99-204 | Virginia Tax

Tax Type

General Provisions

Description

1999 Legislative Summary

Topic

Reports

Date Issued

06-30-1999

1999
LEGISLATIVE
SUMMARY

Virginia
Department of Taxation

Danny M. Payne
Tax Commissioner

TABLE OF CONTENTS

STATE TAX LEGISLATION .................................................................................... 1

GENERAL PROVISIONS ....................................................................................... 2
Interest Rates on Tax Overpayments and Underpayments .......................... 2
Reproductions of Department of Taxation Documents ................................. 2

INCOME TAX .......................................................................................................... 3
Corporations
Income Tax Credit for Research and Development Expenses ..................... 3
Tax Credit for Employers Who Employ Disabled Individuals ....................... 3
Historic Rehabilitation Tax Credit ................................................................ 4
Historic Rehabilitation Tax Credit ................................................................ 4
Land Preservation Tax Credit ...................................................................... 4
Neighborhood Assistance Act Tax Credit .................................................... 5
Neighborhood Assistance Act Tax Credit .................................................... 5
Subtraction for the Gain on the Sale of Land for Open-space Use ............. 5
Number of Permitted Enterprise Zones ....................................................... 5
Double-weighted Sales Factor .................................................................... 6
Individuals
Credit for Taxes Paid to Other States ......................................................... 7
Political Contribution Tax Credit ................................................................. 7
Home Accessibility Features for the Disabled Tax Credit .......................... 8
Subtraction for Unemployment Compensation Benefits ............................. 8
Individual Income Tax Exemption for First $15,000 of Basic Military Pay .. 9
Exemption for Federal and State Employees ............................................. 9
Subtraction and Deduction for Contributions to and Distributions from a
Virginia Higher Education Tuition Trust Fund Savings Account ...... 10
Individual Income Tax Deduction for Long Term Health Care Premiums ... 10
Full Deduction for Prepaid Tuition Contracts for Taxpayers Age 70 or Older 10
Deduction for Tuition Costs of Primary and Secondary School Teachers.... 11
U. S. Olympic Committee Check-off ............................................................ 11
Community Policing Fund Check-off ........................................................... 11
State Forest Systems Fund Check-off ........................................................ 11
Uninsured Medical Catastrophe Fund Check-off ........................................ 12
Jamestown-Yorktown Foundation Check-off ............................................... 12
Virginia Humanities Fund Check-off ............................................................ 12
Center for Governmental Studies Check-off ............................................... 12
Law and Economics Center Check-off ........................................................ 13

RETAIL SALES AND USE TAX ............................................................................ 14
Food Tax Reduction Program ..................................................................... 14
Refund of Sales Tax Paid on Building Materials by Certain Nonprofit
Organizations .................................................................................. 14
Extension of Certain Sunset Dates, Creation of Sunset Dates,
Establishment of Informational Filing for Exempt Nonprofit
Organizations .................................................................................. 15
Exemption on Prescription Orders of Licensed Physicians ....................... 15
Exemption for Internet Service Providers ................................................... 16
Governmental and Commodities Exemption .............................................. 16
Sales and Use Taxes from the Suffolk Conference Center ........................ 16
Exemption for Tooling, Machinery or Equipment ........................................ 17
Sales Price Definition to Exclude Local Property Tax Charges .................. 17
Exemption for Machinery and Tools Used in the Harvesting of
Forest Products ............................................................................... 17
Medical Sales and Use Tax Exemption ...................................................... 18

MISCELLANEOUS TAXES ................................................................................... 19
SCC Tax
TAXATION OF ELECTRIC UTILITIES ........................................................ 19
License Tax on Gross Receipts ....................................................... 19
Consumption Tax ............................................................................. 19
Corporate Income Tax ..................................................................... 20
Local Taxes ..................................................................................... 21
Recordation Tax
Exemption for the Amherst County Habitat for Humanity, Inc..................... 21

LOCAL TAX LEGISLATION ................................................................................ 22

GENERAL PROVISIONS ..................................................................................... 23
Definition of Treasurer ............................................................................... 23
Tax Increment Financing for Development ................................................ 23

TANGIBLE PERSONAL PROPERTY TAX .......................................................... 24
Rate Adjustment ......................................................................................... 24
Taxation on Aircraft of Public Service Corporations ................................... 24
Production of the Personal Property Tax Book by Electronic Means ......... 24
Identifying Vehicles That Qualify for Personal Property Tax Relief ........... 25
Property Classifications ............................................................................. 25
Classifications for Boats and Watercraft ................................................... 26
Water Well Drilling Equipment .................................................................. 26

REAL ESTATE TAX ............................................................................................ 27
Exemptions for Elderly or Disabled Persons in the Town of Lovettsville .. 27
Authorization of Local Governments to Grant Property Tax Exemptions ... 27
Sliding Scale Tax Rate .............................................................................. 28
New Building Assessments in Fairfax County ........................................... 28
Providing Names and Addresses of Property Owners to Relative
Property Owners Associations ........................................................ 29

BUSINESS PROFESSIONAL AND OCCUPATIONAL LICENSE TAX ............... 30
Excess Collection of BPOL Tax by Motor Vehicle Dealers ....................... 30
Localities May Eliminate BPOL and Merchant's Capital Tax on Merchants 30
Out-of-State Contractors Subject to BPOL ................................................ 31
MISCELLANEOUS TAXES ................................................................................... 32
Admissions Tax
Exemption for Charitable Events ................................................................ 32
Use Tax
Uniform Method of Use Tax Distribution .................................................... 32
Meals Tax
Prohibition on Local Food and Beverage Tax ............................................ 33
Items Subject to Tax ................................................................................... 33
Combined Meals and Transient Occupancy Tax in Rappahannock County 34
Transient Occupancy Tax
Rockbridge County Allowed to Impose Additional Tax .............................. 34
Sunset Date for Arlington County's Additional 1/4% Tax .......................... 34
Prince William County Allowed to Impose Additional Tax ......................... 35
Franklin County Allowed to Impose Additional Tax ................................... 35

TAX COLLECTION AND ADMINISTRATION ...................................................... 36
Local Tax Assessment Appeals ................................................................ 36
Method for Treasurers to Serve Process .................................................. 36
Sale of Real Estate to Collect Delinquent Taxes ...................................... 36
Appeal and Ruling Process for Certain Local Taxes ................................ 37
Delinquent Tax Responsibility for Limited Liability Companies ................ 37
Collection of Delinquent Real Estate Taxes ............................................. 38
Appeal of Real Estate Assessments ......................................................... 38
Conveyance of Real Estate to Satisfy Delinquent Taxes ......................... 39
Payment of Local Taxes, Fees, and Other Charges by Credit Card ........ 39
Interest on Refunds of Erroneous Assessments ...................................... 40

LEGISLATIVE STUDIES .................................................................................... 41
HB 1667: Research and Development Investment Tax Credit Study ...... 42
HB 2708: Joint Commission on Health Care ........................................... 42
SB 968: Study on the Definition of "Food" .............................................. 42
SB 1105: Joint Study of the Taxation of Gas Utilities and
Natural Gas Suppliers .................................................................. 42
HJR 578 & SJR 401: Joint Commission Studying Virginia's State and
Local Tax Structure of the 21st Century ....................................... 43
HJR 700: Study of Florida's Tax Incentives for Private Corporations which
Participate with Universities in Research and Development Projects. 43
HJR 742: Study of Sales and Use Taxation of Modular Housing ............... 43
HJR 746: Virginia Housing Development Authority Study ......................... 44
SJR 400: Joint Subcommittee Examining Electric Utility Restructuring
in the Commonwealth ..................................................................... 44
SJR 502: Coordinated Research and Development Policy Study ............... 44
SJR 503: Joint Subcommittees Studying Ways to Encourage Utilization of
Land Use Taxation and Agricultural and Forestal Districts ........... 44

INDEXES ............................................................................................................. 45

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 1999 Session of the General Assembly. It includes a general description of enacted legislation affecting:

_ State taxes administered by TAX, and

_ Local taxes which TAX assists in the administration of 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 (804) 367-8037
Employer 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.

Virginia Department of Taxation
July 1999

Page 1

STATE TAX
LEGISLATION

Page 2

GENERAL PROVISIONS

Interest Rates on Tax Overpayments and Underpayments - Amended

House Bill 1678 (Chapter 180) and Senate Bill 868 (Chapter 146) equalize Virginia's interest rates on tax overpayments (refunds) and underpayments (assessments) for both corporate and noncorporate taxpayers by increasing Virginia's existing overpayment rate by 2%.

Effective Date: January 1, 2000
Code Section Amended: § 58.1-15

Reproductions of Department of Taxation Documents - New

Senate Bill 794 (Chapter 103) allows the Department of Taxation to reproduce tax correspondence, documents, forms, statements, reports and working papers. This bill also permits the destruction of original documents after reproduction and enables the reproductions to be used as admissible evidence in court. Under prior law, authority to reproduce documents was limited to tax returns. This bill also clarifies that reproduction includes optic imaging.

Effective Date: July 1,1999
Code Section Amended: 58.1-106, 58.1-107, and 58.1-108

Page 3

INCOME TAX

Corporations

Income Tax Credit for Research and Development Expenses - New

House Bill 1667 (Chapter 450) creates an income tax credit for businesses that engage in research and development activities in Virginia. The credit is equal to 15% of the research and development expenditures eligible for the federal credit for research and development. The credit is limited to $100,000 per taxpayer per taxable year and a $5 million annual cap for all taxpayers. The amount of any credit exceeding a taxpayer's liability can be carried forward for up to 10 taxable years.

The bill also commissions a study of tax incentives for research and development investments in the Commonwealth. The study will be conducted by the Secretaries of Technology and Commerce and Trade. A report on the study including recommendations will be submitted to the Governor and the chairmen of the Senate Finance Committee and House Finance Committee by September 1, 1999.

- Effective Date: Taxable years beginning on or after January 1, 2001, and before January 1, 2006, if the bill is reenacted during the 2000 session of the General Assembly.

Code Section Added: § 58.1-439.11*

Tax Credit for Employers Who Employ Disabled Individuals - New

House Bill 1676 (Chapter 304) creates a tax credit for an employer who employs an individual with a disability. The credit will equal 20% of the first $6,000 of annual wages paid to the employee. The credit can be claimed against the individual income tax, corporate income tax, bank franchise tax, insurance gross premiums tax, or regulated utility license tax. The credit is nonrefundable and nontransferable. Unused credits can be carried over for three succeeding taxable years until used.

Effective Date: Taxable years beginning on and after January 1,1999, but
before December 31, 2002.
Code Section Added: § 58.1-439.11*

Page 4

Historic Rehabilitation Tax Credit- Expanded

House Bill 1739 (Chapter 183) and Senate Bill 957 (Chapter 152) amend the Historic Rehabilitation Tax Credit to allow credits granted to partners or shareholders of S corporations to be allocated among the partners and shareholders as they mutually agree. In addition, these bills permit a one time transfer of credits granted for projects completed and certified prior to the adoption of the Historic Rehabilitation Tax Credit regulations. These bills also clarify that the Department of Historic Resources may adopt, by regulation, those aspects of the federal historic rehabilitation tax credit program that it deems appropriate, unless the Virginia credit provides otherwise.

Effective Date: Taxable years beginning on or after January 1,1997
Code Section Amended: § 58.1-339.2

Historic Rehabilitation Tax Credit - Amended

House Bill 2370 (Chapter 213) amends the Historic Rehabilitation Tax Credit to allow individuals, trusts, estates, and corporations who are considered residents of the Commonwealth for income tax purposes to claim a credit for eligible expenses incurred in the rehabilitation of a historic structure located outside of Virginia, providing the other state has a historic structure rehabilitation tax credit program and a reciprocal agreement with the Commonwealth. Such reciprocal agreement must provide that the residents of the other state would be able to claim a tax credit on their return for the historic rehabilitation of a structure located in Virginia.

Effective Date: January 1, 2002
Code Section Amended: § 58.1-339.2

Land Preservation Tax Credit - New

House Bill 1752 (Chapter 983) and Senate Bill 1218 (Chapter 968) provide an income tax credit for individuals, estates, trusts, and corporations donating land for conservation and preservation purposes. The credit equals 50% of the "fair market value" of the land transferred up to a maximum credit of $50,000 for the 2000 taxable year, $75,000 for the 2001 taxable year, and $100,000 for taxable years thereafter. The credit is not refundable, but it can be carried forward for up to five years.

The Personal Property Tax Relief Act of 1998 includes certain safeguards or "triggers" that do not allow the next level of the phase-out of the tangible personal property tax to take effect if there is insufficient revenue growth. These bills contain a provision that would delay implementation of the credit until the level of tangible personal property tax relief reaches 47.5%.

- Effective Date: Taxable years beginning on or after January 1, 2000 provided the tax relief provided by the Personal Property Tax Relief Act of 1998 reaches 47.5%
  Code Sections Added: §§ 58.1-510, 58.1-511, 58.1-512, 58.1-513

Page 5

Neighborhood Assistance Act Tax Credit - Expanded

House Bill 1866 (Chapter 909) and Senate Bill 1021 (Chapter 890) expand the types of services that are eligible for Neighborhood Assistance Act Credits to include "contracting services." "Contracting services" include the provision of labor or technical advice to aid in the development, construction, renovation, or repair of homes of poor individuals and/or buildings used by qualified neighborhood organizations. The value of the "contracting services" is limited to the lower of the reasonable cost for similar services or $50 per hour for purposes of determining the amount of the Neighborhood Assistance Act tax credit.

- Effective Date: July 1, 1999
  Code Sections Amended: §§ 63.1-321 and 63.1-324
  Code Section Added: § 63.1-325.1

Neighborhood Assistance Act Tax Credit - Expanded

House Bill 2290 (Chapter 917) and Senate Bill 1153 (Chapter 894) make Neighborhood Assistance Act Credits available to licensed nurse practitioners, dental hygienists, physician assistants, and pharmacists who donate time to perform health care services at a qualified health clinic.

- Effective Date: July 1, 1999
  Code Section Amended: § 63.1-325

Subtraction for the Gain on the Sale of Land for Open-space Use - New

Senate Bill 1222 (Chapter 355) provides a subtraction for individuals and corporations for any gain on the sale of land or an easement to an organization which dedicates the land for open-space use.

- Effective Date: January 1, 2000
  Code Section Amended: §§ 58.1-322 and 58.1-402

Number of Permitted Enterprise Zones - Increased

House Bill 1953 (Chapter 249) and Senate Bill 1187 (Chapter 235) increase the maximum number of enterprise zones from 50 to 55 and require that five of the zones designated after July 1, 1999 meet certain criteria. The five newly designated zones must be established in a locality with an unemployment rate at least 50% higher than the statewide unemployment rate or within a planning district that has an unemployment rate that is at least 1 % higher than the state average.

- Effective Date: July 1, 1999
  Code Section Amended: § 59.1-274

Page 6

Double-weighted Sales Factor- Reenacted

House Bill 1818 (Chapter 186) and Senate Bill 1076 (Chapter 158) reenacted 1998 legislation that adopted a double-weighted sales factor for corporate income apportionment. Under this formula, the sales factor is weighted 50% and payroll and property as 25% each in determining the overall corporate income apportionment factor. Under current law, apportionment for most corporations is based on a formula which averages a property, payroll, and sales factor, with each factor weighted equally.

The Personal Property Tax Relief Act of 1998 includes certain safeguards or "triggers" that do not allow the next level of the phase-out of the personal property tax to take effect if there is insufficient revenue growth. These bills contain a provision that would delay implementation of this bill until the level of personal property tax relief reaches 47.5%.

- Effective Date: Taxable years beginning on or after January 1, 2000 provided the tax relief provided by the Personal Property Tax Relief Act of 1998 reaches 47.5%
  Code Section Amended: § 58.1-408

* Code references are those as shown in chapterized bills. Actual code section numbers will be assigned by the Virginia Code Commission.

Page 7

Individuals

Credit for Taxes Paid to Other States - Amended

House Bill 2223 (Chapter 317) expands the individual income tax credit for taxes paid to other states to allow a Virginia resident to claim this credit for taxes paid on the gain from the sale of any capital asset not used in a trade or business. Current law restricts this credit to income tax paid on certain types of income. Residents are currently allowed to claim this credit only if they pay income tax to another state on earned or business income, or on the gain from the sale of a principal residence. A capital asset is defined with reference to Internal Revenue Code (IRC) § 1221.

The Personal Property Relief Act of 1998 includes certain safeguards or "triggers" that do not allow the next level of the phase-out of the personal property tax to take effect if there is insufficient revenue growth. This bill contains a provision that would delay implementation of this bill until the level of personal property tax relief reaches 47.5%.

- Effective Date: Taxable years beginning on or after January 1, 2000 provided the tax relief provided by the Personal Property Tax Relief Act of 1998 reaches 47.5%
  Code Section Amended: § 58.1-332

Political Contribution Tax Credit- New

House Bill 2749 (Chapter 464) allows individuals a tax credit equal to 50% of the political contributions made to candidates for state and local offices, not to exceed $25 for an individual taxpayer or $50 for taxpayers filing a joint return. The credit is allowed for contributions to political candidates in a primary, special, or general election for local or state office held in the year in which the contribution is made. The credit is nonrefundable, and unused credits cannot be carried over to subsequent tax years.

- Effective Date: Taxable years beginning on or after January 1, 2000
  Code Section Added: § 58.1-339.6*

Page 8

Home Accessibility Features for the Disabled Tax Credit - New

House Bill 2358 (Chapter 404) creates an income tax credit for individuals who install or hire someone to install one or more accessability features in their home to make it accessible to disabled individuals provided such features are not otherwise required by law. The credit is equal to the lesser of 25% of the total cost of such features or $500. The total amount of tax credits that can be approved for any taxable year is limited to $1.0 million.

Accessability features which apply toward the credit are: 1) a no-step entrance allowing access into the residence; 2) interior passage doors providing a thirty-two inch wide clear opening; 3) reinforcements in bathroom walls and installation of grab bars around the toilet, tub, shower; 4) light switches and outlets placed in accessible locations; and 5) universal design features or those accessibility or adaptability features prescribed in the Virginia Uniform Statewide Building Code.

The Personal Property Relief Act of 1998 includes certain safeguards or "triggers" that do not allow the next level of the phase-out of the tangible personal property tax to take effect if there is insufficient revenue growth. This bill contains a provision that would delay implementation of this bill until the level of tangible personal property tax relief reaches 47.5%.

- Effective Date: Taxable years beginning on or after January 1, 2000 provided the tax relief provided by the Personal Property Tax Relief Act of 1998 reaches 47.5%
  Code Section Added: § 58.1-339.6*

Subtraction for Unemployment Compensation Benefits - New

House Bill 1487 (Chapter 588) creates an individual income tax subtraction for unemployment compensation benefits received during the taxable year.

The Personal Property Tax Relief Act of 1998 includes certain safeguards or "triggers" that do not allow the next level of the phase-out of the personal property tax to take effect if there is insufficient revenue growth. This bill contains a provision that will delay implementation of this bill until the level of personal property tax relief reaches 47.5%.

- Effective Date: Taxable years beginning on or after January 1, 2000 provided the tax relief provided by the Personal Property Tax Relief Act of 1998 reaches 47.5%.
  Code Section Amended: § 58.1-322

Page 9

Individual Income Tax Exemption for First S15,000 of Basic Military Pay - New

House Bill 1584 (Chapter 365) and Senate Bill 1160 (Chapter 498) provide military service personnel with an exemption from the Virginia individual income tax for up to $15,000 of military basic pay received during a taxable year, provided they are on extended active duty for a period in excess of 90 days. The exemption is reduced when the amount of military basic pay received by the taxpayer exceeds $15,000 and is fully phased out when basic military pay reaches $30,000. This exemption is available whether the individual is stationed inside or outside of Virginia.

The Personal Property Tax Relief Act of 1998 includes certain safeguards or "triggers" that do not allow the next level of the phase-out of the personal property tax to take effect if there is insufficient revenue growth. These bills contain a provision that will delay implementation of this bill until the level of personal property tax relief reaches 47.5%.

- Effective Date: Taxable years beginning on or after January 1, 2000 provided the tax relief provided by the Personal Property Tax Relief Act of 1998 reaches 47.5%
  Code Section Amended: § 58.1-322

Exemption for Federal and State Employees - New

Senate Bill 1160 (Chapter 498) provides an exemption for the first $15,000 of salary for federal and state employees whose annual salary is $15,000 or less.

The Personal Property Tax Relief Act of 1998 includes certain safeguards or "triggers" that do not allow the next level of the phase-out of the personal property tax to take effect if there is insufficient revenue growth. This bill contains a provision that will delay implementation of this bill until the level of personal property tax relief reaches 47.5%.

- Effective Date: Taxable years beginning on or after January 1, 2000 provided the tax relief provided by the Personal Property Tax Relief Act of 1998 reaches 47.5%
  Code Section Amended: § 58.1-322

Page 10

Subtraction and Deduction for Contributions to and Distributions from a Virginia Higher Education Tuition Trust Fund Savings Account - New

House Bill 1600 (Chapter 518) and Senate Bill 919 (Chapter 485) authorize the Virginia Higher Education Tuition Trust Fund to establish a program for higher education savings trust accounts and provide tax preferences for the contributions to, and the distributions from such accounts. These bills create a deduction on the individual income tax return for contributions made to a savings trust account with the Virginia Higher Education Tuition Trust Fund. The deduction is limited to the lesser of $2,000 per year per account or the total of the actual contributions made in that year. These bills also create a subtraction for the earnings from a savings trust accounts if the distribution is used for qualified higher education expenses or if the refund is in the case of the beneficiary's death, disability, or receipt of a scholarship.

- Effective Date: Taxable years beginning on or after January 1, 1999
  Code Sections Amended: §§ 2.1-342, 2.1-344, 23-38.75, 23-38.76, 23-38.77, 23-38.80, 23-38.81, 23-38.86, 23-38.87, and 58.1-322.

Individual Income Tax Deduction for Long Term Health Care Premiums - New

House Bill 1546 (Chapter 298) creates an individual income tax deduction for long term health care insurance premiums provided that these premiums have not been deducted for federal income tax purposes.

- Effective Date: Taxable years beginning on or after January 1, 2000
  Code Section Amended: § 58.1-322

Full Deduction for Prepaid Tuition Contracts for Taxpayers Age 70 or Older - New

House Bill 1933 (Chapter 535) allows purchasers of prepaid tuition contracts sold by the Virginia Higher Education Trust Fund who are age 70 or older to deduct the full amount paid for the purchase of a prepaid tuition contract, not subject to the existing limitation of $2,000 per year per contract. The accelerated deduction only applies to amounts not previously deducted and is permitted in any taxable year in which the purchaser has attained the age of 70, regardless of the purchaser's age in the year the prepaid tuition contract was purchased.

Under current law, the deduction for the purchase of a prepaid tuition account is limited to $2,000 per contract per taxable year. The amount of any unused deduction, however, can be carried forward to each of the taxpayer's subsequent year(s) return until the total amount paid for the prepaid tuition contract is deducted.

- Effective Date: Taxable years beginning on or after January 1, 1998
  Code Section Amended: § 58.1-322

Page 11

Deduction for Tuition Costs of Primary and Secondary School Teachers - New

Senate Bill 877 (Chapter 285) allows any individual who is licensed to teach by the Commonwealth of Virginia and employed as a primary or secondary school teacher to claim an individual income tax deduction for tuition costs incurred for continuing teacher education courses which are required as a condition of employment. The deduction equals 20% of the tuition costs and is allowed to the extent the individual was not reimbursed for such costs and has not claimed a deduction for such costs on his federal income tax return.

- Effective Date: Taxable years beginning on or after January 1, 1999.
  Code Section Amended: § 58.1-322

U.S. Olympic Committee Check-off - Amended

House Bill 1887 (Chapter 32) makes the individual income tax check-off for voluntary contributions to the U.S. Olympic Committee permanent. This check-off was set to expire on January 1, 2000.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-346.1:1

Community Policing Fund Check-off - Amended

House Bill 1491 (Chapter 23) makes permanent the income tax refund check-off to fund the Community Policing Fund. The fund provides grants to local law enforcement agencies for the purchase of equipment or the support of services relating to community policing. The check-off would have expired on December 31, 1999.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-346.5

State Forest Systems Fund Check-off - New

House Bill 2047 (Chapter 998) allows any individual to designate a portion of his or her tax refund to the State Forests System Fund. Contributions will be used for the purposes of developing and implementing conservation and education initiatives in the state forest system.

- Effective Date: Taxable years beginning on or after January 1, 1999
  Code Sections Added: §§ 10.1-1119.1 and 58.1-346.9*

Page 12

Uninsured Medical Catastrophe Fund Check-off - New

House Bill 2047 (Chapter 998) allows any individual to designate a portion of his or her tax refund to the Uninsured Medical Catastrophe Fund. Contributions will be
used solely for the purposes of providing a source of payment for medical treatment of uninsured medical catastrophes.

- Effective Date: Taxable years beginning on or after January 1, 1999
  Code Sections Added: §§ 32.1-324.2 and 58.1-346.10*

Jamestown-Yorktown Foundation Check-off - New

House Bill 2335 (Chapter 210) allows any individual to designate a portion of his or her tax refund to the Jamestown-Yorktown Foundation. Contributions will be used
to help fund the Jamestown 2007 quadricentennial celebration.

- Effective Date: Taxable years beginning on or after January 1, 2000, but before January 1, 2008.
  Code Section Added: § 58.1-346.9*

Virginia Humanities Fund Check-off - New

Senate Bill 923 (Chapter 948) allows any individual to designate a portion of his or her tax refund to the Virginia Foundation for the Humanities and Public Policy. The Virginia Foundation for the Humanities and Public Policy is a not-for-profit organization dedicated to developing and supporting research, education, and public programs in
the humanities.

- Effective Date: Taxable years beginning on or after January 1, 1999 but before January 1, 2005.
  Code Section Added: § 58.1-346.9*

Center for Governmental Studies Check-off - New

Senate Bill 923 (Chapter 948) allows any individual to designate a portion of his or her tax refund to the Center for Governmental Studies. The Center for Governmental Studies is a public service and research center at the University of Virginia.

- Effective Date: Taxable years beginning on or after January 1, 1999 but before January 1, 2005.
  Code Section Added: § 58.1-346.10*

Page 13

Law and Economics Center Check-off - New

Senate Bill 923 (Chapter 948) allows any individual to designate a portion of his or her tax refund to the Law and Economics Center. The Law and Economics Center is a public service and research center at George Mason University.

- Effective Date: Taxable years beginning on or after January 1, 1999 but before January 1, 2005.
  Code Section Added: § 58.1-346.11*

* Code references are those as shown in chapterized bills. Actual code section numbers will be assigned by the Virginia Code Commission.

Page 14

RETAIL SALES AND USE TAX

Food Tax Reduction Program

House Bill 1601 (Chapter 366) and Senate Bill 735 (Chapter 466) establish the Food Tax Reduction Program. These bills reduce the state sales and use tax rate on food products purchased for human consumption by 2% over a four year period.

These bills reduce the state sales tax rate by 1/2% per year over a four year period. Beginning January 1, 2000, the state tax rate decreases to 3% for the period January 1, 2000 through March 31, 2001. Thereafter, the rate decreases to 2.5% for the period April 1, 2001 through March 31, 2002 and 2% for the period April 1, 2002 through March 31, 2003. Effective April 1, 2003, the state sales and use tax rate will be 1.5%.

These bills do not affect the imposition of the local sales and use tax. When fully phased in, the combined state and local tax rate of sales and use tax on food products for human consumption on and after April 1, 2003 will be 2.5%.

The tax rate reductions for April 1, 2001 and thereafter are effective provided two conditions are satisfied: (1) the next level of the phase-out of the tangible personal property tax under the Personal Property Tax Relief Act of 1998 is implemented for that fiscal year, and (2) actual General Fund revenues for the fiscal year preceding a fiscal year in which a rate reduction is contemplated exceed the official revenue estimates for that second preceding fiscal year by at least 1 percent.

- Effective Date: January 1, 2000
  Code Section Added: § 58.1-611.1

Refund of Sales Tax Paid on Building Materials by Certain Nonprofit Organizations - Sunset Date Extended

House Bill 1636 (Chapter 12) and Senate Bill 847 (Chapter 334) extend the sunset date for the provision authorizing a refund of sales tax paid on building materials purchased by a nonprofit organization exempt from taxation under § 501 (c)(3) of the Internal Revenue Code and organized primarily to acquire land and purchase materials to erect or rehabilitate low-cost homes on such land.

The refund provision was enacted by the 1993 General Assembly and effective July 1, 1993 through June 30, 1994. The refund provision was extended by the 1994 General Assembly to June 30, 1999. These bills extend the sunset date of this refund provision for five years, to July 30, 2004.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-608.1

Page 15

Extension of Certain Sunset Dates, Creation of Sunset Dates, Establishment of Informational Filing for Exempt Nonprofit Organizations - New

House Bill 1571 (Chapter 776) and Senate Bill 829 (Chapter 762) extend the sunset date for all exemptions for nonprofit organizations in the medical-related, civic and community service, cultural organizations, and miscellaneous groupings from June 30, 1999 to June 30, 2001. These bills also establish a June 30, 2001 sunset date for existing nonprofit organization exemptions in the same groupings that currently do not have a sunset date.

These bills also require all nonprofit organizations, except churches, exempt from sales and use tax to submit to the Department of Taxation updated information relating specifically to the operation and administration of the organization. The initial filing of information is due from all exempt nonprofit organizations by July 1, 2000. Such organizations are then required to update this information on five year cycles. The law provides that failure to file this information with the department in a timely manner will result in loss of the sales and use tax exemption.

These bills also create a new exemption from the retail sales and use tax for any nonprofit organization whose members include the Commonwealth and other states and which is organized for the purpose of fostering interstate cooperation and excellence in government.

- Effective Date: July 1, 1999
  Code Sections Amended: §§ 30-19.05, 30-19.1:3, 58.1-608.2, 58.1-609.1, 58.1-609.4, 58.1-609.7 through 58.1-609.10, 58.1-623, and 58.1-623.1

Exemption on Prescription Orders of Licensed Physicians - Expanded

House Bill 1650 (Chapter 523) and Senate Bill 782 (Chapter 472) expand the current sales and use tax exemption for medicines and drugs, contact lenses, eyeglasses, and hearing aids dispensed on prescription orders of licensed physicians. Under these bills, the exemption applies to eyeglass cases and contact lens storage containers, solutions or sterilization kits or other similar devices when distributed free of charge by optometrists, ophthalmologists, and opticians.

These bills also expand the exemption for controlled drugs purchased for use by a licensed physician in his professional practice to include optometrists, licensed nurse practitioners, and licensed physician assistants. Under current law, a licensed physician may purchase controlled drugs for use in his professional practice exempt of the tax. However, optometrists, licensed nurse practitioners, and licensed physician assistants are not licensed physicians in Virginia and must pay the tax on their purchases of controlled drugs. These bills allow optometrists, licensed nurse practitioners, and licensed physician assistants to purchase controlled drugs exempt of the tax for use in their professional practices.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-609.7(1)

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Exemption for Internet Service Providers - New

House Bill 1713 (Chapter 981) redefines retail sales as it relates to tangible personal property used in Virginia to provide Internet service to customers. By definition, the retail sales and use tax does not apply to computer hardware and software, servers, hosting equipment, and distribution equipment purchased by an Internet service provider.

Internet service is defined as a service that enables users to access proprietary and other content, information, electronic mail, and the Internet as part of a package of services sold to end-user subscribers.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-602

Governmental and Commodities Exemption - Clarified

House Bill 1765 (Chapter 401) and Senate Bill 781 (Chapter 471) provide that the exemption from the retail sales and use tax for the Commonwealth and its political subdivisions does not apply to tangible personal property they acquire and then transfer to private businesses for their use in a facility or real property improvement to be used by a private entity or for nongovernmental purposes.

These bills codify the Attorney General's opinion which determined that a local industrial development authority does not have the statutory authority to act as a general contractor in the construction of a manufacturing plant in order to enable the manufacturer to construct the plant without payment of the sales and use tax on construction materials.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-609.1(4)

Sales and Use Taxes from the Suffolk Conference Center

House Bill 1785 (Chapter 184) and Senate Bill 790 (Chapter 141) authorize the state sales and use tax generated by sales at the Suffolk Conference Center (a public facility) to be returned to the City of Suffolk. The tax so returned to the City of Suffolk must be applied to the repayment of municipal bonds issued to finance the construction of the facility.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-608.3

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Exemption for Tooling, Machinery or Equipment - New

House Bill 1820 (Chapter 187) and Senate Bill 774 (Chapter 138) exclude from the retail sales and use tax charges for tooling, machinery, or equipment (including dies, molds and patterns) where title is transferred by a manufacturer to its customer after use by the manufacturer directly in the production of a product. The exclusion applies if: (1) at the time of purchase the manufacturer (buyer) is obligated, under the terms of a written contract, to make the transfer of the specified property, and (2) the transfer is made for the same or greater consideration to the person for whom the manufacturer produces goods.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-602

Sales Price Definition to Exclude Local Property Tax Charges - Amended

House Bill 1911 (Chapter 723) amends the definition of "sales price" to exclude from retail sales and use taxation separately stated local property tax charges. Currently, lessors of tangible personal property (who pay the property tax to localities) are required to charge and collect the sales tax when those property tax charges are passed on to lessees.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-602

Exemption for Machinery and Tools Used in the Harvesting of Forest Products Expanded

Senate Bill 864 (Chapter 229) expands the current sales and use tax exemption available to machinery and tools used directly in the harvesting of forest products. Under this bill, the exemption applies to machinery used in certain pre-harvesting and post-harvesting activities. Specifically, the exemption applies to machinery and tools used to obtain access to the harvest site, remove timber or other forest products from the harvest site, load cut timber or other forest products onto highway vehicles for transportation to storage or processing facilities, and comply with environmental protection and safety requirements applicable to the harvesting of forest products.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-609.2(6)

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Medical Sales and Use Tax Exemption - Expanded

Senate Bill 869 (Chapter 847) provides an exemption for medicines and drugs purchased for use or consumption by a licensed hospital. This exemption benefits Virginia's for-profit hospitals.

This bill does not affect nonprofit hospitals. Code of Virginia § 58.1-609.7(4) currently exempts tangible personal property (including medicines and drugs) purchased for use or consumption by nonprofit hospitals or nonprofit licensed nursing homes. Further, this bill does not affect purchases of nonprescription drugs. Effective July 1, 1998, all purchases of nonprescription drugs became exempt from the tax, including purchases by for-profit hospitals.

- Effective Date: July 1, 2000
  Code Section Amended: § 58.1-609.7(1)

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MISCELLANEOUS TAXES

SCC Tax

TAXATION OF ELECTRIC UTILITIES

License Tax on Gross Receipts - Repealed and Replaced

Legislation was enacted during the 1999 session of General Assembly to deregulate the electric industry in the Commonwealth. This legislation included provisions that will change the manner in which the electric industry is taxed once deregulation commences.

Senate Bill 1286 (Chapter 971) repeals the state and local gross receipts taxes and State Corporation Commission special assessment tax imposed on electric utilities. These taxes are to be replaced by a declining block consumption tax on electricity based on kilowatt hour usage and the corporate income tax on electric suppliers.

- Effective Date: Tax years beginning on or after January 1, 2002

Consumption Tax

Senate Bill 1286 (Chapter 971) imposes a declining block consumption tax on residential, commercial, and industrial users of electric power. The consumption tax is imposed on all consumers of electricity in Virginia based on kWh used per month. The per unit tax rate declines as monthly usage increases as shown in the table below:

kWh per month	Maximum tax rate	State Consumption Tax	Special Regulatory Tax	Local Consumption Tax
0 - 2,500	$0.00155/kWh	$0.00102/kWh	$0.00015/kWh	$0.00038/kWh
2,501 - 50,000	$0.00099/kWh	$0.00065/kWh	$0.00010/kWh	$0.00024/kWh
50,000 +	$0.00075/kWh	$0.00050/kWh	$0.00007/kWh	$0.00018/kWh

The electric service provider collects the tax from the consumer by adding it to the consumer's monthly bill. After the consumer pays the tax to the electric service provider, the taxes are held in trust by the provider until remitted to the SCC. The electric service provider remits the amount of State Consumption and Special Regulatory taxes billed to the service provider's consumers to the SCC on a monthly basis. The local portion of the consumption tax is remitted to the locality in which the electricity was sold based on the locality's license fee rate imposed on public service. Payments would be due on the last day of each month.

Page 20

Municipal electric utilities ("municipals") receive different treatment regarding the administration of the consumption tax. Municipals are not required to separately state the consumption tax component on consumers' bills. Municipals remit the consumption tax collected to the entity providing the transmission service of the electricity. The transmission entity then remits the tax to the SCC.

The governments of the United States and the Commonwealth of Virginia, as well as the localities of the Commonwealth, are exempt from the consumption tax. This exemption applies to federal and state agencies.

- Effective Date: January 1, 2001

Corporate Income Tax

Senate Bill 1286 (Chapter 971) imposes the Virginia corporate income tax on "electric suppliers." An electric supplier is any corporation, cooperative, partnership or other business entity providing electric service.

Investor-owned electric suppliers are subject to the usual corporate income tax. Cooperatives are subject to a modified net income tax. Modified net income is the total revenue from the sale of electricity within the Commonwealth less (i) revenue attributable to sales to members of the electric cooperative, and (ii) the nonmember share of ordinary and necessary expenses paid or incurred during the taxable year to provide electricity. All available tax credits are allocated between member and nonmember revenue.

This bill allows each electric supplier a "special" subtraction from federal taxable income in determining Virginia taxable income. This subtraction allows an electric supplier to reduce its taxable income for its "Virginia Tax Basis." The Virginia Tax Basis is the difference between the total book value and the total tax value of the electric supplier's assets. This amount is determined according to the asset values as of the last day of the taxable year preceding the tax year in which the electric supplier became subject to the corporate income tax. The Virginia Tax Basis is amortized over 30 years using the straight line method.

Each electric supplier is also eligible for the Virginia Coal Employment and Production Incentive Tax Credit against its corporate income tax (or modified net income tax in the case of electric cooperatives). Electric suppliers are allowed a $3 per ton credit for coal purchased by the electric supplier provided that the coal was mined in Virginia.

- Effective Date: Taxable years beginning on or after January 1, 2001

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Local Taxes

Senate Bill 1286 (Chapter 971) permits any city, county, or town to impose a tax of no more than $.015 per KWH used by each consumer. This optional tax by localities is limited to the first 200 KWH used by residential consumers which would charge each residential consumer a maximum of $3.00 on their monthly bill. There is no KWH limit for all other consumers.

For local property tax purposes, all generating equipment is centrally assessed by the SCC. The rate at which this generating equipment can be taxed cannot exceed the real estate rate applicable in the respective localities. This is not a change for investor owned utilities and electric cooperatives. This is a change, however, for cogenerators. Currently, cogenerators' property is assessed at approximately 10% of its cost and then the machinery and tools tax rate is applied to determine the personal property tax. Under this bill, cogenerators' property is assessed at approximately 80% of its cost and the lower real estate tax rate will be applied to determine the personal property tax.

- Effective Date: Tax years beginning on or after January 1, 2002
  
  Code Sections Amended: §§ 58.1-401, 58.1-402, 58.1-439.2, 58.1-504, 58.1-2600, 58.1-2601, 58.1-2602, 58.1-2603, 58.1-2604, 58.1-2606, 58.1-2609, 58.12610, 58.1-2611, 58.1-2626, 58.1-2627, 58.1-2628, 58.1-2633, 58.1-2660, 58.12682, 58.1-3731 and 58.1-3814
  Code Sections Added: §§ 58.1-400.2, 58.1-433.1, 58.1-440.1, 58.1-2900, 58.1-2901, 58.1-2902, and 58.1-2903

RECORDATION TAX

Exemption for the Amherst County Habitat for Humanity, Inc. - New

House Bill 1722 (Chapter 400) provides a recordation tax exemption for deeds on property conveyed by the Amherst County Habitat for Humanity and on deeds of trust or mortgages received by this organization.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-811

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LOCAL TAX
LEGISLATION

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GENERAL PROVISIONS

Definition of Treasurer - Amended

House Bill 1814 (Chapter 90) and House Bill 1841 (Chapter 777) expand the definition of a treasurer for local tax purposes to include town treasurers, town directors of finance, and any other town employee who performs any of the duties of a town treasurer or town director of finance. Many towns have officers or employees who perform very similar functions to city and county treasurers. These bills give the above persons the same powers as city and county treasurers for the purposes of collection of taxes and other charges.

- Effective Date: March 15, 1999
  Code Section Amended: § 58.1-3123

Tax Increment Financing for Development - Expanded

House Bill 1877 (Chapter 190) and Senate Bill 1221 (Chapter 162) expand the types of public facilities for which tax increment financing may be used to include real estate devoted to open-space use. Real estate devoted to "open-space use" is real estate preserved for park or recreational purposes, conservation of land and other natural resources, floodways, historic or scenic purposes or otherwise assisting in the shaping of community development. Tax increment financing allows localities to redevelop blighted areas. This is accomplished by localities issuing debt instruments and making commitments to redevelop specific blighted areas.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3245.1

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TANGIBLE PERSONAL PROPERTY TAX

Rate Adjustment - New

House Bill 1851 (Chapter 189) changes the formula currently used in determining funding to localities, and tangible personal property tax relief to taxpayers, under the Personal Property Tax Relief Act of 1998. Under this bill, a locality is funded for any loss of local revenue attributable to tangible personal property tax relief, and taxpayers receive tangible personal property tax relief, in accordance with the tangible personal property tax rates in effect in the locality on July 1, 1997 or August 1, 1997, whichever is greater. The prior formula for determining funding to localities and tangible personal property tax relief to taxpayers was based upon tangible personal property tax rates in effect in a Virginia locality on August 1, 1997.

- Effective Date: March 17, 1999
  Code Section Amended: § 58.1-3523

Taxation on Aircraft of Public Service Corporations - Amended

House Bill 2092 (Chapter 866) requires the aircraft of public service corporations to be taxed at the same rate as is applicable to other aircraft in the locality. Aircraft, like other tangible personal property owned by public service corporations, is currently taxed at the real estate rate applicable in the respective locality.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-2606

Production of the Personal Property Tax Book by Electronic Means - New

House Bill 1944 (Chapter 52) allows commissioners of the revenue and other local assessing officers to produce the personal property tax book by electronic means in addition to the means currently authorized. The personal property tax book is a record of all tangible personal property subject to tax in a locality and its corresponding value which is submitted to the treasurer of a locality for purposes of levying the local tangible personal property tax. Currently, commissioners of the revenue can use any microphotographic process for transmitting the personal property tax book to local treasurers.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3118

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Identifying Vehicles That Qualify for Personal Property Tax Relief - Amended

House Bill 2312 (Chapter 99) allows commissioners of the revenue to identify vehicles qualifying for relief under the Personal Property Tax Relief Act of 1998 and their value by means other than the use of the certified personal property tax book. While this bill changes the means by which commissioners of the revenue can perform the identification process, the time frame in which this process must be completed by commissioners of the revenue is the same as required under current law. Current law requires that the identity of qualifying vehicles and their value be reported to treasurers by September 1 or by such later date of extension as granted by the Tax Commissioner. This bill requires that commissioners of the revenue complete the identification process on or before September 1 or by a later date of extension as granted by the Tax Commissioner.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3526

Property Classifications - Amended

Senate Bill 995 (Chapter 289) establishes a separate class of tangible personal property for tax rate purposes consisting of business personal property used in manufacturing, testing, or operating satellites by a business located within a Multicounty Transportation Improvement District. The creation of this separate classification of tangible personal property allows a locality to tax the machinery and tools of satellite manufacturers at a tangible personal property tax rate lower than the rate applicable to its general class of tangible personal property. This classification exists only until the earlier of June 30, 2009, or the date that a special improvements tax on real property in a Multicounty Transportation Improvement District is no longer levied.

This bill also eliminates the separate classification of tangible personal property previously created for machines and tools owned by a commercial air carrier and used in a commercial airline maintenance, repair, and rebuilding facility, with an assessed value of at least $100,000,000 and located on or contiguous to an airport.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3506

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Classifications for Boats and Watercraft - New

Senate Bill 1134 (Chapter 358) establishes three tangible personal property tax classifications for privately owned pleasure boats and watercraft used for recreational purposes: (1) boats 18 feet or more in length; (2) motorized boats less than eighteen feet; and (3) nonmotorized boats less than eighteen feet. This bill also requires certain marina owners, who currently must report the boats stored at their marina to a Commissioner of the Revenue, to report such boats in a list divided into these new classifications. Finally, this bill allows treasurers not to send a tax bill if the amount of such bill is for twenty dollars or less.

Under current law, privately owned pleasure boats and watercraft used for recreational purposes only is a separate classification of tangible personal property. A locality may tax this property at a rate lower than the rate applicable to a locality's general class of tangible personal property.

- Effective Date: July 1, 1999
  Code Sections Amended: §§ 58.1-3506, 58.1-3902 and 58.1-3912

Water Well Drilling Equipment - New

Senate Bill 1312 (Chapter 396) subjects machinery and tools used by a water well drilling business to the local machinery and tools tax. This reclassification allows localities to tax machinery and tools used in water well drilling businesses at a rate equal to or lower than the rate imposed upon the general class of tangible personal property. Currently, tangible personal property used by a water well drilling business is subject to a locality's tangible personal property tax.

Under this bill, the remaining personal property owned by a water well drilling business (including but not limited to furniture, fixtures, office equipment, and computer equipment) is classified as intangible personal property subject to taxation only by the Commonwealth under the state's intangible personal property tax. The state tax rate on intangible personal property is zero.

This bill equalizes the treatment of property used in water well drilling with that of property used in mining. In other words, the machinery and tools used in both businesses would be subject to the local machinery and tools tax, and other personal property owned by these businesses would be classified as intangible personal property segregated for state taxation only.

- Effective Date: July 1, 1999
  Code Sections Amended: §§ 58.1-1101 and 58.1-3507

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REAL ESTATE TAX

Exemptions for Elderly or Disabled Persons in the Town of Lovettsville Amended

House Bill 2136 (Chapter 205) permits the Town of Lovettsville to raise, by ordinance, the income and net worth limitations for elderly and permanently and totally disabled persons to qualify for an exemption from or deferral of real property taxes. Several localities are currently permitted to use a different income and financial worth limitation other than what is generally authorized. The new limitations under this bill are: (1) the greater of $52,000 or income limits based upon family size for the respective metropolitan statistical area for the total combined income amount; and (2) $195,000 for the maximum net combined financial worth amount. This bill permits the Town of Lovettsville to use these specific income and net worth limitations as opposed to those generally authorized.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3211

Authorization of Local Governments to Grant Property Tax Exemptions - New

House Bill 1679 (Chapter 979) would authorize local governments to grant, by ordinance, exemptions from local real and personal property taxes for selected nonprofit organizations. Such exemptions extend for a period of four years unless renewed by the locality.

Under current law, a two-step process is required for property to be exempt from local real and personal property taxes. First, after finding that the applicant is exempt from taxation pursuant to Internal Revenue Code § 501 (c) and considering any other criteria, facts and circumstances which the governing body deems pertinent, a local governing body must adopt a resolution either approving or refusing to support an applicant's request for exemption. Such a resolution is adopted only after a public hearing on the matter.

Secondly, in accordance with the Virginia Constitution, Art. X, § (6)(a)(6), legislation designating the property as exempt must be adopted by a three-fourths vote of both houses of the General Assembly. Under the Virginia Constitution, the General Assembly is granted the authority to exempt nonprofit organizations from local real and personal property taxes. This bill would place that responsibility solely with localities.

- Effective Date: July 1, 2000 if reenacted by the 2000 session of the General Assembly. Code Section Amended: § 58.1-3651

Page 28

Sliding Scale Tax Rate - New

House Bill 2754 (Chapter 1026) permits localities to establish a sliding scale tax rate which would lower tax rates for real estate devoted to special use and held for longer periods of time. This sliding scale tax rate applies to real estate which is taxed on its agricultural, horticultural, open-space or forest use value and is available only to those taxpayers who enter into a written agreement, subject to a 20 year limit, with the locality under which they promise to use their real estate for such uses for a mutually agreed upon period of time.

The benefits of this sliding scale tax rate are in addition to, and do not change, current law which provides for special assessment of real estate (use value assessment as opposed to fair market value assessment) for real estate devoted to agricultural, horticultural, open-space or forest use. Use value assessment is available to taxpayers if a locality adopts a land-use plan and ordinance providing for use value assessment, but there is no requirement that an owner of real estate enter into a written agreement with the local governing body.

- Effective Date: July 1, 1999
  Code Sections Amended: §§ 58.1-3231, 58.1-3234 and 58.1-3237

New Building Assessments in Fairfax County - New

Senate Bill 776 (Chapter 760) permits any county operating under the urban county executive form of government (currently only Fairfax), by ordinance, to assess new buildings when they are substantially completed or fit for use and occupancy, regardless of the date of completion or fitness.

This bill also permits any county operating under the urban county executive form of government to charge a penalty for late payment of tax, on assessments of new buildings substantially completed after November 1, beginning on the later of December 5 or thirty days following the date of billing. Under current law, for such assessments made after September 1, taxpayers have at least three months in which to pay without incurring penalty.

Under this bill, all other localities besides those operating under the urban county executive form of government (currently, Fairfax County) are still prohibited from assessing real estate taxes on new buildings substantially completed or fit for use after October 31 in a calendar year. Additionally, taxpayers in those localities still have at least three months to pay their real estate taxes, without incurring a penalty, on new buildings substantially completed or fit for use after September 1.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3292
  Code Section Added: § 58.1-3292.1

Page 29

Providing Names and Addresses of Property Owners to Relative Property Owners Associations - New

Senate Bill 1297 (Chapter 973) authorizes a commissioner of revenue to provide to the representative of a condominium unit owners' association, property owners' association, or real estate cooperative association, or to the owner of property governed by any such association, the names and addresses of parties having a security interest in real property governed by the association.

Commissioners of Revenue may only release this information only upon a written request stating the reason for such request. The reason must be related to matters relating to the association, including but not limited to proposing or opposing changes to governing documents of the association. Any information received is to be used for its stated purpose. Any misuse of this information is a misdemeanor. The Commissioner of Revenue may require any person requesting information about an association to pay the reasonable cost of providing such information.

- Effective Date: July 1, 2000 if reenacted by the 2000 session of the General Assembly
  Code Section Amended: § 58.1-3

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BUSINESS PROFESSIONAL AND OCCUPATIONAL LICENSE TAX

Excess Collection of BPOL Tax by Motor Vehicle Dealers - New

House Bill 1930 (Chapter 862) and Senate Bill 1028 (Chapter 957) permit localities to provide, by ordinance, that any motor vehicle dealer who collects excess business license tax from purchasers must return the overpayments to the purchasers within 120 days of discovering the overpayment. These bills provide that any such amounts which are not refunded must be paid to the Commissioner of the Revenue as additional business license tax. During a three-year period after receipt of such amounts, the commissioner of the revenue or other local assessing officer and the treasurer will refund such amounts as appropriate to purchasers who produce documentation verifying such overpayment. At the expiration of this period, the commissioner of the revenue or other local assessing officer will consider these funds as additional business license tax. The locality may recover from the motor vehicle dealer its costs of mailing, printing, and other reasonably necessary administrative costs related to refunding such amounts to purchasers.

Currently, motor vehicle dealers are allowed to separately state the amount of business license tax applicable to each sale of a motor vehicle and add this tax to the sales price of the motor vehicle. Current law does not address the situation of a dealer who overstates the amount of a BPOL tax applicable to a sale and keeps the difference.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3734

Localities May Eliminate BPOL and Merchant* Capital Tax on Merchants - New

House Bill 2062 (Chapter 200) authorizes any locality to exempt or partially exempt a merchant from the local BPOL tax or the merchants' capital tax, or both. This bill follows from an amendment to Article X of the Virginia Constitution which was ratified by the voters of Virginia on November 3, 1998 with an effective date of January 1, 1999. The amendment provides that the General Assembly of Virginia may, by general law, authorize a local governing body to exempt merchants from the local merchants' capital tax or certain businesses from the local BPOL tax, or both.

- Effective Date: July 1, 1999
  Code Sections Amended: §§ 58.1-3509 and 58.1-3704

Page 31

Out-of-State Contractors Subject to BPOL - New

House Bill 2106 (Chapter 203) subjects to a locality's BPOL license tax or fee any contractor without a definite place of business in the locality when the amount of the business done there by such contractor will exceed $25,000 for the year. A definite place of business means an office or a location at which occurs a regular and continuous course of dealing for thirty consecutive days or more. In some cases, a contractor's work in a locality will not exceed thirty days for the particular year meaning that such contractor has not established a definite place of business in the locality.

Under current law, a Virginia contractor without a definite place of business in a locality is still subject to a locality's BPOL tax or fee if the amount of the business done in that locality exceeds $25,000 for the year. Prior to the passage of this bill, this exception to the definite place of business requirement was not applicable to out-of-state contractors.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3715

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MISCELLANEOUS TAXES

Admissions Tax

Exemption for Charitable Events - New

House Bill 1810 (Chapter 986) allows a municipal corporation or county to adopt an ordinance to exempt from admissions tax charges for attendance at an event when the sole purpose of the event is to raise money for charitable purposes. To qualify for the exemption from the admissions tax, the net proceeds derived from the event must be transferred to a nonprofit charitable entity or entities that are exempt from the retail sales and use tax pursuant to §§ 58.1-609.4 (educational), 58.1-609.7 (medical related), 58.1-609.8 (civic and community service), 58.1-609.9 (cultural), and 58.1-609.10 (miscellaneous).

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3818
  Code Section Added: § 15.2-1104.1

Use Tax

Uniform Method of Use Tax Distribution - New

Senate Bill 1064 (Chapter 156) requires the Tax Commissioner to develop a uniform method to distribute local use tax revenue. Any significant changes in the method of the local use tax distribution must be phased in over a five-year period. The distribution information is required to be shared with the affected localities prior to implementation of the changes.

Currently, the 1 % local use tax collected by dealers is distributed monthly to counties and cities based on the destination locality of purchases made by customers in Virginia, as reported by the dealers. When out-of-state dealers are unable to accurately assign a shipment to a particular city or county locality code, the dealers remit the tax to the department and it is distributed proportionately to all localities in Virginia.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-606

Page 33

Meals Tax

Prohibition on Local Food and Beverage Tax - New

House Bill 1601 (Chapter 366) prohibits localities from imposing a local meals and beverage tax on food purchased for human consumption as defined under the federal food stamp program. This definition is broad and includes any food or food product for home consumption, except alcoholic beverages, tobacco, and hot foods or hot food products ready for immediate consumption.

Under current law, localities may impose a tax on food and beverages sold for human consumption by a restaurant, not to exceed 8.5% when added to the general sales and use tax. In addition, counties may impose a local meals and beverage tax on sales of prepared foods ready for human consumption when sold by a grocery store delicatessen or convenience store. The food and beverage tax imposed on meals sold by grocery store delicatessens and convenience stores is limited to sales of prepared sandwiches and single-meal platters.

- Effective Date: July 1, 2000
  Code Sections Amended: §§ 58.1-3833 and 58.1-3840

Items Subject to Tax - Amended

Senate Bill 968 (Chapter 953) prohibits cities and towns from imposing the local meals and beverage tax on items sold by a grocery store delicatessen or convenience store except prepared sandwiches, beverages prepared on premise, and single-meal platters.

Under current law, localities may impose a tax on food and beverages sold for human consumption by a restaurant, not to exceed 8.5% when added to the general sales and use tax. Counties may impose a local meals and beverage tax on sales of prepared foods ready for human consumption when sold by a grocery store delicatessen or convenience store. The food and beverage tax imposed by counties on meals sold by grocery store delicatessens and convenience stores is limited to sales of prepared sandwiches and single-meal platters.

- Effective Date: July 1, 2000 if reenacted by the 2000 session of the General Assembly.
  Code Section Amended: §§ 58.1-3840

Page 34

Combined Meals and Transient Occupancy Tax in Rappahannock County - New

Senate Bill 778 (Chapter 617) authorizes Rappahannock County (defined in the bill by population brackets) to levy a combined transient occupancy and food and beverage tax on the aggregate charges for rooms and meals in bed and breakfast establishments when such charges are not separately stated. The tax is imposed (1) at a rate not exceeding 4% of the total combined charge for occupancy and the food, and (2) only if a food and beverage tax has been approved in a county-wide referendum.

This bill affects only certain facilities in Rappahannock County which provide both transient accommodations and food and beverages. The affected facilities are limited to bed and breakfast establishments. This bill allows (but not requires) such establishments to combine charges for rooms and meals and to apply the transient occupancy and food and beverage taxes to that combined charge at a rate not exceeding 4%.

- Effective Date: July 1, 1999
  Code Section Added: § 58.1-3842

Transient Occupancy Tax

Rockbridge County Allowed to Impose Additional Tax - New

House Bill 1618 (Chapter 241) and Senate Bill 1050 (Chapter 233) allow any county having a population of no less than 18,000 and no greater than 20,000 (only Rockbridge County) to impose a transient occupancy tax at a rate not to exceed five percent of the amount charged for the occupancy of any room or space occupied. The revenues collected from that portion of the tax over the two percent rate must be designated and spent solely for tourism, marketing of tourism or initiatives that attract travelers to the locality and generate tourism revenue in the locality. Rockbridge County currently imposes the tax at the maximum 2% rate.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3819

Sunset Date for Arlington County's Additional 1/4% Tax - Extended

House Bill 1626 (Chapter 242) and Senate Bill 837 (Chapter 228) extend the sunset date for the 1/4% additional transient occupancy tax which any county with the county manager plan of government (only Arlington County) may impose. The sunset date is extended for three years, from December 31, 1999 to December 31, 2002.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3822

Page 35

Prince William County Allowed to Impose Additional Tax - New

House Bill 2086 (Chapter 253) allows any county which has adopted the county executive form of government and which is contiguous to any county operating under the urban county executive form of government (only Prince William County) to impose a transient occupancy tax not to exceed five percent of the amount charged for the occupancy of any room or space occupied. The revenues collected from that portion of the tax over the two percent rate must be designated and spent on tourism and tourism initiatives as determined in consultation with the local tourism industry organizations.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3819

Franklin County Allowed to Impose Additional Tax - New

House Bill 2386 (Chapter 260) and Senate Bill 1098 (Chapter 234) allow any county having a population of no less than 34,500 and no greater than 39,560 (only Franklin County and James City County) to impose a transient occupancy tax at a rate not to exceed five percent of the amount of the charge for the occupancy of any room or space occupied. The revenues collected from that portion of the tax over the two percent rate must be designated and spent for tourism and tourism initiatives as determined in consultation with the local tourism industry organizations. Currently, James City County is already authorized to impose a transient occupancy tax at a rate not to exceed five percent of the amount of the charge for the occupancy of any room or space occupied. Therefore, these bills affect only Franklin County.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3819

Page 36

TAX COLLECTION AND ADMINISTRATION

Local Tax Assessment Appeals - New

House Bill 1941 (Chapter 123) allows taxpayers to administratively appeal assessments of any local tax to the Commissioner of the Revenue. Currently, only local license, real estate, tangible personal property, machinery and tools, and merchants' capital taxes may be appealed to a Commissioner of the Revenue.

This bill provides that any local tax including, but not limited to, the transient occupancy, food and beverage, and admissions taxes may be administratively appealed to a Commissioner of the Revenue. The statute of limitations for appealing a local tax assessment to a Commissioner of the Revenue is generally three years from the last day of the tax year for which the assessment is being made.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3980

Method for Treasurers to Serve Process - New

House Bill 1942 (Chapter 192) requires that any writ, warrant, notice, summons or other process a treasurer is authorized to issue be served by the sheriff of the respective locality or by the treasurer or his deputy or designee. This bill also requires treasurers to make out the list of uncollectible taxes in their locality within sixty days of the end of the fiscal year.

- Effective Date: July 1, 1999
  Code Section Amended: §§ 58.1-3128 and 58.1-3921

Sale of Real Estate to Collect Delinquent Taxes - Amended

House Bill 1977 (Chapter 403) requires a clerk of a county or city in certain cases to pay over to his local governing body the unclaimed proceeds from a sale of real estate made to collect delinquent taxes. This bill requires payment to be made in those cases where an unknown beneficiary fails to file a claim for the proceeds within two years after the sale of such real estate. This bill also allows cities and counties, by ordinance, to pay over the proceeds due to an unknown beneficiary of a lien even in cases where the beneficiary fails to file a claim within the two years. Currently, the proceeds due to an unknown lienholder of real estate escheat to the Commonwealth if a claim to the proceeds is not made within a certain time period.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3967

Page 37

Appeal and Ruling Process for Certain Local Taxes - New

House Bill 2085 (Chapter 202) and Senate Bill 780 (Chapter 470) provide for an appeals and rulings process through the local assessor and the state Tax Commissioner for the machinery and tools tax, business tangible personal property tax and merchant's capital tax ("local business taxes") similar to that currently provided for the local BPOL tax. These bills would give taxpayers at least one year to appeal the state Tax Commissioner's determination to a circuit court.

These bills allow taxpayers to appeal a local business tax assessment to the state Tax Commissioner. A taxpayer is first required to file an appeal with the local assessor within ninety days of the assessment. If a taxpayer is not satisfied with the local assessor's determination, the taxpayer may appeal that determination to the state Tax Commissioner within ninety days of the issuance of the final local determination.

These bills require a local assessor to issue a determination on a taxpayer's appeal of a local business tax within ninety days after the appeal is filed. These bills do not provide for an extension beyond the ninety days. For appeals of BPOL assessments, however, current law provides that a local assessor must issue a determination only within a reasonable time.

These bills provide for the suspension of collection activity on local business tax assessments while an appeal is pending with either the local assessor or the state Tax Commissioner. In addition, these bills provide for interest to accrue on the portion of an assessment that is upheld until paid, including accrual of interest during the pendency of an appeal.

- Effective Date: Assessments made on or after January 1, 2000, except for appeals on questions of fair market value which becomes effective on January 1, 2001
  Code Section Amended: § 58.1-3984
  Code Section Added: § 58.1-3983.1

Delinquent Tax Responsibility for Limited Liability Companies - Clarification

House Bill 2154 (Chapter 541) clarifies existing law to specifically provide that a member, manager or employee of a limited liability company is an individual who may be held personally responsible for delinquent local admissions, transient occupancy, food and beverage, or daily rental property taxes in certain circumstances. These individuals may be held personally responsible for certain delinquent taxes of the corporation or partnership if they had actual knowledge of the failure to pay over such taxes to the local Commissioner of the Revenue and could have prevented such nonpayment.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3906

Page 38

Collection of Delinquent Real Estate Taxes - New

House Bill 2211 (Chapter 674) establishes criteria for a court to determine that real property is abandoned, which allows for streamlining the delinquent tax sale process for real estate assessed at $20,000 or less. This bill deems real property with an assessed value of $20,000 or less to be abandoned if a court determines the following circumstances are present:

- - - _ taxes on the real estate are three years past due;
      
      _ the property has been declared a nuisance by the local code official due to unresolved code violations;
      
      _ the owner of the property has failed to abate the nuisance after proper statutory notice has been given by code enforcement officials; and
      
      _ the locality has taken steps to abate the nuisance conditions and placed a lien on the property for the cost of such abatement, and the lien has remained unpaid.

Additionally, real property with an assessed value of $20,000 or less may be deemed abandoned if a court determines that taxes on the property are seven years past due. Under this bill, if the property is deemed abandoned, a court may appoint a special commissioner to sell the property without referring the case to the commissioner of chancery.

- Effective Date: July 1, 1999
  Code Sections Amended: §§ 58.1-3965 and 58.1-3969

Appeal of Real Estate Assessments - New

House Bill 2313 (Chapter 677) and Senate Bill 914 (Chapter 624) allow taxpayers to administratively appeal to the Commissioner of the Revenue factual errors made by others during general reassessments of real estate. These bills also authorize and require the Commissioner of the Revenue to correct such erroneous assessments.

Prior to the passage of this bill, a taxpayer or Commissioner of the Revenue had to apply to the circuit court for correction of a factual error in a general reassessment made by persons other than the Commissioner of the Revenue.

- Effective Date: July 1, 1999
  Code Sections Amended: §§ 58.1-3980 and 58.1-3981

Page 39

Conveyance of Real Estate to Satisfy Delinquent Taxes - New

House Bill 2231 (Chapter 869) establishes a process whereby delinquent real estate taxes and related costs may be satisfied by the conveyance of the underlying real estate to a locality. Real estate which may be conveyed under this bill must meet all of the following conditions:

- - - _ each parcel has delinquent real estate taxes or the locality has a lien against the parcel for removal, repair or securing of a building or structure; or removal of trash or other nuisance;
      
      _ each parcel has an assessed value of $20,000 or less; and
      
      _ such taxes, liens, penalty, and accumulated interest exceed fifty percent of the assessed value of the parcel.

This bill prohibits the locality from assessing the delinquent taxpayer with any difference between the fair market value of the real estate conveyed and the delinquent debt once real property is conveyed to a locality to satisfy delinquent real estate taxes and related charges. If a locality were to sell the real property conveyed to it, this bill requires that any proceeds received in excess of the delinquent taxes and related charges be paid over to the beneficiaries of liens against the property and the former owner or his heirs.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3967
  Code Section Added: § 58.1-3970.1

Payment of Local Taxes, Fees, and Other Charges by Credit Card - New

House Bill 2497 (Chapter 216) authorizes any treasurer to accept payment of local taxes, fees, and charges by credit card. Currently, the local governing body must adopt an ordinance authorizing a treasurer to accept payment by credit card. This bill also increases the service charge which may be added by the locality for accepting payment by credit card. Currently, a service charge of four percent of the total amount (tax, penalty, and interest) paid may be added. This bill allows a locality to increase its service charge to 4.5 percent of the amount paid or $6 whichever is greater.

- Effective Date: July 1, 1999
  Code Section Amended: § 58.1-3013

Page40

Interest on Refunds of Erroneous Assessments - New

Senate Bill 1008 (Chapter 631) requires a locality to pay interest on refunds of overpayments and erroneously assessed taxes at the same rate which the locality charges interest on delinquent taxes. Under current law, localities may pay interest on refunds of local taxes. This bill makes it mandatory for localities to pay interest on refunds of erroneous assessments or overpayments of local taxes if the locality charges interest on underpayments of taxes.

- Effective Date: July 1, 1999
  Code Sections Amended: §§ 58.1-535, 58.1-3916, 58.1-3918, 58.1-3981, and 58.1-3987
  Code Section Repealed: § 58.1-3991

Page 41

LEGISLATIVE
STUDIES

Page 42

HB 1667 (Chapter 450): Research and Development Investment Tax Credit Study

The Secretary of Technology and the Secretary of Commerce and Trade will conduct a study of tax incentives for research and development investments in the Commonwealth. The study will specifically address the respective benefits and costs of an investment tax credit for amounts spent in Virginia on qualified research expenses as defined in § 41 of the Internal Revenue Code of 1986. The study will also address legal and fiscal policy issues relating to incentives for such investments. The Secretaries will confer with TAX (i) in developing recommendations for methods of allocating tax credits or other incentives among taxpayers whose applications exceed a maximum amount of such credits or incentives and (ii) regarding how a state tax credit or other incentive program would compound the existing federal income tax credit for research and development expenses. This study will conducted in conjunction with their study and development of a coordinated research and development policy for the Commonwealth pursuant to Senate Joint Resolution No. 502 of the 1999 Session of the General Assembly.

HB 2708 (Chapter 331): Joint Commission on Health Care

The joint commission will examine the current provisions of federal and state taxation and insurance laws to determine the feasibility of licensing group self-insurance associations that will pool their liabilities for the purpose of offering high-deductible, catastrophic health insurance coverage to holders of medical savings accounts. TAX will provide technical assistance upon request.

SB 968 (Chapter 953): Study on the Definition of "Food"

A study may be conducted by the Virginia Municipal League, the Virginia Association of Counties, the Virginia Food Dealers Association, the Virginia Retail Merchants Association, and the Virginia Hospitality and Travel Association to determine the impact of a uniform definition of "food" for the purposes of the local meals and beverage tax. TAX will provide technical assistance upon request.

SB 1105 (Chapter 494): Joint Study of the Taxation of Gas Utilities and Natural Gas Suppliers

The study will consider and assess the effect of state and local taxation of gas utilities and natural gas suppliers on the economic development goals and objectives of the Commonwealth. Furthermore, the study will formulate and recommend specific statutory language to ensure (i) revenue neutrality for the Commonwealth and its local governments and (ii) that any revisions to the existing regime of local and state taxation of gas utilities and natural gas suppliers do not increase the tax rate applicable to, or tax burdens borne by, gas utilities, natural gas suppliers and gas customers, as of the date of enactment of this legislation. TAX will provide technical assistance upon request.

Page 43

HJR 578 & SJR 401: Joint Commission Studying Virginia* State and Local Tax Structure of the 21st Century

The commission will examine all aspects of the state and local tax structure to ensure its viability, fairness, and appropriateness for the 21st century. It will analyze the relationship between state and local tax authority and service responsibilities in order to determine whether the duty to provide services at the appropriate level of government is matched by the ability to generate sufficient revenues. In conducting its study, the commission will examine what other states have done to assist their localities with raising revenues paying particular attention to those states in which a local income tax is imposed. The commission is specifically directed to develop revenue-neutral recommendations that will not increase Virginia's per capita state and local tax burden. TAX will provide technical assistance upon request.

HJR 700: Study of Florida* Tax Incentives for Private Corporations which Participate with Universities in Research and Development Projects

TAX will study the tax incentives recently enacted by the State of Florida which encourage private corporations to participate with Florida universities in research and development projects by providing tax incentives. In conducting the study, the Department will examine Florida's tax incentives which allow for adjustments to be made to the payroll and property factors of the apportionment formula when corporations are calculating their state income tax liability. The Department will also study the sales tax preferences given to companies which manufacture certain technology-related products. Finally, the Department will review the administrative procedures involved in implementing and carrying out the program. The State Council of Higher Education for Virginia and the Virginia Economic Development Partnership will provide assistance upon request.

HJR 742: Study of Sales and Use Taxation of Modular Housing

TAX will study the sales and use taxation of modular housing. The study will address all issues relating to the application of the retail sales and use tax to modular housing, including, but not limited to: (i) the fiscal impact of any recommended amendments to the current law; (ii) whether any proposed changes to the wording of applicable provisions of the Code of Virginia are intended to be declarative of existing law rather than substantive in nature; and (iii) whether the Department should suspend, during the period of this study, all audits, assessments, accrual of interest, and collection actions as they pertain to the applicability of the retail sales and use tax to sales of modular homes. TAX will include the Virginia Manufactured Housing Association, the Industrialized Housing Association of Virginia, Inc., out-of-state associations representing manufacturers who do business in the Commonwealth of Virginia, and all other interested parties in the study.

Page 44

HJR 746: Virginia Housing Development Authority Study

The Virginia Housing Development Authority will study ways in which it can work more closely with localities and the housing industry in approving loan financing and allocating Low-lncome Housing Tax Credit incentives for multifamily new construction projects. TAX will provide technical assistance upon request.

SJR 400: Joint Subcommittee Examining Electric Utility Restructuring in the Commonwealth (SJR 118 - 1996, SJR 259 - 1997, SJR 91 - 1998)

The joint subcommittee will continue and complete its development of a comprehensive legislative proposal for restructuring Virginia's electricity market appropriate for the Commonwealth and beneficial to all of its citizens. TAX will provide technical assistance upon request.

SJR 502: Coordinated Research and Development Policy Study

The Secretary of Technology will study and develop a coordinated research and development (R&D) policy for the Commonwealth. Included among the Secretary's findings and recommendations will be the identification of assets and opportunities for collaboration and coordinated efforts, the identification of mechanisms already in place that facilitate such goals, and the identification of any barriers and obstacles for greater collaboration. TAX will provide technical assistance upon request.

SJR 503: Joint Subcommittees Studying Ways to Encourage Utilization of Land Use Taxation and Agricultural and Forestal Districts

The joint subcommittees will study ways to encourage utilization of land use taxation and agricultural and forestal districts. In conducting their study, the joint subcommittees will determine (i) the extent to which localities avoid enacting land use taxation because of its negative revenue impact; (ii) whether state reimbursement of all or a portion of local revenue lost through land use taxation would induce more localities to enact land use taxation; (iii) other ways localities can be encouraged to utilize land use taxation and agricultural and forestal districts; (iv) whether owners of agricultural, forestal and open space lands are aware of the availability of land use taxation and agricultural and forestal districts; and (v) ways landowners can be educated about and encouraged to take advantage of land use taxation, agricultural and forestal districts, and other land preservation incentives. TAX will provide technical assistance upon request.

INDEXES

INDEX BY BILL NUMBER

BILL # CHAPTER SUBJECT MATTER PAGE

HB 1487 588 Subtraction for Unemployment Compensation Benefits 8
HB 1491 23 Community Policing Fund Check-off 11
HB 1546 298 Deduction for Long term Health Care Premiums 10
HB 1571 776 Exemption Sunset Dates & Exempt Nonprofit Organization Filings 15
HB 1584 365 Income Tax Exemption for First $15,000 of Basic Military Pay 9
HB 1600 518 Virginia Higher Education Trust Fund Subtraction and Deduction 10
HB 1601 366 Food Tax Reduction Program 14
HB 1601 366 Prohibition on Local Food and Beverage Tax 33
HB 1618 241 Rockbridge County May Impose Additional Transient Occupancy Tax 34
HB 1626 242 Arlington County’s Additional 1/4 % Transient Occupancy Tax 34
HB 1636 12 Refund of Sales Tax Paid on Building Materials by Nonprofit Org. 14
HB 1650 523 Exemption on Prescription Orders of Licensed Physicians 15
HB 1667 450 Income Tax Credit for Research and Development Expenses 3
HB 1667 450 Research and Development Investment Tax Credit Study 42
HB 1676 304 Tax Credit for Employers Who Employ Disabled Individuals 3
HB 1678 180 Interest Rates on Tax Overpayments and Underpayments 2
HB 1679 979 Local Governments may Grant Property Tax Exemptions 27
HB 1713 981 Exemption for Internet Service Providers 16
HB 1722 400 Exemption for the Amherst County Habitat for Humanity, Inc. 21
HB 1739 183 Historic Rehabilitation Tax Credit 4
HB 1752 983 Land Preservation Tax Credit 4
HB 1765 401 Governmental and Commodities Exemption 16
HB 1785 184 Sales and Use Taxes from the Suffolk Conference Center 16
HB 1810 986 Admissions Tax Exemption for Charitable Events 32
HB 1814 90 Definition of Treasurer 23
HB 1818 186 Double-weighted Sales Factor 6
HB 1820 187 Exemption for Tooling, Machinery and Equipment 17
HB 1841 777 Definition of Treasurer 23
HB 1851 189 Tangible Personal Property Rate Adjustment 24
HB 1866 909 Neighborhood Assistance Act Tax Credit 5
HB 1877 190 Tax Increment Financing for Development 23
HB 1887 32 U.S. Olympic Committee Check-off 11
HB 1911 723 Sales Price Definition to Exclude Local Property Tax Charges 17
HB 1930 862 Excess Collection of BPOL Tax by Motor Vehicle Dealers 30
HB 1933 535 Deduction for Prepaid Tuition Contracts for Taxpayers Above Age 70 10
HB 1941 123 Local Tax Assessment Appeals 36
HB 1942 192 Method for Treasurers to Serve Process 36
HB 1944 52 Production of Personal Property Tax Book by Electronic Means 24
HB 1953 249 Number of Permitted Enterprise Zones 5

INDEX BY BILL NUMBER

BILL # CHAPTER SUBJECT MATTER PAGE

HB 1977 403 Sale of Real Estate to Collect Delinquent Taxes 36
HB 2047 998 Uninsured Medical Catastrophe Fund Check-off 12
HB 2047 998 State Forest Systems Fund Check-off 11
HB 2062 200 Localities May Eliminate BPOL and Merchant's Capital Tax 30
HB 2085 202 Appeal and Ruling Process for Certain Local Taxes 37
HB 2086 253 Prince William Cty. May Impose Additional Transient Occupancy Tax 35
HB 2092 866 Taxation on Aircraft of Public Service Corporations 24
HB 2106 203 Out-of-State Contractors Subject to BPOL 31
HB 2136 205 Exemptions for Elderly or Disabled Persons in Lovettesville 27
HB 2154 541 Delinquent Tax Responsibility for Limited Liability Companies 37
HB 2211 674 Collection of Delinquent Real Estate Taxes 38
HB 2223 317 Credit for Taxes Paid to Other States 7
HB 2231 869 Conveyance of Real Estate to Satisfy Delinquent Taxes 39
HB 2290 917 Neighborhood Assistance Act Tax Credit 5
HB 2312 99 Identifying Vehicles That Qualify for Tax Relief 25
HB 2313 677 Appeal of Real Estate Assessments 38
HB 2335 210 Jamestown-Yorktown Foundation Check-off 12
HB 2358 404 Home Accessibility Features for the Disabled Tax Credit 8
HB 2370 213 Historic Rehabilitation Tax Credit 4
HB 2386 260 Franklin County May Impose Additional Transient Occupancy Tax 35
HB 2497 216 Payment of Local Taxes, Fees, and Other Charges by Credit Card 39
HB 2708 331 Joint Commission on Health Care 42
HB 2749 464 Political Contribution Tax Credit 7
HB 2754 1026 Sliding Scale Real Estate Tax Rate 28

HJR 578 - Joint Commission Studying the State and Local Tax Structure of the
21st Century 43

HJR 700 - Study of Florida's Tax Incentives for Private Corporations which 43
Participate with Universities in Research and Development Projects

HJR 742 - Study of Sales and Use Taxation of Modular Housing 43
HJR 746 - Virginia Housing Development Authority Study 44
SB 735 466 Food Tax Reduction Program 14
SB 774 138 Exemption for Tooling, Machinery and Equipment 17
SB 776 760 New Building Assessments in Fairfax County 28
SB 778 617 Meals and Transient Occupancy Tax in Rappahannock County 34
SB 780 470 Appeal and Ruling Process for Certain Local Taxes 37
SB 781 471 Governmental and Commodities Exemption 16
SB 782 472 Exemption on Prescription Orders of Licensed Physicians 15
SB 790 141 Sales and Use Taxes from the Suffolk Conference Center 16
SB 794 103 Reproductions of Tax Department Documents 2

INDEX BY BILL NUMBER

BILL # CHAPTER SUBJECT MATTER PAGE

SB 829 762 Exemption Sunset Dates & Exempt Nonprofit Organization Filings 15
SB 837 228 Arlington County's Additional 1/4% Transient Occupancy Tax 34
SB 847 334 Refund of Sales Tax Paid on Building Materials by Nonprofit Org. 14
SB 864 229 Forest Products Machinery and Tools Exemption 17
SB 868 146 Interest Rates on Tax Overpayments and Underpayments 2
SB 869 847 Medical Sales and Use Tax Exemption 17
SB 877 285 Deduction for Tuition Costs of School Teachers 11
SB 914 624 Appeal of Real Estate Assessments 38
SB 919 485 Virginia Higher Education Trust Fund Subtraction and Deduction 10
SB 923 948 Law and Economics Center Check-off 13
SB 923 948 Virginia Humanities Fund Check-off 12
SB 923 948 Center of Governmental Studies Check-off 12
SB 957 152 Historic Rehabilitation Tax Credit 4
SB 968 953 Items Subject to Meals Tax 33
SB 968 953 Study on the Definition of "Food" 42
SB 995 289 Property Classifications 25
SB 1008 631 Interest on Refunds of Erroneous Assessments 40
SB 1021 890 Neighborhood Assistance Act Tax Credit 5
SB 1028 957 Excess Collection of BPOL Tax by Motor Vehicle Dealers 30
SB 1050 233 Rockbridge County May Impose Additional Transient Occupancy Tax 34
SB 1064 156 Uniform Method of Use Tax Distribution 32
SB 1076 158 Double-weighted Sales Factor 6
SB 1098 234 Franklin County May Impose Additional Transient Occupancy Tax 35
SB 1105 494 Joint Study of the Taxation of Gas Utilities and Natural Gas Suppliers 42
SB 1134 358 Classifications for Boats and Watercraft 26
SB 1153 894 Neighborhood Assistance Act Tax Credit 5
SB 1160 498 Exemption for Federal and State Employees 9
SB 1160 498 Income Tax Exemption for First $15,000 of Basic Military Pay 9
SB 1187 235 Number of Permitted Enterprise Zones 5
SB 1218 968 Land Preservation Tax Credit 4
SB 1221 162 Tax Increment Financing for Development 23
SB 1222 355 Subtraction for the Gain on the Sale of Land for Open-space Use 5
SB 1286 971 Taxation of Electric Utilities 19-21
SB 1297 973 Names and Addresses of Property Owners in Property Associations 29
SB 1312 396 Water Well Drilling Equipment 26
SJR 400 - Joint Subcommittee Examining Electric Utility Restructuring in Virginia 44
SJR 401 - Joint Commission Studying the State and Local Tax Structure of the
21st Century 43

INDEX BY BILL NUMBER

BILL # CHAPTER SUBJECT MATTER PAGE

SJR 502 - Coordinated Research and Development Policy Study 44

SJR 503 - Joint Subcommittees Studying Ways to Encourage Utilization of Land
Use Taxation and Agricultural and Forestal Districts 44

INDEX BY CODE SECTION

VA CODE § BILL # SUBJECT MATTER PAGE

2.1-342 HB 1600, SB 919 Virginia Higher Education Trust Fund Subtraction and Deduction 10
2.1-344 HB 1600, SB 919 Virginia Higher Education Trust Fund Subtraction and Deduction 10
10.1-1119.1 HB 2047 State Forest Systems Fund Check-off 11
15.2-1104.1 HB 1810 Admissions Tax Exemption for Charitable Events 32
23-38.75 HB 1600, SB 919 Virginia Higher Education Trust Fund Subtraction and Deduction 10
23-38.76 HB 1600, SB 919 Virginia Higher Education Trust Fund Subtraction and Deduction 10
23-38.77 HB 1600, SB 919 Virginia Higher Education Trust Fund Subtraction and Deduction 10
23-38.80 HB 1600, SB 919 Virginia Higher Education Trust Fund Subtraction and Deduction 10
23-38.81 HB 1600, SB 919 Virginia Higher Education Trust Fund Subtraction and Deduction 10
23-38.86 HB 1600, SB 919 Virginia Higher Education Trust Fund Subtraction and Deduction 10
23-38.87 HB 1600, SB 919 Virginia Higher Education Trust Fund Subtraction and Deduction 10
30-19.05 HB 1571, SB 829 Exemption Sunset Dates & Exempt Nonprofit Organization 15
Filings
30-19.1:3 HB 1571, SB 829 Exemption Sunset Dates & Exempt Nonprofit Organization 15
Filings
32.1-324.2 HB 2047 Uninsured Medical Catastrophe Fund Check-off 12
58.1-3 SB 1297 Names and Addresses of Property Owners in Property 29
Associations
58.1-15 HB 1678, SB 868 Interest Rates on Tax Overpayments and Underpayments 2
58.1-106 SB 794 Reproductions of Department of Taxation Documents 2
58.1-107 SB 794 Reproductions of Department of Taxation Documents 2
58.1-108 SB 794 Reproductions of Department of Taxation Documents 2
58.1-322 SB 1222 Subtraction for the Gain on the Sale of Land for Open-space 5
Use
58.1-322 HB 1487 Subtraction for Unemployment Compensation Benefits 8
58.1-322 HB 1584, SB 1160 Income Tax Exemption for First $15,000 of Basic Military Pay 9
58.1-322 SB 1160 Exemption for Federal and State Employees 9
58.1-322 HB 1546 Deduction for Long term Health Care Premiums 10
58.1-322 HB 1933 Deduction for Prepaid Tuition Contracts for Taxpayers Above 10
Age 70
58.1-322 SB 877 Deduction for Tuition Costs of School Teachers 11
58.1-322 HB 1600, SB 919 Virginia Higher Education Trust Fund Subtraction and Deduction 10
58.1-332 HB 2223 Credit for Taxes Paid to Other States 7
58.1-339.2 HB 1739, SB 957 Historic Rehabilitation Tax Credit 4
58.1-339.2 HB 2370 Historic Rehabilitation Tax Credit 4
58.1-339.6 HB 2749 Political Contribution Tax Credit 7
58.1-339.6 HB 2358 Home Accessibility Features for the Disabled Tax Credit 8
58.1-346.1:1 HB 1887 U.S. Olympic Committee Check-off 11
58.1-346.5 HB 1491 Community Policing Fund Check-off 11

INDEX BY CODE SECTION

VA CODE BILL # SUBJECT MATTER PAGE

58.1-346.9 HB 2047 State Forest Systems Fund Check-off 11
58.1-346.9 HB 2335 Jamestown-Yorktown Foundation Check-off 12
58.1-346.9 SB 923 Virginia Humanities Fund Check-off 12
58.1-346.10 SB 923 Center of Governmental Studies Check-off 12
58.1-346.10 HB 2047 Uninsured Medical Catastrophe Fund Check-off 12
58.1-346.11 SB 923 Law and Economics Center Check-off 13
58.1-400.2 SB 1286 Taxation of Electric Utilities 19-21
58.1-401 SB 1286 Taxation of Electric Utilities 19-21
58.1-402 SB 1286 Taxation of Electric Utilities 19-21
58.1-402 SB 1222 Subtraction for the Gain on the Sale of Land for Open-space 5
58.1-408 HB 1818, SB 1076 Double-weighted Sales Factor 6
58.1-433.1 SB 1286 Taxation of Electric Utilities 19-21
58.1-439.2 SB 1286 Taxation of Electric Utilities 19-21
58.1-439.11 HB 1667 Income Tax Credit for Research and Development Expenses 3
58.1-439.11 HB 1676 Tax Credit for Employers Who Employ Disabled Individuals 3
58.1-440.1 SB 1286 Taxation of Electric Utilities 19-21
58.1-504 SB 1286 Taxation of Electric Utilities 19-21
58.1-510 HB 1752, SB 1218 Land Preservation Tax Credit 4
58.1-511 HB 1752, SB 1218 Land Preservation Tax Credit 4
58.1-512 HB 1752, SB 1218 Land Preservation Tax Credit 4
58.1-513 HB 1752, SB 1218 Land Preservation Tax Credit 4
58.1-535 SB 1008 Interest on Refunds of Erroneous Assessments 40
58.1-602 HB 1911 Sales Price Definition to Exclude Local Property Tax Charges 17
58.1-602 HB 1713 Exemption for Internet Service Providers 16
58.1-602 HB 1820, SB 774 Exemption for Tooling, Machinery or Equipment 17
58.1-606 SB 1064 Uniform Method of Use Tax Distribution 32
58.1-608.1 HB 1636, SB 847 Refund of Sales Tax Paid on Building Materials by Nonprofit 14
Org.
58.1-608.2 HB 1571, SB 829 Exemption Sunset Dates & Exempt Nonprofit Organization 15
Filings
58.1-608.3 HB 1785, SB 790 Sales and Use Taxes from the Suffolk Conference Center 16
58.1-609.1 HB 1571, SB 829 Exemption Sunset Dates & Exempt Nonprofit Organization 15
Filings
58.1-609.1(4) HB 1765, SB 781 Governmental and Commodities Exemption 16
58.1-609.2(6) SB 864 Forest Products Machinery and Tools Exemption 17
58.1-609.4 HB 1571, SB 829 Exemption Sunset Dates & Exempt Nonprofit Organization 15
Filings
58.1-609.7(1) SB 869 Medical Sales and Use Tax Exemption 18

INDEX BY CODE SECTION

VA CODE § BILL # SUBJECT MATTER PAGE

58.1-609.7(1) HB 1650, SB 782 Exemption on Prescription Orders of Licensed Physicians 15
58.1-609.7 HB 1571, SB 829 Exemption Sunset Dates & Exempt Nonprofit Organization 15
Filings
58.1-609.8 HB 1571, SB 829 Exemption Sunset Dates & Exempt Nonprofit Organization 15
Filings
58.1-609.9 HB 1571, SB 829 Exemption Sunset Dates & Exempt Nonprofit Organization 15
Filings
58.1-609.10 HB 1571, SB 829 Exemption Sunset Dates & Exempt Nonprofit Organization 15
Filings
58.1-611.1 HB 1601, SB 735 Food Tax Reduction Program 14
58.1-623 HB 1571, SB 829 Exemption Sunset Dates & Exempt Nonprofit Organization 15
Filings
58.1-623.1 HB 1571, SB 829 Exemption Sunset Dates & Exempt Nonprofit Organization 15
Filings
58.1-811 HB 1722 Exemption for the Amherst County Habitat for Humanity, Inc. 21
58.1-1101 SB 1312 Water Well Drilling Equipment 26
58.1-2600 SB 1286 Taxation of Electric Utilities 19-21
58.1-2601 SB 1286 Taxation of Electric Utilities 19-21
58.1-2602 SB 1286 Taxation of Electric Utilities 19-21
58.1-2603 SB 1286 Taxation of Electric Utilities 19-21
58.1-2604 SB 1286 Taxation of Electric Utilities 19-21
58.1-2606 SB 1286 Taxation of Electric Utilities 19-21
58.1-2606 HB 2092 Taxation on Aircraft of Public Service Corporations 24
58.1-2609 SB 1286 Taxation of Electric Utilities 19-21
58.1-2610 SB 1286 Taxation of Electric Utilities 19-21
58.1-2611 SB 1286 Taxation of Electric Utilities 19-21
58.1-2626 SB 1286 Taxation of Electric Utilities 19-21
58.1-2627 SB 1286 Taxation of Electric Utilities 19-21
58.1-2628 SB 1286 Taxation of Electric Utilities 19-21
58.1-2633 SB 1286 Taxation of Electric Utilities 19-21
58.1-2660 SB 1286 Taxation of Electric Utilities 19-21
58.1-2682 SB 1286 Taxation of Electric Utilities 19-21
58.1-2900 SB 1286 Taxation of Electric Utilities 19-21
58.1-2901 SB 1286 Taxation of Electric Utilities 19-21
58.1-2902 SB 1286 Taxation of Electric Utilities 19-21
58.1-2903 SB 1286 Taxation of Electric Utilities 19-21
58.1-3013 HB 2497 Payment of Local Taxes, Fees, and Other Charges by Credit 39
Card
58.1-3118 HB 1944 Production of Personal Property Tax Book by Electronic Means 24

INDEX BY CODE SECTION

VA CODE BILL# SUBJECT MATTER PAGE

58.1-3123 HB 1814, HB 1841 Definition of Treasurer 23
58.1-3128 HB 1942 Method for Treasurers to Serve Process 36
58.1-3211 HB 2136 Exemptions for Elderly or Disabled Persons in Lovettesville 27
58.1-3231 HB 2754 Sliding Scale Real Estate Tax Rate 28
58.1-3234 HB 2754 Sliding Scale Real Estate Tax Rate 28
58.1-3237 HB 2754 Sliding Scale Real Estate Tax Rate 28
58.1-3245.1 HB 1877, SB 1221 Tax Increment Financing for Development 23
58.1-3292 SB 776 New Building Assessments in Fairfax County 28
58.1-3292.1 SB 776 New Building Assessments in Fairfax County 28
58.1-3506 SB 995 Property Classifications 25
58.1-3506 SB 1134 Classifications for Boats and Watercraft 26
58.1-3507 SB 1312 Water Well Drilling Equipment 26
58.1-3509 HB 2062 Localities May Eliminate BPOL and Merchant's Capital Tax 30
58.1-3523 HB 1851 Tangible Personal Property Rate Adjustment 24
58.1-3526 HB 2312 Identifying Vehicles That Qualify for Tax Relief 25
58.1-3651 HB 1679 Local Governments may Grant Property Tax Exemptions 27
58.1-3704 HB 2062 Localities May Eliminate BPOL and Merchant's Capital Tax 30
58.1-3715 HB 2106 Out-of-State Contractors Subject to BPOL 31
58.1-3731 SB 1286 Taxation of Electric Utilities 19-21
58.1-3734 HB 1930, SB 1028 Excess Collection of BPOL Tax by Motor Vehicle Dealers 30
58.1-3814 SB 1286 Taxation of Electric Utilities 19-21
58.1-3818 HB 1810 Admissions Tax Exemption for Charitable Events 32
58.1-3819 HB 1618, SB 1050 Rockbridge County May Impose Additional Transient Occupancy 34
Tax
58.1-3819 HB 2086 Prince William Cty. May Impose Additional Transient Occupancy 35
Tax
58.1-3819 HB 2386, SB 1098 Franklin County May Impose Additional Transient Occupancy 35
Tax
58.1-3822 HB 1626, SB 837 Arlington County's Additional M/4% Transient Occupancy Tax 34
58.1-3833 HB 1601 Prohibition on Local Food and Beverage Tax 33
58.1-3840 HB 1601 Prohibition on Local Food and Beverage Tax 33
58.1-3840 SB 968 Items Subject to Meals Tax 33
58.1-3842 SB 778 Meals and Transient Occupancy Tax in Rappahannock County 34
58.1-3902 SB 1134 Classifications for Boats and Watercraft 26
58.1-3906 HB 2154 Delinquent Tax Responsibility for Limited Liability Companies 37
58.1-3912 SB 1134 Classifications for Boats and Watercraft 26
58.1-3916 SB 1008 Interest on Refunds of Erroneous Assessments 40
58.1-3918 SB 1008 Interest on Refunds of Erroneous Assessments 40
58.1-3921 HB 1942 Method for Treasurers to Serve Process 36

INDEX BY CODE SECTION

VA CODE BILL# SUBJECT MATTER PAGE

58.1-3965 HB 2211 Collection of Delinquent Real Estate Taxes 38
58.1-3967 HB 1977 Sale of Real Estate to Collect Delinquent Taxes 36
58.1-3967 HB 2231 Conveyance of Real Estate to Satisfy Delinquent Taxes 39
58.1-3969 HB 2211 Collection of Delinquent Real Estate Taxes 38
58.1-3970.1 HB 2231 Conveyance of Real Estate to Satisfy Delinquent Taxes 39
58.1-3980 HB 1941 Local Tax Assessment Appeals 36
58.1-3980 HB 2313, SB 914 Appeal of Real Estate Assessments 38
58.1-3981 HB 2313, SB 914 Appeal of Real Estate Assessments 38
58.1-3981 SB 1008 Interest on Refunds of Erroneous Assessments 40
58.1-3983.1 HB 2085, SB 780 Appeal and Ruling Process for Certain Local Taxes 37
58.1-3984 HB 2085, SB 780 Appeal and Ruling Process for Certain Local Taxes 37
58.1-3987 SB 1008 Interest on Refunds of Erroneous Assessments 40
58.1-3991 SB 1008 Interest on Refunds of Erroneous Assessments 40
59.1-274 HB 1953, SB 1187 Number of Permitted Enterprise Zones 5
63.1-321 HB 1866, SB 1021 Neighborhood Assistance Act Tax Credit 5
63.1-324 HB 1866, SB 1021 Neighborhood Assistance Act Tax Credit 5
63.1-325 HB 2290, SB 1153 Neighborhood Assistance Act Tax Credit 5
63.1-325.1 HB 1866, SB 1021 Neighborhood Assistance Act Tax Credit 5

Rulings of the Tax Commissioner