In Virginia, a franchise tax is imposed on the net capital of banks and trust companies.
Effective July 1, 2016, an $18 million cap was set on the maximum total annual bank franchise tax liability per bank. The cap will increase to $20 million if at least 5 banks pay the maximum tax for 3 consecutive calendar years. After 2 years at $20 million, the cap will increase by 3% annually. If the cap increases, we will notify all banks and trust companies no later than Aug. 15 of the year prior to the year of the increase.
What to file
Official report of condition and income
Each bank franchise tax return must include a copy of the official report of condition and income of the bank or trust company that was filed with the comptroller of the currency or with the State Corporation Commission as of the close of business Dec. 31 of the preceding year.
When to file
Returns are due on or before March 1 of each tax year. No filing extension is available.
Where to file
Submit 2 copies of Form 64 and all schedules with the Commissioner of the Revenue for the county or city in which the principal office of the bank or trust company is located.
The bank is also required to submit 1 copy of Schedule C and Schedule H to the assessing officer of every city, incorporated town, and county where a branch is located.
Assessment of tax
The Commissioner of the Revenue will certify 1 copy of the return and send it to Virginia Tax. We will issue a notice of assessment (bill) to each bank on or about May 1 of the taxable year. Payment is due by June 1.
Tax rate and local credit
State tax - $1 per $100 of taxable value on Jan. 1 of each year except for new banks.
New banks - The bank franchise tax for new banks will be prorated as follows:
- First transacting business before March 31: $1 on each $100 of net capital, no proration
- First transacting business between April 1 and June 30: 75 cents on each $100 of net capital
- First transacting business between July 1 and Sept. 30: 50 cents on each $100 of net capital
- First transacting business between Oct. 31 and Dec. 31 31: 25 cents on each $100 of net capital
- Local tax - Any city, county, or town may impose a tax not to exceed 80% of the state rate of taxation.
- Local credit - A credit is allowed for amounts paid to cities, towns, or counties for taxes assessed on a bank's net capital.
Penalty and interest
Any bank that fails to file and pay the tax will be subject to a 5% penalty of the tax due.
Interest is charged on any unpaid tax due from the payment due date until we receive the tax payment. Interest is calculated at the rate established by the current IRS underpayment rate plus 2%.
For help with the bank franchise tax, please call 804.404.4215.