During the 2009 Session, the Virginia General Assembly passed legislation (HB 2437) that modifies the corporate apportionment formula by allowing manufacturing companies to use a single factor apportionment based on sales to determine their Virginia taxable income. The modification is phased-in as follows:

  • for taxable years beginning on or after July 1, 2011, but before July 1, 2013, qualifying corporations may elect to use a triple-weighted sales factor;
  • for taxable years beginning on or after July 1, 2013, but before July 1, 2014, qualifying corporations may elect to use a quadruple-weighted sales factor;
  • for taxable years beginning on or after July 1, 2014, and thereafter, qualifying corporations may elect to use the single sales factor method to apportion Virginia taxable income.

The legislation also applied certain employment and wage requirements that a manufacturing company must satisfy in order to elect the modified apportionment formula.

During the 2012 Session, the Virginia General Assembly passed legislation (HB 460) that amended the performance requirements that a manufacturing company must satisfy in order to elect the modified apportionment formula for manufacturers. This law change reduces the employment level that a manufacturing company must maintain to 90 percent of its base year employment level, and it eliminates the penalty for not meeting these requirements. In addition, a taxpayer making this election is required to certify to the Department of Taxation that the average weekly wages of its full-time employees was greater than the lower of the state or local average weekly wages for the taxpayer's industry. If a corporation does not satisfy these criteria, the Department will assess the corporation the difference between taxes calculated under the standard apportionment in which sales are double-weighted and sales-only apportionment and interest.

The Department has issued guidelines to carry out the provisions of this legislation, including rules regarding a method for determining the number of full-time employees of a manufacturing company in cases such as a merger, acquisition, spin-off, or other change in corporate structure. This website contains documents and links to websites that are relevant to the drafting of these guidelines.

Final Guidelines and Clarifications

2012 Single Sales Factor for Manufacturers (January 7, 2013) PDF 72 KB (Also available as PD 13-6)

PD 13-84 ( 2/28/13) Ruling clarifying "average employment" 

PD 13-194 (10/23/13) Ruling clarifying "average weekly wage" 

Legislative Documents

HB 2437 (2009) Text PDF Fiscal Impact Statement

HB 460 (2012) Text PDF Fiscal Impact Statement

Guideline Development Documents

Workplan (PDF 17KB) Revised Workplan (PDF 21KB)

Draft Guidelines

Second Draft Guidelines