement of social security account number by Department of Taxation.
Senate Bill No. 87 Interest provisions on taxes administered by Department of Taxation.
Senate Bill No. 306 Department of Taxation subordinate to Secretary of Administration and Finance.

ALCOHOLIC BEVERAGES TAX

Senate Bill No. 148 Tax increase on alcoholic beverages and wine.

BANK STOCK

House Bill No. 402 Filing bank stock returns.

BEER EXCISE TAX

Senate Bill No. 238 Tax increase on beer and 3.2 beverages.

CAPITAL NOT OTHERWISE TAXED

Senate Bill No. 83 Additional assessments.

CONSUMER UTILITY TAX

House Bill No. 1252 Changing date of maximum limit.

INCOME TAX

House Bill No. 455 Litter tax.
House Bill No. 507 Freeze of Virginia standard deduction provisions.
House Bill No. 1241 Compliance by all motor carriers on Virginia income taxes.
House Bill No. 1245 Retirement income tax credit.
House Bill No. 1253 Extension for filing.
Senate Bill No. 195 Taxation of dividends paid by all corporations.
Senate Bill No. 399 Corporate income allocation formulas for financial institutions and construction companies.
House Joint Resolution No. 85 To prohibit taxing Virginia residents working in District of Columbia.
House Joint Resolution No. 89 To inform foreign motor carriers of their Virginia income tax responsibilities.

INHERITANCE AND GIFT TAXES

Senate Bill No. 92 Limited power of appointment.
Senate Bill No. 291 Interest of decedent or donor in partnership property.
Senate Bill No. 417 Statement of estimated value of decedent's property.

INTANGIBLE PERSONAL PROPERTY

House Bill No. 556 Waiver of penalty for failure to file.

LICENSE - LOCAL

House Bill No. 160 Local severance tax on coal and gas.
House Bill No. 334 License taxes on mobile home camps, parks, lots.
House Bill No. 386 Penalty relating to licenses.
House Bill No. 441 Freeze on tax rates of businesses, professions, and occupations.
House Bill No. 1090 Coin machines and coin machine operators.

LICENSE - STATE

House Bill No. 102 Antique, art or craft shows.
House Bill No. 1090 Coin machines and coin machines operators.

PUBLIC SERVICE CORPORATIONS

House Bill No. 564 Assessing at 100 percent of fair market value.
House Bill No. 893 Effective tax rate on unequalized real property.
House Bill No. 894 Rates on tangible personal property.
Senate Bill No. 235 Franchise tax on railway companies.

Senate Bill No. 407 Franchise tax on telephone, water, heat, light and power companies.

REAL PROPERTY

House Bill No. 33 Local Board of Equalization.
House Bill No. 116 Inventory of tax exempt property.
House Bill No. 152 Special use-value assessment in annexed area.
House Bill No. 160 Local severance tax on coal and gas.
House Bill No. 166 Referendum to amend Constitution re: exemptions.
House Bill No. 491 Penalty on late assessment.
House Bill No. 502 General reassessment cycle reduction.
House Bill No. 556 Waiver of penalty for failure to file.
House Bill No. 564 Assessing at 100 percent of fair market value.
House Bill No. 606 Deadline for delivery of land books.
House Bill No. 679 Dates for filing applications for tax relief by elderly persons.
House Bill No. 687 Deadline for applications for relief to the local board of equalization.
House Bill No. 893 Effective tax rate on public service corporation property.
House Bill No. 1008 Effective dates for suggested use-values.
House Bill No. 1012 Exemption from recordation tax.
House Bill No. 1219 Classification and taxation of rehabilitated buildings.
Senate Bill No. 31 Leasehold interest in exempt property of governmental agency.
Senate Bill No. 170 Service charge on certain property.
Senate Bill No. 200 Extension of time for collection of delinquent taxes.
Senate Bill No. 233 Biennial assessment.
Senate Bill No. 526 Application date for special use-value assessment.
House Joint Resolution No. 10 Amendments to Constitution re: exemptions.

REVENUE SHARING

House Joint Resolution No. 45 To reenact federal general revenue sharing program.

SALES AND USE TAX

House Bill No. 192 Exemption for nonprofit hospital cooperatives.
House Bill No. 704 Exemption of advertisement and promotional materials.
House Bill No. 731 Additions to school age population.
House Bill No. 950 Imposition of motor fuel retail sales tax by certain transportation districts.
Senate Bill No. 89 Definition of "motor vehicle".
Senate Bill No. 256 Exemption for leasing, renting or licensing of copyright films and audio or video tapes.
Senate Bill No. 307 Abatement of outstanding sales and use tax assess­ment against a corporation operating as an agent of the Virginia Port Authority.
Senate Bill No. 422 Imposition of sales and use tax on refunded special fuel tax.

TANGIBLE PERSONAL PROPERTY

House Bill No. 166 Referendum to amend Constitution re: exemptions.
House Bill No. 334 Rate on mobile homes.
House Bill No. 426 Situs of certain receptacles and imported goods.
House Bill No. 450 Reclassifications of dry cleaning and laundry equipment.
House Bill No. 491 Penalty on late assessment.
House Bill No. 556 Waiver of penalty for failure to file.
House Bill No. 718 Leased property returns by lessee.
House Bill No. 894 Rates on public service corporation property.
House Bill No. 1066 Classification and taxation of certain classes of farm animals, grains, machinery, etc.

Legislative Summaries

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