Tax Type
General Provisions
Description
1993 Legislative Summary
Topic
Local Taxes Discussion
Date Issued
05-19-1993
1993 LEGISLATIVE SUMMARY
VIRGINIA DEPARTMENT OF TAXATION
May, 1993
May, 1993
INTRODUCTION
The Legislative Summary is published by the Department of Taxation (TAX) as a convenient reference guide to state and local tax legislation enacted by the 1993 Session of the General Assembly. It includes a general description of enacted legislation affecting:
* State taxes administered by TAX, and
* Local taxes which TAX administers or on which TAX renders advisory assistance.
The Summary also includes legislative studies in which TAX will be directly involved or acting in a technical support role. However, in general, legislation granting property tax exemptions, creating special taxing jurisdictions or affecting taxes administered by other state agencies is not included in the Summary.
The Summary is intended to provide a synopsis of enacted legislation and is for information purposes only. The Summary is not a substitute for the actual state law, local ordinances, and TAX regulations. Additional information on new legislation affecting state taxes may be obtained from TAX at the following telephone numbers:
Individual Income Tax
(804) 367-8031
Corporation Income Tax
(804) 367-8036
Sales and Use Tax
(804) 367-8037
Withholding Tax
(804) 367-8038
Voice/TDD
(804) 367-8329
Additional information on new local tax legislation should be obtained from your local Commissioner of Revenue or Treasurer.
STATE TAX LEGISLATION
GENERAL PROVISIONS
Disclosure of Information
House Bill 1414 (Chapter 519) grants the Tax Commissioner the authority to provide to the Executive Director of the Potomac and Rappahannock Transportation Commission such tax information as may be necessary to facilitate the collection of the motor vehicle fuel sales tax.
House Bill 1832 (Chapter 41) grants the Tax Commissioner like authority, conditioned upon entering into a written agreement with the State Corporation Commission (SCC) to facilitate the collection of taxes and fees administered by that agency.
Generally the Tax Commissioner is barred by statute from divulging any information acquired by him in the performance of his duties with respect to the transactions, property, income or business of any person, firm or corporation. Persons in receipt of tax information pursuant to these provisions would be subject to the prohibitions and penalties prescribed in the secrecy of information provisions in Va. Code § 58.1-3.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3
Memorandum of Lien - Ten Day Notice
House Bill 1888 (Chapter 384) requires TAX to give taxpayers at least ten days notice prior to filing a memorandum of lien against taxpayers' real estate. The notice must be directed to taxpayers' last known address. If the Tax Commissioner determines that the collection of tax would be jeopardized by providing the ten-day notice, taxpayer notification may be provided concurrent with the filing of the memorandum of lien.
Memorandums of lien enable TAX to collect delinquent taxes by attaching real estate owned by individuals or corporations. The tax liability must be paid prior to the consummation of a sale by the seller or from the proceeds from the sale prior to the title conveying to the purchaser.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-1805
INCOME TAX
CORPORATIONS
Clean Fuel Credit - New
House Bill 1727 (Chapter 562) establishes a credit against income taxes for purchases of clean-fuel vehicles and certain refueling property by corporations, individuals, or public service corporations. In the case of telecommunications companies, the credit would apply to both the income tax and the minimum tax on gross receipts. Other public service corporations would not be eligible for the credit because they are taxed under Chapter 26 of Subtitle II (§ 58.1-2000 et. seq.) of Title 58.1.
The credit is limited to 10% of the deduction permissible under IRC § 179A. If the amount of the credit exceeds the taxpayer's tax liability for the year of purchase, the unused credit may be carried as a credit on the taxpayer's returns for up to 5 years until the credit is exhausted.
IRC § 179A provides depreciation deductions as follows:
* Clean-fuel vehicles: deductions are allowed up to $ 2,000 for most vehicles, $ 5,000 for trucks or vans with a gross vehicle weight rating of 10,000 to 26,000 pounds, and $ 50,000 for trucks or vans with a gross vehicle weigh rating of more than 26,000 pounds or buses that seat 20 or more passengers. A qualified electric vehicle is not considered a clean fuel vehicle. In the case of vehicles that may be propelled by both clean fuels and other fuels, only the incremental cost of permitting the use of clean-burning fuel may be deducted.
* Clean-fuel vehicle refueling property: a "lifetime" deduction of $ 100,000 is permitted for this property. A taxpayer's annual deduction is computed by taking $ 100,000 less the clean-fuel vehicle refueling property placed in service for all previous taxable years. Examples of this property include: fuel tanks and dispensing devices of clean fuel, or recharging devices for electric vehicles.
* Clean fuel: property is treated as a clean fuel vehicle if the motor vehicle of which it is a part meets any applicable federal or state emissions standards.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-438.1
Credit for Rent Reductions - Extended
House Bill 1615 (Chapter 37) extends the sunset provision of the income tax credit available to landlords who provide elderly or disabled tenants with reduced rent from December 31, 1993 to December 31, 1996.
The credit was enacted effective for taxable years beginning on or after January 1, 1991 by the 1990 General Assembly. The credit is intended to provide an individual or corporate tax credit for landlords who provide rent reductions of at least 15% to tenants who are either over 62 or disabled from a mental or physical condition. The credit amount is 50% of the total rent reductions allowed during the taxable year to the elderly and disabled, up to a maximum of $ 10,000. Unused credits may be carried over up to five years. The Virginia Housing Development Authority is responsible for certifying to TAX who is authorized to claim the credit.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-339
Recycling Credit - Expanded
House Bill 1865 (Chapter 585) amends the current income tax credit allowed for the purchase of machinery and equipment for processing recyclable materials.
Presently, taxpayers are entitled to claim a credit for the purchase of recycling equipment. The amount of the credit allowed is equal to 10% of the purchase price of such equipment. The Department of Waste Management (DWM) is responsible for certifying that equipment is actually used in a recycling operation, thus qualifying for the exemption. Taxpayers are required to provide a copy of DWM's certification when claiming a credit. The total amount of credit allowed is further limited to 40% of a taxpayer's tax liability, prior to applying the recycling credit, in the year in which recycling equipment is purchased.
Additionally, under current law, for recycling equipment to qualify for the credit it must be situated at a fixed location at a recycler's manufacturing facility. Also, the amount of the credit is determined based upon the cost of the equipment to the taxpayer.
This legislation amends the current statute by:
* eliminating the requirement that machinery and equipment be at fixed locations;
* requiring that the equipment be used exclusively in or on the premises of manufacturing facilities;
* expanding the basis upon which the recycling credit is calculated to include most capitalized costs to get the equipment into operation; and
* modifying the 40% credit limitation to apply each year a credit is claimed rather than being a limitation applied in the year of purchase.
EFFECTIVE DATE: Taxable years beginning on and after January 1, 1993, but before January 1, 1996.
CODE SECTIONS AMENDED: §§ 58.1-338 and 58.1-445.1
Neighborhood Assistance Act - Increase Credit Amount
Senate Bill 925 (Chapter 192) increases the total amount of the income tax credits for a given year under the Neighborhood Assistance Program from $ 5.25 million to $ 8 million.
The Neighborhood Assistance Act of 1981 provides an income tax credit for any business that engages in of providing neighborhood assistance, job training, education, community services, or crime prevention services to an impoverished area or persons living within an impoverished area. The credit is granted against any tax due under Article 10 (§ 58.1-400 et seq.) of Chapter 3 of Title 58.1 or any income tax, franchise tax, or gross receipts tax and shall not be less than $ 50 or more than $ 175,000 per taxable year per business.
EFFECTIVE DATE: July 1, 1994
CODE SECTION AMENDED: § 63.1-323
Investment Credit/Interest Deduction - Expired
1992 House Bill 981 (Chapter 686) would have provided an investment tax credit effective for taxable years beginning on and after January 1, 1994 in an amount equaling 10% of "new Virginia business investment" if the 1993 Act was reenacted by the 1993 Session of the General Assembly. The Act was not reenacted by the 1993 General Assembly, and consequently § 58.1-438 which would have allowed for this credit will not take effect.
The bill also had a provision establishing a subtraction for $ 250 of interest income which required reenactment by the 1993 General Assembly before being effective. As such, § 58.1-322(C)(17) also will not take effect.
CODE SECTIONS AMENDED: §§ 58.1-322 and 58.1-438 (expired without becoming effective)
Agricultural Contribution Subtraction - Extended
House Bill 1279 (Chapter 28) and Senate Bill 615 (Chapter 541) extend the expiration date for the income tax subtraction granted for qualified agricultural contributions from January 1, 1994 to January 1, 1999.
The qualified agricultural contribution subtraction, also referred to as the Gleaning Subtraction, was enacted by the 1985 Session of the General Assembly. Originally, it was effective for taxable years 1985 through 1987. It was reenacted in 1989, effective for taxable years 1989 through 1994. This bill would extend the expiration date through taxable year 1998.
Currently, individuals and corporations are allowed a subtraction in computing Virginia taxable income equal to the wholesale market price of agricultural products donated to a nonprofit organization that is exempt from income tax under IRC § 501(c)(3). The subtraction provides an incentive for farmers to allow tax-exempt organizations to harvest or "glean" edible, but not saleable, agricultural products.
While farmers may be allowed a charitable contribution deduction under federal law (which flows through to Virginia due to conformity) for donated property, this deduction is limited to the basis of the donated property. Since crops are ordinary income property and the cost of donated crops to a farmer (expenses incurred in purchasing and raising the crop, i.e. seed, fertilizer, etc.) are deductible farm expenses, the farmer will usually not have a charitable deduction for donated crops. If a federal charitable contribution deduction is claimed, the Gleaning Subtraction provided under this bill would be reduced by the amount claimed for federal purposes.
EFFECTIVE DATE: July 1, 1993
CODE SECTIONS AMENDED: §§ 58.1-322, 58.1-322.2, and 58.1-402
Conformity to Federal Law - Frozen
Senate Bill 575 (Chapter 640) freezes Virginia's conformity to the federal income tax law as it existed on December 31, 1992.
Virginia's income tax has generally conformed to the federal income tax since 1972. "Virginia taxable income," on which the tax is based, is defined as "federal adjusted gross income" (FAGI) for individuals and "federal taxable income" (FTI) for corporations.
Absent state legislation to deconform, federal changes impacting the computation of FAGI or FTI automatically impact Virginia revenues, either positively or negatively. Conversely, policy changes that do not affect the federal tax base, such as tax credits and rate increases or decreases, have no direct impact on Virginia revenues.
The deconformity imposed by this legislation applies only to taxable year 1993. Thus, Virginia would not automatically conform to tax base changes that may be enacted by Congress effective for taxable year 1993, but would conform to federal changes that are effective for later taxable years.
EFFECTIVE DATE: Taxable year beginning January 1, 1993 and ending December 31, 1993
CODE SECTION AMENDED: § 58.1-301
INDIVIDUALS
Clean Fuel Credit - New
House Bill 1727 (Chapter 562) establishes a credit against income taxes for purchases of clean-fuel vehicles and certain refueling property by corporations, individuals, or public service corporations. In the case of telecommunications companies, the credit would apply to both the income tax and the minimum tax on gross receipts. Other public service corporations would not be eligible for the credit because they are taxed under Chapter 26 of Subtitle II (§ 58.1-2000 et. seq.) of Title 58.1.
The credit is limited to 10% of the deduction permissible under IRC § 179A. If the amount of the credit exceeds the taxpayer's tax liability for the year of purchase, the unused credit may be carried as a credit on the taxpayer's returns for up to 5 years until the credit is exhausted.
IRC § 179A provides depreciation deductions as follows:
* Clean-fuel vehicles: deductions are allowed up to $ 2,000 for most vehicles, $ 5,000 for trucks or vans with a gross vehicle weight rating of 10,000 to 26,000 pounds, and $ 50,000 for trucks or vans with a gross vehicle weigh rating of more than 26,000 pounds or buses that seat 20 or more passengers. A qualified electric vehicle is not considered a clean fuel vehicle. In the case of vehicles that may be propelled by both clean fuels and other fuels, only the incremental cost of permitting the use of clean-burning fuel may be deducted.
* Clean-fuel vehicle refueling property: a "lifetime" deduction of $ 100,000 is permitted for this property. A taxpayer's annual deduction is computed by taking $ 100,000 less the clean-fuel vehicle refueling property placed in service for all previous taxable years. Examples of this property include: fuel tanks and dispensing devices of clean fuel, or recharging devices for electric vehicles.
* Clean fuel: property is treated as a clean fuel vehicle if the motor vehicle of which it is a part meets any applicable federal or state emissions standards.
EFFECTIVE DATE: Taxable years beginning on or after January 1, 1993
CODE SECTION AMENDED: § 58.1-438.1
Credit for Rent Reductions - Extended
House Bill 1615 (Chapter 37) extends the sunset provision of the income tax credit available to landlords who provide elderly or disabled tenants with reduced rent from December 31, 1993 to December 31, 1996.
The credit was enacted effective for taxable years beginning on or after January 1, 1991 by the 1990 General Assembly. The credit is intended to provide an individual or corporate tax credit for landlords who provide rent reductions of at least 15% to tenants who are either over 62 or disabled from a mental or physical condition. The credit amount is 50% of the total rent reductions allowed during the taxable year to the elderly and disabled, up to a maximum of $ 10,000. Unused credits may be carried over up to five years. The Virginia Housing Development Authority is responsible for certifying to TAX who is authorized to claim the credit.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-339
Recycling Credit - Expanded
House Bill 1865 (Chapter 585) amends the current income tax credit allowed for the purchase of machinery and equipment for processing recyclable materials.
Presently, taxpayers are entitled to claim a credit for the purchase of recycling equipment. The amount of the credit allowed is equal to 10% of the purchase price of such equipment. The Department of Waste Management (DWM) is responsible for certifying that equipment is actually used in a recycling operation, thus qualifying for the exemption. Taxpayers are required to provide a copy of DWM's certification when claiming a credit. The total amount of credit allowed is further limited to 40% of a taxpayer's tax liability, prior to applying the recycling credit, in the year in which recycling equipment is purchased.
Additionally, under current law, for recycling equipment to qualify for the credit it must be situated at a fixed location at a recycler's manufacturing facility. Also, the amount of the credit is determined based upon the cost of the equipment to the taxpayer.
This legislation amends the current statute by:
* eliminating the requirement that machinery and equipment be at fixed locations;
* requiring that the equipment be used exclusively in or on the premises of manufacturing facilities;
* expanding the basis upon which the recycling credit is calculated to include most capitalized costs to get the equipment into operation; and
* modifying the 40% credit limitation to apply each year a credit is claimed rather than being a limitation applied in the year of purchase.
EFFECTIVE DATE: Taxable years beginning on and after January 1, 1993, but before January 1, 1996.
CODE SECTIONS AMENDED: §§ 58.1-338 and 58.1-445.1
Neighborhood Assistance Act - Increase Credit Amount
Senate Bill 925 (Chapter 192) increases the total amount of an income tax credit each year under the Neighborhood Assistance Program from $ 5.25 million to $ 8 million.
The Neighborhood Assistance Act of 1981 provided an income tax credit for any business that engages in the activities of providing neighborhood assistance, job training, education, community services, or crime prevention services to an impoverished area. The credit is granted against any tax due under Article 10 (§ 58.1-400 et seq.) of Chapter 3 of Title 58.1 or income tax, franchise tax, or gross receipts tax and shall not be less than $ 50 or more than $ 175,000 per taxable year per business.
EFFECTIVE DATE: July 1, 1994
CODE SECTION AMENDED: § 63.1-323
Investment Credit/Interest Deduction - Expired
1992 House Bill 981 (Chapter 686) would have provided an investment tax credit effective for taxable years beginning on and after January 1, 1994 in an amount equaling 10% of "new Virginia business investment" if the 1993 Act was reenacted by the 1993 Session of the General Assembly. The Act was not reenacted by the 1993 General Assembly, and consequently § 58.1-438 which would have allowed for this credit will not take effect.
The bill also had a provision establishing a subtraction for $ 250 of interest income which required reenactment by the 1993 General Assembly before being effective. As such, § 58.1-322(c)(17) also will not take effect.
CODE SECTIONS AMENDED: §§ 58.1-322 and 58.1-438 (expired without becoming effective)
Agricultural Contribution Subtraction - Extended
House Bill 1279 (Chapter 28) and Senate Bill 615 (Chapter 541) extends the expiration date for the income tax subtraction granted for qualified agricultural contributions from January 1, 1994 to January 1, 1999.
The qualified agricultural contribution subtraction, also referred to as the Gleaning Subtraction, was enacted by the 1985 Session of the General Assembly. Originally, it was effective for taxable years 1985 through 1987. It was reenacted in 1989, effective for taxable years 1989 through 1994. This bill would extend the expiration date through taxable year 1998.
Currently, individuals and corporations are allowed a subtraction in computing Virginia taxable income equal to the wholesale market price of agricultural products donated to a nonprofit organization that is exempt from income tax under IRC § 501(c)(3). The subtraction would provide an incentive for farmers to allow tax-exempt organizations to harvest or "glean" edible, but not saleable, agricultural products.
While farmers may be allowed a charitable contribution deduction under federal law (which flows through to Virginia due to conformity) for donated property, this deduction is limited to the basis of the donated property. Since crops are ordinary income property and the cost of donated crops to a farmer (expenses incurred in purchasing and raising the crop, i.e. seed, fertilizer, etc.) are deductible farm expenses, the farmer will usually not have a charitable deduction for donated crops. If a federal charitable contribution deduction is claimed, the Gleaning Subtraction provided under this bill would be reduced by the amount claimed for federal purposes.
EFFECTIVE DATE: July 1, 1993
CODE SECTIONS AMENDED: §§ 58.1-322, 58.1-322.2, and 58.1-402
Conformity to Federal Law - Frozen
Senate Bill 575 (Chapter 640) freezes Virginia's conformity to the federal income tax law as it existed on December 31, 1992.
Virginia's income tax has generally conformed to the federal income tax since 1972. "Virginia taxable income," on which the tax is based, is defined as federal adjusted gross income" (FAGI) for individuals and "federal taxable income" (FTI) for corporations.
Absent state legislation to deconform, federal changes impacting the computation of FAGI or FTI automatically impact Virginia revenues, either positively or negatively. Conversely, policy changes that do not affect the federal tax base, such as tax credits and rate increases or decreases, have no direct impact on Virginia revenues.
The deconformity imposed by this legislation applies only to taxable year 1993. Thus, Virginia would not automatically conform to tax base changes that may be enacted by Congress effective for taxable year 1993, but would conform to federal changes that are effective for later taxable years.
EFFECTIVE DATE: Taxable year beginning January 1, 1993 and ending December 31, 1993
CODE SECTION AMENDED: § 58.1-301
Refund Checkoffs
Refund checkoffs are itemized on the Virginia individual income tax return and allow any taxpayer who files a return and is due a refund to voluntary designate all or a portion of such refund to an organization participating in the refund checkoff program. Legislation was passed to amend the statutes relative to the refund checkoffs as follows:
* extend the sunset provision of the United States Olympic Committee from December 31, 1993 to December 31, 1996;
* extend the sunset provision of the Family and Children's Trust Fund of Virginia from December 31, 1992 to December 31, 1996;
* extend the sunset provision of the Open Space Recreation and Conservation Fund from December 31, 1993 to December 31, 1995;
* extend the sunset provision of the Housing for the Homeless, Elderly, and Disabled Fund from December 31, 1993 to December 31, 1995;
* extend the sunset provision of the Department for the Aging from December 31, 1992 to December 31, 1995; and
* increase the maximum amount of a contribution to the state Democratic or Republican parties from $ 2 to $ 25.
The checkoff for the Nongame Wildlife Program administered by the Department of Game and Inland Fisheries, which does not contain a sunset provision, remains unchanged.
Extension of Olympic Committee/Family and Children's Trust Fund Checkoffs
House Bill 1218 (Chapter 890) extends the sunset provisions for the United States Olympic Committee and the Family and Children's Trust Fund of Virginia to expire for taxable years beginning after December 31, 1996.
Contributions by Virginia taxpayers to the United states Olympic Committee are used by the committee to assist Virginia athletes and other U.S. athletes to receive training and support needed to compete in the Olympic Games. This checkoff was originally enacted effective for taxable years beginning on and after January 1, 1988.
Contributions to the Family and Children's Trust Fund of Virginia are used by the fund for programs statewide that prevent and treat child abuse and neglect and family violence. This checkoff was originally enacted effective for taxable years beginning on and after January 1, 1991.
EFFECTIVE DATE: July 1, 1993
CODE SECTIONS AMENDED: §§ 58.1-346.1 and 58.1-346.3
Extension of Open Space Recreation and Conservation Fund Checkoff
House Bill 1469 (Chapter 877) extends the sunset provision for the Open Space Recreation and Conservation Fund checkoff from taxable years beginning after December 31, 1993 to taxable years beginning after December 31, 1995. This checkoff was originally enacted effective for taxable years beginning on and after January 1, 1988.
Currently, three-fourths of the contributions by Virginia taxpayers to the Open Space Recreation and Conservation Fund are distributed to the Department of Conservation and Recreation to acquire land for recreation and to preserve natural areas, and to develop, maintain and improve state park sites and facilities. The remaining one-fourth of the contributions are distributed to localities for use pursuant to the Virginia Outdoor Fund grant program. This bill will change the allocation of contributions collected to require that one-half of the funds collected be paid to the Department of Conservation and Recreation and the other half of the funds collected be paid to the Virginia Outdoor Fund Grants Program.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-345.1
Expansion of Maximum Contribution for Political Parties
House Bill 1724 (Chapter 880) increases the maximum amount of a tax refund that taxpayers may contribute to political parties from $ 2 to $ 25. Married couples filing a joint return would be allowed to contribute $ 25 each. Currently, only the Virginia Democratic Party and the Virginia Republican Party would be eligible to receive contributions.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-346
Extension of Aging/Housing Program and Other Checkoffs
Senate Bill 753 (Chapter 865) is similar to House Bills 1218, 1469, and 1724. Additionally, this bill provides the following:
* Expiration of the checkoff, for taxable years beginning after December 31, 1995, for the Department of Aging which finances the transportation of the elderly and disabled who cannot drive or use public transportation to jobs, medical care, and other services; and
* Expiration of the checkoff, for taxable years beginning after December 31, 1995 for the Housing Program which provides housing for the homeless, elderly, and the disabled.
EFFECTIVE DATE: July 1, 1993
CODE SECTIONS AMENDED: §§ 58.1-345.1, 58.1-346, 58.1-346.1, 58.1-346.2, 58.1-346.3, and 58.1-346.4.
Age Deduction
House Bill 1691 (Chapter 803) codifies the General Assembly's intent in enacting the 1990 age subtraction and conforms the law to the age deduction method that was used to compute the deduction on the 1991 and 1992 tax forms.
EFFECTIVE DATE: Taxable years beginning on and after January 1, 1991
CODE SECTION AMENDED: §§ 58.1-321 and 58.1-322
INCOME TAX WITHHOLDING
Taxation of Lottery Winnings - Clarified
Senate Bill 623 (Chapter 54) clarifies that all lottery winnings over $ 5,001 are subject to income tax withholding. The bill also codifies existing policy that withholding on lottery winnings is not limited solely to individuals, but also includes winnings of corporations and other entities.
This bill ensures that individuals, corporations, and other entities are placed on a level playing field regarding withholding from large lottery prizes by referencing the word "person" as provided in Va. Code § 1-13.19.
The bill will also permit the Commonwealth to require withholding tax when federal withholding is based on a provision other than IRC §§ 3402 and 3405.
Finally, it makes a minor technical change to conform to a 1992 lottery law change which applies withholding to prizes in excess of $ 5,001 instead of $ 5,000.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-460
RETAIL SALES & USE TAX
Resale Exemption Restriction - Antiques
House Bill 1591 (Chapter 371) prohibits Virginia dealers from accepting a resale exemption certificate from the purchaser of tangible personal property more than 50 years old (i.e., antiques) unless the purchaser has nexus with Virginia or posts security to secure the collection of the tax. The purchaser would be required to pay the sales tax and apply for a refund of the tax paid after the property is resold.
The purchaser may apply for a refund when the property is resold, if resold within 18 months of the original transaction. When applying for a refund, the purchaser must provide evidence of a bona fide sales transaction to the Tax Commissioner. If a purchaser does not resell the property within 18 months, he will not be eligible for a refund.
This bill affects out-of-state dealers who come to Virginia to purchase antiques and other tangible personal property over 50 years old and take the property back to their home state for resale.
EFFECTIVE DATE: January 1, 1994
CODE SECTION ADDED: § 58.1-602.1
Lions' Club Exemption - Expanded
House Bill 1820 (Chapter 99) makes a technical correction to a retail sales and use tax exemption, enacted in 1991 and designed chiefly for the Lions' Club, by extending the nonprofit designation for qualifying organizations. Currently, the exemption is available only to qualifying organizations exempt from income taxation under IRC § 501(c)(3). This bill extends the exemption to qualifying organizations exempt from income taxation under IRC § 501(c)(4).
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-608
Exemptions - Recodified
Virginia Port Authority Exemption - Permanently Extended
Senate Bill 587 (Chapter 310) recodifies the section of the Code of Virginia dealing with sales and use tax exemptions by adding §§ 58.1-609.1 through 58.1-609.13. The bill sets out the groupings of exemptions into 10 different Code sections, corresponding to the ten different exemption groupings currently contained under one Code section, § 58.1-608. Changes have also been made in those Code sections containing cross references to § 58.1-608.
This was a Virginia Code Commission recommendation and is intended to simplify the legislative process when a sales tax exemption bill is introduced and/or enacted.
The bill also removes the sunset date and permanently extends the sales and use tax exemption for the Virginia Port Authority's operating subsidiary, Virginia International Terminals. Elimination of the sunset makes the exemption in Title 58.1 consistent with that contained in the Virginia Port Authority provisions in Va. Code § 62.1-145.
EFFECTIVE DATE: July 1, 1993
CODE SECTIONS AMENDED: §§ 15.1-1415, 15.1-1440, 30-19.05, 58.1-610, 58.1-629, 58.1-1720, 58.1-3510.1 and 58.1-3510.3
CODE SECTIONS ADDED: §§ 58.1-609.1 through 58.1-609.13
CODE SECTIONS REPEALED: §§ 58.1-608 and 58.1-609
Medical and Civic and Community Exemptions - Extended
House Bill 1221 (Chapter 646) extends the expiration dates of the exemptions grouped in sections 7 (medical exemptions) and 8 (nonprofit civic and community service exemptions) from June 30, 1993 to June 30, 1994. The expiring provisions are extended through June 30, 1994 in conjunction with the report due to the 1994 General Assembly under SJR 249, which establishes a joint subcommittee to study the criteria the General Assembly should use in enacting sales tax exemptions.
This bill also permanently extends the sales and use tax exemption for the Virginia Port Authority's operating subsidiary, Virginia International Terminals as does Senate Bill 587. The elimination of the sunset provision makes the exemption consistent with the provision contained in Va. Code § 62.1-145.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-608
Refund of Tax for Construction Costs - Extended
House Bill 1247 (Chapter 647) extends from July 1, 1993 to July 1, 1994 the authorization for refunds of sales and use tax paid on tangible personal property by certain nonprofit organizations which are exempt from taxation under IRC § 501(c)(3). As with House Bill 1221, the provision is extended in conjunction with SJR 249.
In order to qualify for refunds, the organization must be organized primarily to acquire land and purchase materials to erect or rehabilitate low-cost homes on that land provided the homes are sold at cost to persons who could not otherwise afford to purchase a home. This authorization also applies to organizations which purchase tangible personal property used to repair or rehabilitate homes owned by low-income persons.
Two organizations have been identified which qualify for authorization under this statute: Habitat for Humanity, which currently has 30 affiliates in Virginia, and Housing Partnership, Inc.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-608.1
Purchase of Controlled Drugs - Exemption Expanded
Senate Bill 579 (Chapter 154) expands the exemption for controlled drugs purchased by a physician to include the purchase of controlled drugs for use by physicians when organized as a corporation in which shareholders and operators are all licensed physicians practicing medicine.
In 1992, the controlled drug exemption was expanded to apply to purchases of controlled drugs by physicians when organized as a partnership or professional corporation. The basis for the amendment was the perceived legislative intent that all purchases of controlled drugs for use by physicians, whether organized as a sole proprietorship, partnership, or professional corporation, should be exempt.
This bill extends the exemption to corporations where the shareholders/operators are all licensed physicians engaged in the practice of medicine, thus maintaining the focus of the legislative intent of the original exemption. Hospitals, nursing homes, clinics and other similar corporations, not otherwise exempt, shall continue to be excluded for the exemption.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-608
Public Facilities Act
House Bill 1795 (Chapter 114) makes a technical correction to the bonding section of the Public Facilities Act by providing that bonds issued up to January 1, 1996 (formerly January 1, 1994) qualify to take advantage of the act.
Under the legislation passed in the 1992 Session, localities meeting certain requirements would be able to divert, from the general fund, retail sales tax revenues derived from public facilities to pay the debt service on bonds issued to finance the costs of such facilities.
Currently, only the City of Roanoke (Hotel Roanoke) would benefit from the Public Facilities Act.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 15.1-227.67
Homes for Adults - Name Change
House Bill 2280 (Chapter 957) and Senate Bill 1064 (Chapter 993) revise the name and licensure requirements of homes for adults to "adult care residence". The term is referenced in § 58.1-608(A)(8)(j) which grants a sales and use tax exemption to homes for adults as defined under § 63.1-172.
EFFECTIVE DATE: July 1, 1993
CODE SECTIONS AMENDED: §§ 58.1-608 and 63.1-172
MISCELLANEOUS PROVISIONS
Tire Tax - Permanently Extended
House Bill 1494 (Chapter 211) permanently extends the Virginia Tire Tax scheduled to expire on December 31, 1994.
The tax was enacted effective January 1, 1990 to provide funding for the development and implementation of a plan for the management and transportation of all waste tires in Virginia. The collected tax is deposited in the Waste Tire Trust Fund. The Fund and the plan are under the oversight of the Department of Waste Management.
The tax is imposed upon all tire retailers in the amount of fifty cents per tire, for each new tire sold. The tax is applicable to any person in the business of making retail sales of tires, except sales of new tires to a person solely for the purpose of resale are exempt.
In addition, this bill expands the purposes for which funds generated by the tax could be expended from the Waste Tire Trust Fund in order to enhance the markets for waste tires, chips or similar materials. As a result of this bill, Fund moneys can be used to reimburse users of waste tires for their costs.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED § 10.1-1422.1
CODE SECTIONS ADDED: §§ 10.1-1422.3 and 10.1-1422.4
CODE SECTION REPEALED: § 58.1-643
AMENDED: Second enactment clause of Chapter 630 of the 1989 Acts of Assembly
Egg Tax - Expanded
House Bill 2113 (Chapter 809) makes the following changes to the Egg Tax:
* expands the coverage of the egg tax to include eggs purchased or sold in other than shell form;
* changes the definition of "handler" to cover persons purchasing, selling, or handling eggs that are used or consumed in Virginia;
* permits the Tax Commissioner to disclose to the Egg Board information relating to the Egg Tax;
* increases the period handlers are required to keep records from two to three years;
* conforms the method of collecting delinquent egg taxes to the method utilized in collecting taxes administered by TAX; and
* allows TAX to recoup its administrative costs.
By imposing the excise tax upon eggs "purchased or sold for use or consumption" in Virginia, this bill effectively changes the tax from being on eggs produced in Virginia to eggs consumed in Virginia. Additionally, by covering eggs sold in other than shell form the tax would apply to processed or pasteurized eggs not sold in the shell, as well as shell eggs.
The tax would be imposed at the current rate of five cents per thirty dozen case for shell eggs and 11 cents per hundred pounds for nonshell form. The 11 cents tax rate is based on the liquid yield from a case of large shell eggs.
Nationally, as well as in Virginia, there is a trend toward an increasing consumption of processed eggs in proportion to total eggs consumed. Processed eggs are those that are sold in a nonshell form, such as powdered eggs, liquid eggs in cartons, and so forth. Because more eggs are consumed in Virginia than are produced, Virginia producers of shell eggs have been paying for the Virginia Egg Board's efforts to promote the consumption of all forms of both shell and processed eggs. The tax on eggs consumed eliminates this disparity.
EFFECTIVE DATE: July 1, 1994
CODE SECTIONS AMENDED: §§ 3.1-796.11:3, 3.1-796.11:4, 3.1-796.11:5, 3.1-796.11:6, 3.1-796.11:7, 3.1-796.11:8, and 3.1-796.11:10.
Enterprise Zone Program
House Bill 1232 (Chapter 354), House Bill 1938 (Chapter 943), Senate Bill 761 (Chapter 741), and Senate Bill 852 (Chapter 979) all affect the Enterprise Zone Program administered by the Department of Housing and Community Development (DHCD).
The Enterprise Zone Act of 1982 provided for the establishment of urban enterprise zones to stimulate business and industrial growth in economically distressed areas of the Commonwealth. The current maximum number of zones authorized by statute is 19.
The Enterprise Zone Program authorizes the governing body of any city population of at least 250,000 to apply to DHCD to have more than one designated area declared as an enterprise zone. The program is based on the theory that development of new commercial activity in a given area will create new or additional jobs and increase revenues received from personal property and real estate taxation. Three state tax incentives are available to encourage new or expanded business and industrial operations within an enterprise zone.
* General Credit: A credit against state corporate income, individual income, franchise or license taxes for each of five consecutive years in decreasing amounts from 80% to 20%.
* Unemployment Tax Credit: A credit against state corporate income, individual income, franchise or license taxes equal to the state unemployment tax due on employees of zone businesses for five consecutive years in decreasing amounts from 80% to 20%.
* State Sales and Use Tax Exemption: An exemption from the sales and use tax on tangible personal property purchased or leased for use by businesses within the zone for five consecutive years.
House Bill 1938 allows the cities of Newport News, Norfolk, Portsmouth and Richmond to apply for additional zones conditioned upon each city previously having one zone designation and limiting each city to a maximum of three zones. These cities would be permitted to do so once the Commonwealth meets a total of 25 designated enterprise zones.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 59.1-274
House Bill 1232, Senate Bill 761, and Senate Bill 852, all increase the maximum number of designated zones statewide from 19 to 25. Additionally, Senate Bill 761 authorizes the counties of Chesterfield, Patrick, Prince William, Rockbridge and Wythe to apply for additional zones designations and Senate Bill 852 authorizes the cities of Norfolk and Virginia Beach to apply for additional zones and removes the limit placed on the number of designated zones. Senate Bill 852 also requires that the Governor approve DHCD's recommendations for designated enterprise zones.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 59.1-274
NOTES
LOCAL TAX LEGISLATION
GENERAL PROVISIONS
Provision of Social Security Numbers
House Bill 2179 (Chapter 103) requires the disclosure of social security numbers to tax officials of any county, city or town for tax administration purposes. The bill further specifies that such social security numbers be regarded as confidential tax information.
Federal law clearly allows state and local government officials to request an individual's social security number; this provision will allow local officials to show taxpayers the statutory authority by which such numbers are solicited.
EFFECTIVE DATE: July 1, 1993
CODE SECTION ADDED: § 58.1-3017
PUBLIC SERVICE CORPORATIONS
Local Assessment Ratio
House Bill 1680 (Chapter 528) provides that any county, city, town or public service corporation aggrieved by the assessment ratio as determined by TAX pursuant to § 58.1-2604 (which provides the valuation method for increasing the assessment of taxes on property owned by a public service corporation) may petition the Circuit Court for the City of Richmond, Division I, for correction of such ratio provided a public service corporation's property represents 25% or more of the total assessed value of the real estate in such county, city or town.
EFFECTIVE DATE: Taxable years beginning on and after January 1, 1994.
CODE SECTION ADDED: § 58.1-2670.1
Description of Calculation of Ratio
House Bill 1682 (Chapter 529) provides that TAX must furnish each locality in which a public service corporation's property represents twenty-five percent or more of the total assessed value of real estate in such locality the assessment/sales ratio which is determined pursuant to § 58.1-2604 by April 1 including a description of the manner in which the ratio was determined. Such description shall include, but not be limited to, a description of the parcels used, the time period from which sales transactions were drawn, the classification applied by TAX to any parcel or transaction, and any mathematical formulas used in calculating the local assessment ratio.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-2604
Railroad Companies - Valuation of Roadway and Track
House Bill 1728 (Chapter 22) provides for a formula to determine the fair market value of roadway and track belonging to railroad companies. This formula would consist of multiplying the average of (i) the cost of such property recorded in the applicable Interstate Commerce Commission road accounts, less accumulated depreciation, and (ii) the depreciated basis of such property for federal income tax purposes by a fraction determined by dividing the railroad's track miles within the Commonwealth by its total track miles.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-2656
LICENSE TAXES
BPOL Tax - Payment of Severance Taxes
Senate Bill 889 (Chapter 93) permits localities to require evidence of the payment of severance taxes in order to obtain a local business license. Under current law, applicants are only required to show payment of business license, business personal property, meals, transient occupancy, and admissions taxes.
The severance tax is a tax on every person engaged in the business of severing (extracting) oil, coal, and/or gas from the earth.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3700
BPOL Tax - Clarification of Requirement
House Bill 1814 (Chapter 934) clarifies that existing law does not allow localities to require, as a condition to issuing a license to a business, evidence of payment of certain taxes by another business that may be owned by the applicant.
This bill would limit localities to requiring the payment of only those taxes owed by the business applying for the license. The locality would not be able to require payment of delinquent taxes owed by related businesses, nor could it require payment of delinquent personal property taxes on any nonbusiness property owed by the applicant.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3700
BPOL Tax - Religious Practices Research and Development Services
House Bill 1475 (Chapter 918) provides an exemption from local license taxes for receipts earned from the practice of religious tenets of any church or religious denomination when the practitioner is an "accredited religious practitioner," which is a person engaged solely in praying for others. This portion of the bill applies primarily to Christian Science practitioners.
Another provision of the bill permits any county operating under the county manager form of government (currently, only Arlington County) to elect not to reduce its BPOL tax rate on research and development businesses on federal contracts. Under the law previous to this bill, localities were required to impose the special BPOL tax rate upon federal contractors performing the specified research and development services. An increase in revenues would result in localities electing not to reduce its BPOL tax rate on the applicable research and development businesses. The law requiring the BPOL tax rate reduction was added by the 1992 General Assembly, Chapter 632 and was initially enacted as a result of a proposal of the Report of the Joint Subcommittee To Study the Measures Necessary to Assure Virginia's Economic Recovery.
A third bill provision prevents any other locality from taxing any gross receipts which are properly reported to another locality, and classified by the locality to which they were reported as federal contract receipts of research and development businesses, regardless of whether the reporting locality taxes the applicable gross receipts or not.
EFFECTIVE DATE: July 1, 1993
CODE SECTIONS AMENDED: §§ 58.1-3703 and 58.1-3706
BPOL Tax - Marriage Celebrants
House Bill 1358 (Chapter 65) exempts marriage celebrants, with gross receipts of $ 500 or less, from the BPOL tax. Marriage celebrants include ministers of religious denominations, persons chosen by a religious society which has no ordained minister, judges, and anyone else appointed by a court to celebrate the rites of marriage.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3703
BPOL Tax - Exemptions
House Bill 1352 (Chapter 326) extends an existing exemption from local license taxes granted to hospitals, colleges, universities and other institutions of learning which are exempt from federal income taxes, except where an ordinance taxing such organization was enacted by a local governing body prior to January 15, 1991.
Prior to passage of this bill, the exemption would have expired on July 1, 1993. The exemption will expire on July 1, 1997, unless reenacted.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3703
Coal and Gas Road Improvement Tax
House Bill 1688 (Chapter 163) permits localities comprising the Virginia Coalfield Economic Development Authority to use one-forth of the revenue paid to the Coal and Gas Road Improvement Fund for the purpose of funding the construction of new water systems and lines in areas with insufficient natural water supplies. This results in 18.75% of the total coal severance tax revenues being devoted to the construction of water systems and lines to improve the quality and quantity of water supplies. The funding provided by this legislation could be utilized in such instances, in addition to being utilized to replace water supplies for persons incurring water damages before 1977.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3713
Wise County
House Bill 1783 (Chapter 933) permits counties with a population of between 39,000 and 44,000 to transfer up to one million dollars from the Coal and Gas Road Improvement Fund to their general fund. The transferred amount is to be used for public education and public governmental purposes, in an amount up to $ 500,000 each, respectively.
The applicable county (currently, only Wise County satisfies all necessary criteria) must match dollar for dollar any sums transferred each year by a one-time increase of local revenues over the 1992-1993 fiscal year and may not reduce general fund appropriations for education purposes below the amount set forth in the year prior to the transfer. The provisions of this bill expire on January 1, 1995.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: None, this is only an Act of Assembly
MISCELLANEOUS TAXES
MEALS TAX
Apportionment
House Bill 2269 (Chapter 104) expands the taxing authority of local jurisdictions which impose a food and beverage or meals tax by allowing them to apportion the tax for businesses that straddle boundary lines between local jurisdictions, even if the bordering jurisdictions do not impose a food and beverage or meals tax.
The apportionment would be computed by applying the apportionment formula set out in Va. Code § 58.1-3709 which applies apportionment of local license taxes to those businesses which are located in more than one local jurisdiction. This apportionment is based on the area actually occupied and actively used in connection with the business, as a proportion of the total area which the business occupies and uses.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3834
TRANSIENT OCCUPANCY TAX
Arlington County
Senate Bill 658 (Chapter 56) extends from December 31, 1993 to December 31, 1996 the authorization of any county operating under the county manager plan of government to impose an additional 1/4 percent transient occupancy tax. The county manager plan is a form of government in which all of the legislative powers of the county are vested in a board of five members elected by a majority of qualified voters. Currently, only Arlington County qualifies for this authorization.
The revenues collected from the additional transient occupancy tax are to be designated and spent on promoting tourism and business travel.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3822
Roanoke County
House Bill 38 (Chapter 3) authorizes the county of Roanoke to increase its transient occupancy tax from two percent to five percent. The entire amount of the resulting revenue increase is to be used by the county for tourism and tourism-related services.
EFFECTIVE DATE: July 1, 1993
AMENDED: Section 2.02 of Chapter 617 of the 1986 Acts of Assembly
CONSUMER UTILITY TAX
Local Emergency Telephone System Tax
House Bill 294 (Chapter 25) and Senate Bill 864 (Chapter 76) permit localities which operate an enhanced (E-911) emergency telephone system to use revenues derived from the special E-911 tax on consumers to pay for repair and system upgrade costs and salaries or portions of salaries of dispatchers or call-takers paid by the locality which are directly attributed to the E-911 program.
Under current law, the tax may only be used for capital, installation and maintenance costs. After capital and installation costs have been fully recovered, the tax must be reduced to a level covering only recurring maintenance costs. This bill will allow localities to maintain the tax at a level necessary to pay for certain other system operational costs.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3813
TANGIBLE PERSONAL PROPERTY TAX
Proration of Tax
House Bill 1286 (Chapter 557) allows certain counties, cities, and towns operating under the county manager or the urban county executive plan, to prorate assessments of taxes levied on motor vehicles, boats, and trailers. Under current law, certain localities may prorate assessments on personal property by ordinance only. This bill removes that restriction for the counties of Arlington (county manager plan) and Fairfax (urban county executive form).
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3516
City of Winchester
House Bill 1331 (Chapter 324) and Senate Bill 810 (Chapter 187) provide for the payment of personal property tax on any prorated personal property on the last day of the twelfth month after such personal property acquired situs within the City of Winchester.
Effective in 1992, the City of Winchester was added to the list of localities authorized, by ordinance, to prorate assessments of taxes levied on motor vehicles, boats, and trailers. The tax is prorated on a monthly basis.
This bill extends the deadline for the payment of the tax to the last day of one year after the property acquired situs.
EFFECTIVE DATE: July 1, 1993
CODE SECTION ADDED: § 58.1-3516.1
Classifications - Auxiliary Members of Rescue and Fire Units
House Bill 1829 (Chapter 100) adds motor vehicles owned by auxiliary members of volunteer rescue squads or fire departments to the classifications for local tangible personal property taxation in § 58.1-3506. The governing body may levy a tax on such property at a different rate from the tax levied on other tangible personal property as long as it does not exceed that applicable to the general class of tangible personal property.
Previous to this law change the separate classification applied to motor vehicles owned by members of volunteer rescue squads or fire departments.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3506
Machinery and Tools - Clarification
Senate Bill 1022 (Chapter 78) amends § 58.1-3507, which provides for local taxation of machinery and tools, by deleting the words "and cogeneration equipment covered by § 58.1-3506," added in 1992, which merely reiterated existing law. It removes the requirement that such cogeneration equipment be valued by reference to depreciated cost or capitalized cost.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3507
REAL ESTATE TAX
Mobile Homes - Redefined
House Bill 1246 (Chapter 911) amends the statute that defines property owned by elderly and disabled persons that may be exempted or deferred from the payment of local property taxes by changing the term mobile homes to manufactured homes.
Generally, the law allows a locality to adopt a reduced tax rate for certain real property, including manufactured homes whether permanently affixed or not, when owned by the elderly and the disabled.
The bill also changes a Code reference to provide the proper definition of a manufactured home.
EFFECTIVE DATE: Taxable years beginning on and after January 1, 1993
CODE SECTION AMENDED: § 58.1-3210
Income and Net Worth Limits
House Bill 1285 (Chapter 14) and Senate Bill 537 (Chapter 49) add the City of Portsmouth to the list of localities that may, by ordinance, use higher combined income ($ 40,000) and combined financial net worth ($ 150,000) limitations for purposes of local real estate tax relief programs for the elderly and disabled.
House Bill 1974 (Chapter 149) adds Stafford County to the list.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3211
Income of Relatives
House Bill 1535 (Chapter 66) eliminates income limits for a relative or relative's spouse living with an elderly or disabled person who can no longer care for himself or herself due to his or her physical or mental condition for purposes of qualifying for real property relief as long as the owner of the residence has not transferred assets in excess of $ 5,000 without adequate consideration within a three-year period prior to or after the relative moves into such residence.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3211
Land Use Exemption - Extended
House Bill 1723 (Chapter 584) extends to Albemarle County the authority to exclude from land use taxation by ordinance:
(1) land lying in planned development, industrial or commercial zoning districts established prior to January 1, 1981, and
(2) land which is rezoned at the request of the owner (or his agent) to a more intensive nonagricultural use (except when such use is complementary to agricultural use and the land is retained by the same owner as prior to rezoning).
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3237.1
Land Preservation - Administration
House Bill 1867 (Chapter 102) eliminates the provision in § 58.1-3234 that provides for the local assessing officers to prepare and transmit a list of applicants and a copy of the application for special assessment for land preservation to the clerk. Additionally, the clerk would neither be required to maintain a book indexing the names of the applicants nor be required to file the application in his office.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3234
Use Valuation - Open Space
House Bill 2283 (Chapter 390) provides that land which is (i) subject to a perpetual easement pursuant to the Open Space Land Act (§ 10.1-1700 et seq.) or the Virginia Conservation Easement Act (§ 10.1-1009 et seq.), (ii) is devoted to open-space use as defined in § 58.1-3230, and (iii) is located in any locality that provides for special assessment for land preservation pursuant to § 58.1-3231 or § 58.1-3232, shall be assessed and taxed at the use value for open space.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 10.1-1011
Board of Equalization
House Bill 1451 (Chapter 136) provides that any determination of assessed value by a local board of equalization is deemed presumptively correct for the succeeding two years in a city with a population exceeding 350,000. If an assessor changes an assessment that has been determined by the board, there must be clear and convincing evidence that a substantial change in value has occurred.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3381
Partial Exemption - Hotels and/or Motels
Senate Bill 822 (Chapter 157) provides that the governing body of any locality may provide a partial exemption from property taxation for the real estate on which a hotel or motel at least thirty-five years of age has been substantially rehabilitated for residential use. Such partial exemption may be either ninety percent of the total assessed value of the rehabilitated or renovated structure or an amount equal to the increase in the assessed value resulting from the rehabilitation or renovation of the structure.
EFFECTIVE DATE: July 1, 1993
CODE SECTION ADDED: § 58.1-3220.1
TAX COLLECTION & ADMINISTRATION
Judicial Sale
House Bill 1635 (Chapter 372) and Senate Bill 599 (Chapter 51) eliminate the provision in the current law that was added in 1992 which allows title to real property purchased at a judicial sale in accordance with § 58.1-3967 to vest in the purchaser absolutely on December 31 following the fifth anniversary of the date of the judicial sale. Any proceeding pursuant to Article 4 of Chapter 39 of Title 58.1 initiated or in process on or after July 1, 1992, but before July 1, 1993 are declared valid in all respects, except that jurisdictional defects are not cured.
The 1992 amendment was intended to give innocent purchasers some protection from ejectment in the event the original owner discovered some technical defect in the sale of the land for delinquent taxes. However, some local government attorneys have found that the five year waiting period for title to vest absolutely in the purchaser made the properties unmarketable and have called off their planned sales as a result.
EFFECTIVE DATE: March 19, 1993
CODE SECTION AMENDED: § 58.1-3967
Payment Due Dates
Senate Bill 659 (Chapter 91) provides that the governing body of any locality may establish by ordinance the due dates for the payment of local taxes and may provide that the payments be made in a single installment or in two equal installments.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3916
Legal Services
House Bill 1509 (Chapter 27) authorizes the governing body of any county, city or town to retain private counsel to handle suits to enforce collection of local taxes, rather than employ such counsel on a full-time basis as currently required.
EFFECTIVE DATE: July 1, 1993
CODE SECTION AMENDED: § 58.1-3954
NOTES
LEGISLATIVE STUDIES
LEGISLATIVE STUDIES
The following is a listing of 1993 Legislative Studies assigned to the Secretary of Finance that TAX will be involved in this year. TAX will be directly responsible for several of the studies, while acting in a technical support or monitoring role for others. Generally, the studies are due for presentation to the Governor and the 1994 Session of the General Assembly.
* HJR 486: Requests the Virginia Department of Rail and Public Transportation to study the tax free transit benefits under the 1992 National Energy Policy Act and to follow and encourage implementation of tax free transit benefits programs by private employers as well as state agencies.
* HJR 526: Establishes a joint subcommittee to study the BPOL tax and to consider alternative means of taxation.
* HJR 527: Requests TAX to study the benefits of adding to Title 58.1 for all state and local taxes the definition of a "manufacturer" as defined by the Standard Industrial Classification codes 20 through 39.
* HJR 579: Requests the Secretary of Economic Development to examine the feasibility of various state and local governmental incentives to encourage economic development.
* HJR 589: Requests the Joint Commission on Health Care to study the feasibility of allowing personal income tax credits or deductions for individually purchased health insurance, the establishment of Medical Care Savings Accounts, and the use of transfers of assets to qualify for Medicaid program benefits.
* HJR 669: Requests the Virginia Department of Agriculture and Consumer Services, assisted by the Departments of Conservation and Recreation, Forestry, and TAX to study the extent of use and fairness of the Commonwealth's various "land use" tax programs.
* SJR 249: Establishes a joint subcommittee to study factors and criteria which should be used by the General Assembly in evaluating requests for exemption from the Virginia Retail Sales and Use Tax Act.
* SJR 309: Requests the Joint Legislative Audit and Review Commission (JLARC) to study local taxation of public service corporations, including, but not limited to, the range of local property tax rates on public service corporations throughout the state and the effect of local property tax rates on such corporations' utilities rates, and alternative methods of public service corporation taxation.
* SJR 310: Requests JLARC to continue its study of the division of responsibilities between state and local governments, with a particular emphasis on funding capability and obligations. (SJR 310 continues SJR 235 of the 1992 Session of the General Assembly)
* HB 1250, Item 278 - Income Tax Checkoffs: Requests TAX to study and develop recommendations concerning voluntary income tax checkoffs. The recommendations shall focus on how to handle additional checkoffs relative to limited space on the tax return and methods for selecting checkoffs.
Rulings of the Tax Commissioner