Document Number
77-151
Tax Type
General Provisions
Description
1977 Legislative Digest
Topic
Reports
Date Issued
06-01-1977


1977
Legislative Digest




VIRGINIA DEPARTMENT OF TAXATION























Research Division
Department of Taxation
P. O. Box 6-L Richmond, VA 23282
June, 1977



CONTENTS



INTRODUCTION

STATE TAXES
General
Aircraft Sales and Use Tax
  • Bank Stock Tax
  • Beer and Malt Beverage Tax
    Capital Not Otherwise Taxed
    Income Taxes
    Inheritance and Gift Taxes
    Litter Control Taxes
  • Recordation Taxes
    Retail Sales and Use Tax
    Soft Drink Excise Tax
    Tobacco Tax

LOCAL TAXES
  • General
  • Admissions Tax
    Consumer Utility Tax
    License Tax
    Merchants' Capital Tax
    Personal Property Tax
    Real Property Tax
    Tobacco Tax
    Transient Occupancy Tax

    INDEX OF BILLS AND RESOLUTIONS

INTRODUCTION

This digest is published by the Department of Taxation as a convenient reference guide to bills affecting state and local taxation that were enacted by the 1977 Session of the General Assembly. It is not intended as a definitive interpretation of the law, but should be useful to state and local officials as well as citizens in understanding the enactments.

To make the 1977 digest a more useful and comprehensive publication, it has been organized according to the enactments affecting state taxes, which appear first, followed by those affecting local taxes. Beneath the state or local heading, the specific tax subjects are arranged alphabetically with the appropriate bills beneath them in numerical order. Senate bills and resolutions appear first, followed by House bills and resolutions. An index of bills and resolutions appears at the end of the digest.STATE TAXES

GENERAL

SENATE BILL NO. 755 (Chapter 396)

This act deletes all specific interest rates in those sections of Title 3 and Title 58 of the Code of Virginia concerning taxes administered by the Department of Taxation. It refers instead in those sections to § 58-1160, the general interest rate statute which the 1976 Session of the General Assembly conformed to the interest rate of the Internal Revenue Code of 1954, as amended. The act also amends § 58-1160 to clarify as of what date the interest rate is determined. That is, it is the Internal Revenue Code interest rate as of the assessment date which will apply from the due date of the tax to the date of full payment. The act is effective July 1, 1977.

SENATE JOINT RESOLUTION NO. 103

This joint resolution requests a joint subcommittee of the Committees on Finance of both houses to study the feasibility of granting "tax incentives" to businesses and industrial organizations for awarding contracts to sheltered workshops or other facilities that serve the severely handicapped.

HOUSE BILL NO. 1627 (Chapter 620)

This act amends certain sections of Titles 2, 32, 51, and 65 of the Code relating to retirement and the Virginia Supplemental Retirement System (VSRS), State Police Retirement System, and Judicial Retirement System, to alter certain benefits and make technical changes. By amending § 2.1-257, it adds the Director of the VSRS and each Commissioner of the Revenue and each Treasurer in the state to the list of those offices or officers who are to receive annually a copy of the Acts of Assembly. By amending § 51-111.18, it reassigns the membership of the VSRS Board. The present membership consists of the Comptroller, State Treasurer, Auditor of Public Accounts, and State Tax Commissioner, and five members appointed by the Governor, subject to General Assembly confirmation. This bill reduces the Board to seven, consisting of a state executive official, a teacher, a state employee, an employee of a participating locality, and the others neither teachers nor employees of any government. These sections of the act are effective July 1, 1977.

HOUSE BILL NO. 1813 (Chapter 624)

This act amends various sections of the Code in order to make adjusting changes in accordance with the Revision of Title 8 relating to civil remedies and procedures, contained in Senate Bill No. 565 (Chapter 617). With regard to taxation, the act amends § 58-1014, relating to additional proceedings for the collection of state and local taxes, and defines "venue" for such proceedings according to the definition of venue in the Revision of Title 8. The venue provision referred to in § 8.01 is as follows:

13 a. In any action for the collection of State, county or municipal taxes, any one of the following counties or cities shall be deemed pre­ferred places of venue:
    • 1. Wherein the taxpayer resides; or
2. Wherein the taxpayer owns real or personal property; or
3. Wherein the taxpayer has a registered office, or regularly or
    • systematically conducts business; or
      4. In case of withdrawal from the Common-wealth by a
      delinquent taxpayer, wherein venue was proper at the time
      taxes in question were assessed or at the time of such
      withdrawal."

The act repeals § 58-1015, the present statute prescribing venue for additional proceedings for the collection of state and local taxes.

The act also amends § 58-1130, concerning a taxpayer's application to court for correction of erroneous assessments of state taxes and defines venue for such proceeding according to the definition of venue in the Revision of Title 8. The venue provision referred to in § 8.01-261 is as follows:

13b. In any action for the correction of an erroneous assessment of State taxes and tax re-funds, any one of the following counties or cities shall be deemed preferred places of venue:
    • 1. Wherein the taxpayer resides;
2. Wherein the taxpayer has a registered office, or regularly or
    • systematically conducts business;
3. Wherein the taxpayer's real or personal property involved in
    • such a proceeding is located."

The act is effective October 1, 1977.
AIRCRAFT SALES AND USE TAX

SENATE BILL NO. 702 (Chapter 245)

This act adds a new § 58-685.29:1 and repeals § 58-685.35 in order to impose a penalty and interest on a purchaser of an aircraft who fails to timely file or pay the Virginia Aircraft Sales and Use Tax within 30 days from the time of purchase in the state or from the time required to be licensed in the state. The penalty is five percent, with an additional five percent for each additional 30-day period, or fraction thereof after 60 days, during which the failure to make any return or pay the full amount of tax continues, not to exceed 25 percent in the aggregate. In the case of a false or fraudulent return or failure to file, where willful intent exists to defraud the state, a specific penalty of 50 percent of the amount of the proper tax is to be assessed. The act is effective July 1, 1977.
BANK STOCK TAX

HOUSE BILL NO. 1366 (Chapter 212)

This act amends §§ 58-476 and 58-476.1 to double the percentage of the rate of taxation that a city may impose on each $100 of the taxable value of the shares of stock in any bank located in a city. At the present time, cities may retain 40 percent of the bank stock tax with the state receiving the remainder, while counties and incorporated towns may retain 80 percent with the state receiving the remaining 20 percent. This act would allow cities to retain 80 percent of the tax. The act is effective January I, 1979.
BEER AND MALT BEVERAGE TAX

HOUSE BILL NO. 2123 (Chapter 616).

See LITTER CONTROL TAXES
CAPITAL NOT OTHERWISE TAXED

HOUSE BILL NO. 1920 (Chapter 56).

See LOCAL TAXES - MERCHANT'S CAPITAL TAX.
INCOME TAXES

SENATE BILL NO. 700 (Chapter 243)

This act amends § 58-151.080, relating to consolidated corporation income tax returns, to provide that affiliated corporations filing a consolidated return are jointly and severally liable for the total tax assessed on the basis of such return. The act provides that no agreement entered into by one or more members of the affiliated group with any other member of the group or with any other person shall in any case reduce the liability of each affiliated corporation. The act is effective for taxable years beginning on and after January 1, 1977.

SENATE BILL NO. 701 (Chapter 244)

This act amends § 58-151.067, relating to extensions of time for filing state individual or fiduciary income tax returns. It grants an automatic extension, to and including the first day of the seventh month following the close of the taxable year, to U. S. citizens residing or traveling outside the U. S. and Puerto Rico, including persons in the military or naval service. The act is effective for taxable years beginning on and after January 1, 1977.

SENATE BILL NO. 703 (Chapter 246)

This act amends § 58-151.074 to clarify that the state will criminally prosecute any individual or fiduciary who willfully fails or refuses to make returns of income or who, with intent to defraud the state, makes any false statement therein. The act is effective July 1, 1977.

SENATE BILL NO. 705 (Chapter 297)

This act amends § 58-151.013 to provide individual income taxpayers with a subtraction of the amount included in federal adjusted gross income by the operation of the provisions of § 78 of the Internal Revenue Code. That is, the act provides a subtraction for so-called "deemed dividends," the amounts of income and dividend withholding taxes actually paid by the foreign corporation to a foreign government and deemed to be dividends to the United States taxpayer. Such a subtraction is already available to corporate taxpayers under § 58-151.032, and this section is also amended for simplification of the law. The act is effective for taxable years beginning on and after January 1, 1977.

SENATE BILL NO. 760 (Chapter 250)

This act amends § 58-151.31, relating to refunds and credits for overpayment of individual income taxes, in order to make the statute of limitations consistent with the general statute of limitations in § 58-1118.1. The statute of limitations is three years from the last day, prescribed by law for the timely filing of the return, or within sixty days from the final determination of any change or correction in the liability of the taxpayer for any federal tax upon which the state tax is based, whichever is later. The act further amends § 58-151.31 so that the interest provision on such refunds is consistent with § 58-1140.1, the general statute regarding interest on overpayments of taxes administered by the department. This act is effective January 1, 1977.

HOUSE BILL NO. 1504 (Chapter 612)

This act amends § 58-151.013 and restores for Virginia taxpayers the itemized deduction for child and dependent care that was lost when the federal Tax Reform Act of 1976 changed the treatment of these expenses from an itemized deduction to a percentage tax credit. (This federal deduction was eliminated for taxable years beginning after December 31, 1975.) The act provides for an itemized deduction of five times the amount of the credit allowed under the federal law, but only to taxpayers claiming itemized deductions for both federal and state returns. This act is effective for the taxable years beginning on and after January 1, 1977.

HOUSE BILL NO. 2001 (Chapter 658)

This act amends § 58-151.050 and exempts the apportionment of net income to Virginia of those motor carriers whose commercial activities within Virginia are not sufficiently substantial to constitute a basis for income taxation.

Specifically, it exempts a carrier that has made no pick-ups or deliveries in Virginia, and that has traveled less than 50,000 vehicle miles in Virginia in the taxable year. It also exempts a carrier that makes no more than 12 round trips into Virginia during a taxable year. Either exemption, however, is conditioned on the following: (1) that the mileage under 50,000 or in the round trips does not represent more than five percent of the total miles annually traveled in all states by a carrier, and (2) that the carrier neither owns nor rents real or tangible personal property in Virginia (except vehicles). The act is effective for taxable years beginning on and after January 1, 1977.

HOUSE BILL NO. 2139 (Chapter 663)

This act amends § 58-151.13 and modifies the method of collecting Virginia income withholding taxes from larger employers. Whenever an employer whose average monthly liability can be expected to be $1,000 or more accumulates more than $500 during any quarter-monthly period (i.e. on the 7th, 15th, 22nd, or last day of a month), he is required to file a form with the department and pay the amount withheld within three banking days following the close of that quarter-­monthly period. Any employer making a quarter-monthly payment must make a payment of at least 90 percent of the actual tax liability for that period. In addition, the act requires that every employer whose average monthly liability can be expected to be $100 or more must file and pay withholding taxes monthly, a requirement essentially the same as current law.

The act is effective October 1, 1977, for reporting and payment of all income taxes withheld from wages paid on or after October 1, 1977. It will produce a one-time windfall of approximately $20 million in the 1977-78 fiscal year.
INHERITANCE AND GIFT TAXES

SENATE BILL NO. 641 (Chapter 481)

This act amends § 58-157 and provides for an exemption from the inheritance tax by deleting the requirement that a nonresident settlor of a trust creating a special power of appointment must forever remain a nonresident of Virginia after the creation of the trust. The exemption applies if the settlor of such a trust was a nonresident of Virginia at any time any property was contributed to the trust. The act is effective for estates of those dying after July 1, 1977.

SENATE BILL NO. 821 (Chapter 486)

This act adds a new § 58-155.1 and provides for the special valuation for Virginia inheritance tax purposes of real property used for farming and included in the decedent's estate. This would provide similar tax relief for farm families at the state level as was given at the federal level through the Tax Reform Act of 1976.

This act cites § 2032A of the Internal Revenue Code with regards to qualification, valuation, and definitions for Virginia inheritance tax purposes. The act is effective for estates of those individuals dying on or after July 1, 1978.

HOUSE BILL NO. 1625 (Chapter 146)

This act amends § 64.1-66.1 and provides that a general direction in a will to pay all death taxes does not include taxes imposed on a "generation skipping transfer" under § 2601 of the Internal Revenue Code or taxes imposed on the estate of a prior decedent in which the testator had no power of appointment or disposition. Such taxes may, however, be paid out of the estate if the testator expresses that intent. The act is effective July 1, 1977.

HOUSE BILL NO. 1736 (Chapter 657)

This act amends § 64.1-19 and adds a new § 64.1-19.1. It provides that a surviving spouse shall be entitled to a dower or curtesy interest in fee simple of one third of all real estate of which the spouse died in possession. This act also provides that dower and curtesy shall be taken to be synonymous. This act is effective for estates of those dying on or after July 1, 1977.

HOUSE RESOLUTION NO. 34

This resolution directs the House Finance Committee to study the inheritance and gift tax laws of the Commonwealth. In conducting its study, the committee may utilize up to six citizen members and may invite other members of the General Assembly to participate.
LITTER CONTROL TAXES

HOUSE BILL NO. 2123 (Chapter 616)

This act increases the tax rates on beer and malt beverages; increases the litter tax enacted by the 1976 Session; and enacts a new soft drink excise tax in order to fund a state litter control program.

§§ 4-40 and 4-108 are amended and reenacted to increase the excise tax on beer and malt beverages as follows:

(1) On barrels of 31 gallons, the rate increases from $7.80 per barrel to $7.95
    • per barrel, with the same rates applying to containers of more or less
      than 31 gallons.
(2) On bottles containing seven ounces or less, the rate remains constant at 2
    • cents per bottle.
(3) On bottles containing no more than 12 ounces but more than 7 ounces, the
    • rate increases from 2.6 cents to 2.65 cents per bottle.
(4) On bottles containing more than 12 ounces, the rate increases from 2.2
    • mills per ounce to 2.22 mills per ounce per bottle.

These increases in the excise taxes on beer and beverages become uniformly effective on July 1, 1977, and will expire July 1, 1978, along with the 0.6 cent increase passed at the 1976 Session. Floor tax provisions are included in both §§ 4-40 and 4-108.

§ 10-201.1 is amended and reenacted to extend the present flat rate litter tax (Ch. 757, 1976 Acts of Assembly) to each establishment from which a litter ­related business, as enumerated in § 10-201, is conducted. The rate of the litter tax is increased from $2.50 to $5.00. The amended section also specifically excludes a vending machine as a separate establishment. The present limitation of the tax to taxable years beginning in 1976 is repealed.

A Chapter 7.2, consisting of § 58-404.02, is added to Title 58 of the Code of Virginia, imposing on every wholesaler or distributor of carbonated soft drinks a flat amount state excise tax based on total gross receipts from' the sale of soft drinks. The following rate schedule shall apply:

With gross receipts of $500,000 or less - a tax of $250
With gross receipts in excess of $500,000
but not exceeding $1 million - a tax of $500
With gross receipts in excess of $1 million
    • but not exceeding $3 million - a tax of $1,000
With gross receipts exceeding $3 million - a tax of $2,000.

This tax will be collected in the same manner as the income tax and is reserved for state taxation only.

All revenues derived from these tax increases will be deposited in the general fund. The act further provides that all revenues resulting from those taxes imposed or increased by this act are appropriated to the Department of Conservation and Economic Development after deduction of the expenses incurred by the Department of Taxation. A paragraph is added to § 10-206, providing that the Department of Conservation and Economic Development must expend at least 50 percent of the funds appropriated to it in each year pursuant to contracts with localities under § 10-208.

The act provides that the soft drink excise tax and the five dollar litter tax are effective for taxable years beginning on and after January 1, 1977. The increases in the beer and beverage excise taxes become effective on July 1, 1977, according to the provisions of §§ 4-40 and 4-108, and expire July 1, 1978. § 10-206, as amended, is effective July 1, 1976. The tax rates enacted by this act will raise approximately $1.2 million per year in general fund revenues.
RECORDATION TAXES

SENATE BILL NO. 763 (Chapter 449)

This act amends §§ 8-501, 14.1-112, 14.1-120, 58-71, and 58-73, and repeals § 58­74, relating to fees, costs and writ taxes in regards to Supreme Court proceedings. It eliminates writ taxes chargeable to the plaintiff in all proceedings either on appeal or original jurisdiction which are filed in the Supreme Court.

SENATE BILL NO. 779 (Chapter 398)

This act amends § 58-55.1. For purposes of exempting a "permanent loan deed of trust or mortgage" from the recordation tax, the act defines a "construction loan deed of trust or mortgage" to include a note due and payable on demand, as well as a note payable within three years or less. The act is effective July 1, 1977.

HOUSE BILL NO. 1075 (Chapter 611)

This act amends §§ 58-55 and 58-514.2:1 and decreases the rate of tax on the recordation of deeds of trust or mortgage in excess of $10 million. Presently the state recordation tax is $0.15 per $100 of value. The new rates as follows:
    • Value Tax / $100 of value
First $10 million $0.15
$10 million - $20 million $0.12
$20 million - $30 million $0.09
$30 million - $40 million $0.06
Over $40 million $0.03

The act requires that the State Corporation Commission consider any decrease in a utility's recordation taxes when reviewing requests for rate increases. The act is effective July 1, 1978.

HOUSE BILL NO. 1824 (Chapter 153)

This act amends § 58-60 and exempts from recordation tax deeds of trust that are supplemental to permanent deeds of trust that are exempt pursuant to § 58­55.1(c). That is, the permanent deed was exempt because the construction loan deed of trust which followed it was taxable. The act is effective July 1, 1977.

HOUSE BILL NO. 1974 (Chapter 418)

This act amends §§ 58-61 and 58-64 and exempts from recordation taxes (1) deeds conveying real estate to a partnership when the grantors in the deed and the partners in the partnership are the same persons and (2) transfers of real estate between husband and wife for a change of tenancy where there is no gift as a result of such transfer. In case a gift has been made between husband and wife, the deed must state that it is a deed of gift. This act is effective July 1, 1977.
RETAIL SALES AND USE TAX

SENATE BILL NO. 704 (Chapter 247)

This act amends § 58-441.6, relating to exclusions and exemptions from the retail sales and use tax, and clarifies the intention of the 1976 Session (Chapter 666) that the retail sales and use tax apply to all motor fuels and special fuels on which refunds are granted under the motor fuel and special fuel tax provisions, except motor fuels or special fuels for use in a boat or ship. This act is effective July 1, 1977.

HOUSE BILL NO. 2066 (Chapter 604)

This act adds a new § 58-441.21:1 that provides for a single advanced payment of the sales and use tax from certain registered dealers. It requires all dealers with an average monthly tax liability of $600 or more to make a one-time payment of two-thirds of that liability. This tax payment represents the estimated amount of sales and use tax collected for the current month and must be made within thirty days of the date of notice from the department. The act further provides that in the initial year, the payment may at the taxpayer's option be made in two equal installments, the first due within 30 days of the department's notice and the second due within five months of the notice.

The act also provides for an annual adjustment of the computed payment liability. That is, if a dealer's average monthly liability falls below $600 or if the previous annual payment exceeds by 20 percent a currently computed annual payment liability, the difference will be refunded to the dealer. If, on the other hand, the currently computed annual payment liability exceeds by 20 percent the dealer's previous annual payment, the difference will be assessed to the dealer. To annually determine the required payment, the department is to average the dealer's last 12 monthly reports for the preceding taxable period ending June 30 after eliminating the high and low liability months. The act is effective July 1, 1977. It will produce a one-time windfall of approximately $26 million in the 1977-78 fiscal year.

HOUSE BILL NO. 2099 (Chapter 504)

This act amends § 58-441.6 and provides the following exemptions from the retail sales and use tax: (1) Commercial feed, fish eggs and other supplies purchased by farmers engaged in raising fish for market; (2) Tangible personal property purchased for use and consumption by a noncommercial educational telecommunications entity not conducted for profit; and (3) Catalogs and other printed materials used in the advertising of tangible personal property for sale and the envelopes, containers and labels used for packaging and mailing such catalogs and printed materials stored for twelve months or less in this state and distributed for use without this state. The act is effective July 1, 1977.

HOUSE BILL NO. 2121 (Chapter 591)

This act amends § 58-441.15 and provides a sales and use tax exemption for construction materials purchased by a nonprofit college or institution of learning and furnished to construction contractors for use in the performance of a contract entered into prior to January 1, 1977, with such college or institution. The act is effective July 1, 1977.
SOFT DRINK EXCISE TAX

HOUSE BILL NO. 2123 (Chapter 616)

See LITTER CONTROL TAXES
TOBACCO TAX

SENATE BILL NO. 850 (Chapter 595)

See LOCAL TAXES - TOBACCO TAX

LOCAL TAXES

GENERAL

SENATE BILL NO. 855 (Chapter 507)

This act amends §§ 58-978 and 58-983 and allows towns to adopt, by ordinance, the same administrative procedures with regard to uncollectible and delinquent taxes as are presently required of city and county treasurers. The act is effective July 1, 1977.

HOUSE BILL NO. 1413 (Chapter 99)

This act amends §§ 58-1141, 58-1142, 58-1145, 58-1146, and 58-1152.1 and establishes a new statute of limitations on application for refunds of local taxes erroneously paid. The present limitation is two years after the date of the erroneous payment. The new limitation corresponds to the limitation placed upon the local commissioner in assessing omitted, underassessed, or unrealized local taxes, that is, within three years from the last day of the tax year for which the assessment was made. The act is effective July 1, 1977.

HOUSE BILL NO. 1627 (Chapter 620)

See STATE TAXES - GENERAL

HOUSE BILL NO. 1813 (Chapter 624)

See STATE TAXES - GENERAL

HOUSE BILL NO. 2048 (Chapter 501)

This act amends §§ 42.1-77, 42.1-80, and 42.1-82 and specifically includes the offices of local constitutional officers as an "agency" under the Public Record Act. Although the Public Record Act already applies to "all boards, commissions, departments, divisions, institutions, authorities, or parts thereof, of the State or its political subdivisions," this bill clarifies that the Library Board shall issue regulations to the offices of constitutional officers concerning paper quality, ink, typewriter ribbons, carbon papers, etc. which may be used for making public records. This act also provides that no land or personal property book shall be destroyed without having first been offered to the State Library for preservation. The act is effective July 1, 1977.

HOUSE BILL NO. 2096 (Chapter 661)

This act creates a Commission on State Aid to Localities, whose membership is composed of II persons as follows: 5 appointed by the Speaker of the House of Delegates; 3 appointed by the Privileges and Elections Committee of the Senate; and 3 appointed by the Governor from the state at large. The commission is directed to study and report to the Governor and the General Assembly on the following, no later than October 1, 1978:
    • 1. Present state programs giving aid to localities, other than public education.
      2. Formulas used to compute local shares of state aid.
      3. Reasons underlying these formulas.
      4. The fairness of the formulas.
      5. The desirability and feasibility of modifying formulas or providing a
        • standard formula.

The act appropriates $10,000 from the general fund for the use of the commission. The act is effective July 1, 1977.

HOUSE JOINT RESOLUTION NO. 230

This joint resolution requests the Department of Taxation to submit to the local governing body of every county, city, or town by April 1 of each year an estimate for the next fiscal year of the revenues to be received by the locality from the local option sales tax, the state sales tax distributed on the basis of school age population, the wine tax, and A.B.C. profits. In addition, the resolution requests the department to provide localities the procedure used in making the estimate, and the reference to the Code of Virginia stating the authority for the local distribution.
ADMISSIONS TAX

HOUSE BILL NO. 2158 (Chapter 573)

This act amends § 58-404.2 and adds Prince George County to the list of counties (Fairfax and Arlington counties) that are authorized to levy an admissions tax. The admissions tax is limited to no more than ten percent of the admission charge. The act is effective July 1, 1977.
CONSUMER UTILITY TAX

SENATE BILL NO. 613 (Chapter 425)

This act amends the charter of the City of Manassas Park. In the tax area, it empowers the city to impose a consumer or subscriber tax on the use of water, gas, electricity, telephone, and any other public utility services, as authorized by § 58-617.2 of the Code of Virginia. The act contains an emergency clause and is effective March 27, 1977.

LICENSE TAX

HOUSE BILL NO. 1670 (Chapter 320)

This act amends §§ 58-266.1 and extends to April 1, 1978, the current freeze on local business, professional, and occupational license tax rates which will expire on April 1, 1977. Any locality that does increase its rates after April 1, 1977, is required to roll them back to the February 1, 1976, rate and refund the excess. The bill also clarifies that the freeze applies only to such local business, professional, and occupational license taxes imposed pursuant to Title 58 or by charter and not to any other local license tax provisions of the Code. The act is effective July 1, 1977.
MERCHANTS' CAPITAL TAX

SENATE BILL NO. 838 (Chapter 487)

This act amends § 58-833.1 and permits localities by ordinance to prospectively, retroactively, or both exempt from taxation as merchants' capital the excess of bills and accounts receivable over bills and accounts payable for the three preceding years only. The act further provides for the exoneration of taxes so assessed and for refunds of taxes, penalties, and interest already paid. This is permissive legislation, affecting only the locality acting thereunder. Chapter 420(S.B. 655) of the 1975 Acts of Assembly added the § 58-833.1 permitting the exemption from taxation as merchants' capital the excess of bills and accounts receivable over bills and accounts payable, effective January 1, 1976. This act is effective July 1, 1977.

HOUSE BILL NO. 1920 (Chapter 56)

This act amends § 58-833 and enlarges the definition of merchants' capital to include all repair parts, materials, supplies and other property defined as capital associated with a repair and service operation carried on as an integral part of a primarily mercantile business whose principal sales are subject to the motor vehicle sales and use tax. Since this capital is currently subject to the state tax on capital not otherwise taxed and current law segregates merchants' capital for local taxation exclusively, this bill would thus remove such capital from the state tax base. This act is effective for the tax year 1977 and for every tax year thereafter.
PERSONAL PROPERTY TAX

HOUSE BILL NO. 1290 (Chapter 211)

This act abates any personal property taxes assessed or assessable between January 1, 1974, and July 1, 1976, on containers, barges, and similar receptacles engaged in interstate or foreign commerce that were temporarily located in a local jurisdiction. In addition, it provides that refunds be made in accordance with the various provisions for erroneous assessments set forth in Article 2, Chapter 22 of Title 58 (§ 58-1141 et seq.). The act is effective July 1, 1977.

HOUSE BILL NO. 1404 (Chapter 561)

See LOCAL TAXES - REAL PROPERTY TAX.
REAL PROPERTY TAX

SENATE BILL NO. 590 (Chapter 479)

This act amends § 58-12.59, implementing the recent constitutional amendment to Article X, § 6 and allowing localities to exempt from the property tax all real property that is encumbered by a recorded perpetual easement permitting the inundation by water, while such property is in fact so inundated. The act is effective July 1, 1977.

SENATE BILL NO. 768 (Chapter 594)

This act amends §58-792.01 and requires that the local assessing officer send notices of a change in assessment directly to the owner of the property as shown by the land books. The act further provides that if the address of the taxpayer is in care of a lender, the lender must upon request furnish the locality a list of the property owners and their addresses, or the parties by agreement may permit the lender to forward the notices to the property owner, with the cost of postage paid by the locality. The act is effective July 1, 1977.

SENATE BILL NO. 802 (Chapter 210)

The act amends §§ 58-512.1 and 58-760 and provides that all public service corporation property, other than property that is still not equalized, must be assessed by applying the local assessment ratio prevailing in the applicable taxing district for other real estate as most recently determined and published by the Department of Taxation. The act also requires that ten days after determining an assessment ratio, the Department of Taxation shall notify the locality of the ratio and the basis of the determination.

This legislation eliminates the present tax adjustment provisions whereby if the prevailing local assessment ratio is found to be different from the ratio used by the State Corporation Commission (SCC) in deriving the assessed value, the tax is recomputed and any overpayment/underpayment is applied to the utility's tax bill in the following year. Previous law required the SCC to assess public service corporation property in a locality at 100 percent when the locality notified the SCC that it had gone to an assessment level of 100 percent of fair market value. However, since the assessments are actually made during the year before their effective date, an assessment made at 100 percent is actually less than that by the time it goes into effect. This would result in a downward tax adjustment plus interest to be credited to the utilities when the actual ratio of assessment in a locality is determined.

To avoid the tax adjustments and yet ensure that public service corporation property is assessed at the same ratio prevailing in a taxing jurisdiction, this legislation requires the SCC to assess public service corporation property on the basis of the department's most recently determined and published local assessment ratio. Since both locally assessed real estate and the public utility property would then be assessed at the same level, the tax adjustment features of the previous law become unnecessary. The act contains an emergency clause and is effective March 16, 1977.

SENATE JOINT RESOLUTION NO. 15 (Chapter 687)

This joint resolution proposes an amendment to Article X, § 6(a)(6) of the Constitution of Virginia to exempt from property taxation that portion of the property owned by a nonprofit community association or its trustees and used or operated exclusively for general community purposes, as may be provided by classification or designation by the General Assembly. The proposed amendment must be agreed to by the 1978 Session and then submitted to the people in a referendum.

HOUSE BILL NO. 322 (Chapter 40)

This act amends §§ 21-112.1, 21-112.2, 21-112.5, 21-112.12, and 21-112.20, the statutes regarding the establishment of a small watershed improvement district within a soil and water conservation district. In the area of taxation, it provides that the assessed valuation of all watershed improvement districts for district tax purposes may be based on any of the following: (1) the same assessed valuation as used for the general county or city levy, (2) a special assessment of real estate if the district lies in two or more counties and cities and if there is a disparity of assessed values, (3) in proportion to the benefits that accrue to the real estate as determined by the directors, (4) or any combination of the above. The ballot for the referendum to establish such a district must set forth the method or methods of real estate assessment to be used for district tax purposes. Moreover, once a watershed improvement district is established, the method or methods of assessment cannot be changed nor can the provisions of this act be used to change the method of real estate assessment in any watershed improvement district established before January 1, 1976. The bill is effective July 1, 1977.

HOUSE BILL NO. 949 (Chapter 681)

This act amends §§ 15.1-237 and 58-769.6, adds a new Chapter 36 in Title 15.1, and adds new §§ 25-46:2 and 33.1-89.1. Titled the "Agricultural and Forestal Districts Act," it provides for the establishment of special agricultural, forestal, or agricultural and forestal districts, when enacted by local ordinances. The act increases the scope of the special assessment and taxation plan for agricultural and forest land under § 58-769.4, et seq., to include any agricultural and forestal district, both within and without localities which have ordinances implementing the special assessment plan.

The act provides that no land shall be a part of an agricultural and forestal district without the written consent of the owner. Once the land is included in such district, it would be eligible for use-value taxation, subject to all of the requirements of the general use-value taxation statutes, i.e., § 58-769.4, et seq., of the Code of Virginia. The act specifically provides for use-value taxation without a local use-value ordinance. No legal entity may own more than 3,500 acres proposed to be included in all districts within the state. The act is effective July 1, 1977.

HOUSE BILL NO. 1291 (Chapter 453)

This act amends § 58-760.1, implementing the constitutional amendment to Article X, § 6, effective January 1, 1977, and permitting localities to grant the same property tax exemption or deferral to persons who are "permanently and totally disabled," as is granted to the elderly. The local assessing officer must find the disabled person "to be unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment or deformity which can be expected to result in death or can be expected to last for the duration of such person's life." The act further requires evidence of disability to be by sworn affidavit by two licensed medical doctors or by certification from the Social Security Administration. These persons would receive tax relief subject to the same constraints on income and financial worth as imposed upon elderly persons who apply for property tax relief. This act contains an emergency clause and is effective January 1, 1977.

HOUSE BILL NO. 1388 (Chapter 122)

The act makes a number of changes in the charter for the City of Alexandria. These changes include the elimination of the power of the council to direct the city manager and city assessor to change the real estate assessment ratio. This change parallels present general law requiring assessments at 100 percent of fair market value. The Board of Review (for real estate assessments) is to be appointed by the Circuit Court rather than the corporation court. The bill also allows the council to impose a deadline for action by the Board of Review.

The act also allows the Alexandria city council to require owners of income­-producing real estate, except property producing income solely from the rental of no more than four dwelling units, to provide a certified statement of income and expenses of such property to the assessing officer. Furthermore, the bill requires that any such statement given to the assessing officer be kept confidential as required by § 58-46 of the Code of Virginia. The act is effective July 1, 1977.

HOUSE BILL NO. 1389 (Chapter 456)

This act amends § 58-760.1 and increases the maximum income limit to $11,000 for elderly persons to qualify for exemption or deferral on real property taxes. The present local option authority limits the income of the owners and owners' relatives living with the owner, as adjusted, to $10,000 per annum. An income of slightly over that amount would prevent an individual from qualifying. According to this act, a locality would be allowed to increase the total combined income limit to $11,000, provided that the property owner's tax deferral or exemption is reduced by the amount that such combined income exceeds $10,000. Therefore, as income rises over $10,000, the amount of relief that can be granted decreases. For example, assuming income as adjusted of $10,200 and a $700 deferral or exemption, $200 would be subtracted from the deferral and $500 would be the total deferral given. The act is effective July 1, 1977.

HOUSE BILL NO. 1404 (Chapter 561)

This act adds a new § 58-16.4, implementing the recent constitutional amendment to Article X, § 6 and establishing for purposes of local taxation a classification of property for certified solar energy equipment, facilities or devices, separate from other classifications of real or personal property. It allows the governing body of any county, city, or town, by local ordinance, to totally or partially exempt such property from local taxation. Application for exemption is made to the local building department. Certification of the solar energy equipment, facilities or devices will be handled by the State Office of Housing through the local building departments. Appeal of the local building department decisions may be made to the Technical Review Board of the State Office of Housing.

The act requires that the local assessing officer determine the value of qualifying solar energy equipment. The exemption will then be determined by applying the local tax rate to the value of the equipment and subtracting that amount, wholly or partially, from the total real property tax due on the real property to which the equipment is attached. The exemption would be effective for the next succeeding tax year and would be allowed for a term of not less than five years. (A provision is made for localities that assess new buildings under § 58-811.1 so that the exemption is effective when the real estate is first assessed.) The act also provides that the value of such qualifying solar energy equipment will not be less than the normal cost of purchasing and installing such equipment. The act is effective January 1, 1978, except that the office of Housing may proceed to promulgate regulations prior to that date.

HOUSE BILL NO. 1464 (Chapter 213)

This act amends § 58-769.8 and changes the taxpayer application deadline for use-value assessment in those localities having fiscal tax years pursuant to § 58-851.6 but assessing on a calendar year basis because they have not adopted fiscal year assessments under § 58-851.7. In such localities, the deadline would be 60 days preceding the effective date of the assessment. The act is effective July 1, 1977.

HOUSE BILL NO. 1530 (Chapter 268)

This act amends § 58-985 and changes the requirements on local treasurers for reporting delinquent real estate tax collections to the clerk's office. The present requirement for at least monthly reports of such collections would be eliminated, requiring instead that reports be sent to the clerk at least annually. The act is effective July 1, 1977.

HOSE BILL NO. 1609 (Chapter 48)

The act amends § 58-760.1 and provides that persons who are otherwise qualified for real property tax relief for the elderly would not lose this deferral or exemption because of an extended stay in facilities for physical or mental care so long as the real estate that receives such exemption or deferral is not used by or leased to others for consideration. The act is effective July 1, 1977.
    HOUSE BILL NO. 1635 (Chapter 49)

    This act amends § 58-764.1 and requires that the local commissioner of the revenue or director of finance must send to the State Corporation Commission and the public service corporation only on request the amount of deduction made from the value of real estate for a public service corporation easement. The act is effective July 1, 1977.

    HOUSE BILL NO. 1696 (Chapter 323)

    This act amends § 58-769.10 and clarifies that the roll-back tax under the special assessment plan for agricultural, horticultural, forest, or open space real estate is to be assessed against and paid by the owner of the property at the time the change in use which no longer qualifies occurs. This act is effective July 1, 1977.

    HOUSE BILL NO. 2004 (Chapter 419)

    This act amends § 58-778 and allows any county, whose year for general reassessment under the four-year cycle enacted in 1976 falls one year before the year designated under the old six-year cycle, to delay its reassessment by one year and then commence the four-year reassessment cycle. The act is effective July 1, 1977.

    HOUSE JOINT RESOLUTION NO. 177 (Chapter 686)

    This joint resolution proposes an amendment to Article X, § 6 of the Constitution of Virginia to allow the General Assembly by general law to authorize a local governing body to partially exempt from taxation real estate whose improvements, by virtue of age and use, have undergone substantial renovation, rehabilitation, or replacement. The proposed amendment must be agreed to by the 1978 Session and then submitted to the people in a referendum.

    HOUSE JOINT RESOLUTION NO. 249

    This joint resolution appoints a six-member joint subcommittee of composed of three members of the House Corporations, Insurance and Banking Committee and three members of the Senate Commerce and Labor Committee to study the State Corporation Commission's method of public service company property appraisal. The subcommittee is directed to report its findings and conclusions to the Governor and General Assembly by December 1, 1977. All state agencies and localities are directed to assist in the study upon request.
    TOBACCO TAX

    SENATE BILL NO. 850 (Chapter 595)

    This act amends § 58-757.27 and permits counties, cities, towns, and joint enforcement authorities to enter into agreements with the Department of Taxation to allow tobacco wholesalers to use either a dual die meter impression or dual stamps as evidence of payment of both the state and local cigarette tax. (Currently, only cities are permitted to enter into such an agreement, and the agreement only relates to dual die meter impressions. There are 2 counties, 16 cities, and 3 towns presently levying a tax on cigarettes.)

    The act also amends § 58-757.29 and sets forth broader provisions than are given in present law that may be included in county, city, and town ordinances for administration and enforcement of local cigarette taxes. Among these provisions are various conditions under which tobacco products and other property, excluding motor vehicles, used in any illegal tax evasion could be seized and confiscated by local authorities. Also, the locality may condition registration to sell or store tobacco products upon the filing of a bond in an amount not to exceed one and one-half times the average monthly liability of the taxpayer. In addition, the local ordinance may provide that violators of any provision of the cigarette tax ordinance be deemed guilty of a Class 1 misdemeanor and may provide for a late payment penalty not to exceed 10 percent per month; fraud or evasion penalties not to exceed 50 percent; and interest not to exceed ¾ percent per month, for overdue and unpaid taxes. However, mere possession of untaxed cigarettes in quantities of not more than six cartons is not a violation.

    The bill also prohibits county cigarette taxes from being levied within towns unless the governing body of the town agrees to levy the county tax. The bill also provides that "[n]o provision of this chapter [Chapter 14.2 - Taxes on Tobacco Products] shall be construed to deprive counties, cities, and towns of the right to levy taxes upon the sale or use of tobacco or tobacco products, provided such county, city, or town had such power prior to January one, nineteen hundred seventy-seven." The act is effective July 1, 1977.
    TRANSIENT OCCUPANCY TAX

    SENATE BILL NO. 563 (Chapter 274)

    This act amends the charter of the City of Fairfax to, among other provisions, allow a transient occupancy tax on hotels, motels, and boarding houses at a rate of four percent or less of the occupancy charge. The tax does not apply to rooms rented for continuous periods of 30 or more days. This act contains an emergency clause and is effective March 18, 1977.

    SENATE BILL NO. 594 (Chapter 265)

    This act amends § 58-76.2 and allows Arlington County to impose the transient occupancy tax permitted in § 58-76.1 at a rate of no more than five percent on the occupancy charge for any room or space occupied. The tax is permitted with the proviso that Arlington County's license tax as permitted in § 58-266.1, which is levied on hotels, motels, boarding houses, and travel campgrounds be limited to no more than one percent of the gross receipts of these establishments on and after January 1, 1978. This act is effective July 1, 1977.
    INDEX OF BILLS AND RESOLUTIONS

    SENATE BILL OR JOINT RESOLUTION NO.

    SB 563 Local-Transient Occupancy Tax (Fairfax City)
    SB 590 Local-Real Property Tax (Flooded Land Exemption)
    SB 594 Local-Transient Occupancy Tax (Arlington Co.)
    SB 613 Local-Consumer Utility Tax
    SB 641 Inheritance Tax (Nonresident Settlor of Trust)
    SB 700 Income Tax (Consolidated Corporation)
    SB 701 Income Tax (Extension for Filing)
    SB 702 Aircraft Sales and Use Tax (Penalty)
    SB 703 Income Tax (Criminal Prosecution)
    SB 704 Retail Sales and Use Tax (Motor/Special Fuels)
    SB 705 Income Tax (Deemed Dividends)
    SB 755 State Taxes-General (Interest Rate)
    SB 760 Income Tax ( Overpayments )
    SB 763 Recordation Tax (Writs)
    SB 768 Local-Real Property Tax (Notices)
    SB 779 Recordation Tax (Construction Loan Deed)
    SB 802 Local-Real Property Tax (Utilities)
    SB 821 Inheritance Tax (Farmland Valuation)
    SB 838 Local-Merchants' Capital Tax (Accounts Receivable)
    SB 850 Local-Tobacco Tax
    SB 855 Local-General (Towns' Delinquent Taxes)
    SJR 15 Local-General Real Property Tax (Exemption Proposed)
    SJR 103 State-General (Tax Incentives Study)



    HOUSE BILL, RESOLUTION, OR JOINT RESOLUTION NO.

    HB 322 Local-Real Property Tax (Watershed Impr. Districts)
    HB 949 Local-Real Property Tax (Agric./Forest Districts)
    HB 1075 Recordation Tax (Rate Decrease on Certain Deeds)
    HB 1290 Local-Personal Property Tax (Containers)
    HB 1291 Local-Real Property Tax (Disabled Exemption)
    HB 1366 Bank Stock Tax
    HB 1388 Local-Real Property Tax (Alexandria)
    HB 1389 Local-Real Property Tax (Elderly Exemption)
    HB 1404 Local-Real Property Tax (Solar Exemption)
    HB 1413 Local-General (Refund Statute of Limitations)
    HB 1464 Local-Real Property Tax (Use-Value Application)
    HB 1504 Income Tax ( Dependant Care Deduction)
    HB 1530 Local-Real Property Tax (Delinquent Collections)

    HB 1609 Local-Real Property Tax (Elderly Exemption)
    HB 1625 Inheritance Tax (Generation Skipping Transfer)
    HB 1627 State/Local-General (Administrative)
    HB 1635 Local-Real Property Tax (Utility Easement)
    HB 1670 Local-License Tax Freeze
    HB 1696 Local-Real Property Tax (Use-Value Roll-Back)
    HB 1736 Inheritance (Dower/Curtesy Interest)
    HB 1813 State/Local-General (Venue Definition)
    HB 1824 Recordation Tax (Supplemental Deeds)
    HB 1920 Local-Merchants' Capital Tax (Repair Parts)
    HB 1974 Recordation Tax (Partnership)
    HB 2001 Income Tax (Motor Carriers)
    HB 2004 Local-Real Property (Reassessment Cycle)
    HB 2048 Local-General (Public Record Act)
    HB 2066 Retail Sales and Use Tax (Collection Speedup)
    HB 2096 Local-General (State Aid)
    HB 2099 Retail Sales and Use Tax (Exemptions)
    HB 2121 Retail Sales and Use Tax (Exemption)
    HB 2123 Litter Control Taxes
    HB 2139 Income Tax (Withholding Speedup)
    HB 2158 Local-Admissions Tax (Prince George Co.)
    HJR 177 Local-Real Property Tax (Exemption Proposed)
    HJR 230 Local-General (Revenue Estimates)
    HJR 249 Local-Real Property Tax (Study SCC's Appraisal)
    HR 34 Inheritance and Gift Taxes (Study)

    Legislative Summaries

    Last Updated 08/25/2014 16:44