Document Number
84-274
Tax Type
General Provisions
Description
1984 Legislative Digest
Topic
Reports
Date Issued
06-01-1984



1984
Legislative Digest
VIRGINIA DEPARTMENT OF TAXATION












Department of Taxation
P.O. Box 6-L Richmond, Va. 23282
June, 1984


CONTENTS

INTRODUCTION

STATE TAXES
General
Aircraft Sales and Use
Egg Excise
Forest Products
Grantors
Recordation
Income
Intangible Personal Property
Retail Sales and Use
Set-Off Debt Collection
Watercraft Sales and Use
Withholding

LOCAL TAXES
General
License
Property

INDEX OF LEGISLATION
INTRODUCTION

This digest is published by the Department of Taxation as a convenient reference guide to legislation affecting state and local taxation enacted by the 1984 session of the General Assembly. It is not intended to present a definitive interpretation of the law here; however, this digest should prove useful to state and local officials as well as the general citizenry in understanding the enactments of the General Assembly. With regard to state taxation, the acts of the Assembly summarized herein are only those affecting tares administered by the Department of Taxation. Other state taxes such as corporate franchise or gross receipts taxes, the gasoline tax, and the motor vehicle sales tax are not dealt with herein.

The digest is organized in two parts: state taxes and local taxes. In each part specific tax subjects are arranged with the bills beneath them in numeric order. Senate bills appear first followed by House bills. Chapter numbers for each bill refer to the 1984 Acts of the Assembly. An index of bills appears at the end of the digest.
STATE TAXES
GENERAL

HOUSE BILL 239 (Chapter 678)

This act amends §59.1-274 to increase the number of Urban Enterprise Zones that may be designated by the Governor from six to twelve. Credits for corporation income tax, state bank franchise tax and state use tax are available to qualified businesses located in such zones. This act is effective July 1, 1984.
AIRCRAFT SALES AND USE TAX

SENATE BILL 278 (Chapter 372)

This act amends §58-685.37 to provide a credit against the aircraft sales and use tax for any retail sales and use tax paid upon purchases of components which become part of an assembled aircraft. This act is effective July 1, 1984.

HOUSE BILL 193 (Chapter 370)

This act amends §58-685.37 to provide that current market value, when used as the basis of the aircraft sales and use tax, shall not exceed the original purchase price of an aircraft and any improvements or additions thereto. This act is effective July 1, 1984.
                      • EGG EXCISE

    SENATE BILL 363 (Chapter 550)

    This act amends §3.1-796.11:4 to define the terms "handler" and "registered handler" and clarifies the functions of a handler. This act is effective July 1, 1984.
                    • FOREST PRODUCTS

    HOUSE BILL 674 (Chapter 715)

    This act amends §58-838.5:2 to increase the forest products severance tax, effective July 1, 1984, on all species except pine.
    GRANTOR'S

    HOUSE BILL 819 (Chapter 397)

    This act amends §58-54.1 to make the following recordation tax exemptions applicable to the grantor's tax, when transactions involve the conveyance of real estate: (1) to a corporation upon its organization by persons in control of the corporation in a transaction which qualifies for nonrecognition of gain or loss pursuant to §351 of the Internal Revenue Code of 1954, as it exists at the time of the conveyance; (2) from a corporation to its stockholders upon complete or partial liquidation of the corporation in a transaction which qualifies for income tax treatment pursuant to §§331, 332 or 337 of the Internal Revenue Code of 1954, as it exists at the time of liquidation; (3) to the surviving or new corporation upon merger or consolidation of two or more corporations; (4) to a subsidiary corporation from its parent corporation, or from a subsidiary corporation to a parent corporation, if the transaction qualifies for nonrecognition of gain or loss under the Internal Revenue Code of 1954, as amended; (5) to a partnership, when the grantors are entitled to receive not less than fifty percent of the profits and surplus of such partnership; (6) from a partnership, when the grantees are entitled to receive not less than fifty percent of the profits and surplus of such partnership; (7) to trustees of a trust, when the grantors in the deed and the beneficiaries of the trusts are the same persons; and (8) when the grantor is the personal representative of a decedent's estate or trustee under a will or inter vivos of which the decedent was the settlor, other than a security trust defined in §55-58.1, and the sole purpose of such transfer is to comply with a devise or bequest in the decedent's will or to transfer title to decedent's spouse or the kindred of decedent or decedent's spouse in accordance with a dispositive provisions in the trust instrument. This act is effective July 1, 1984.
    RECORDATION

    HOUSE BILL 425 (Chapter 428)

    This act amends §58-64 to provide an exemption from recordation tax for the conveyance of real estate to a new or surviving corporation in a reorganization which effects a change only in the form, name or place of organization, within the meaning of § 368(a)(1)(F) of the Internal Revenue Code. This act is effective July 1, 1984.
    INCOME

    SENATE BILL 127 (Chapter 729)

    This act amends §§58-151.013 and 58-151.013:1 to continue the deferral of Excess Cost Recovery benefits for corporate and individual income tax purposes. This act requires that thirty percent of actual Accelerated Cost Recovery System (ACRS) deductions continue to be added to Virginia taxable income for each taxable year after January 1, 1984 and that twenty percent of the amount so added in each biennium (two years) may be deducted from Virginia taxable income in each of the next five years. This act is effective for taxable years beginning on and after January 1, 1984.

    SENATE BILL 161 (Chapter 153)

    This act amends §58-151.013 to require the addition of certain interest income, excluded from federal taxation under § 128 of the Internal Revenue Code, to federal adjusted gross income for purposes of computing the individual income tax. This act is effective for taxable years beginning on and after January 1, 1984.

    SENATE BILL 311 (Chapter 672)

    This act amends §§58-151.032, 58-151.032:1, and 58-151.032:2 to provide a subtraction from the Virginia taxable income of corporations for contributions to Employee Stock Ownership Plans (ESOP) not deducted in computing federal taxable income because of ESOP tax credit elections by corporations under §44G of the Internal Revenue Code. This act is effective for taxable years beginning on and after January 1, 1983.

    HOUSE BILL 28 (Chapter 162)

    This act amends §58-151.013 to exempt Tier 1 Railroad Retirement benefits and Workmen's Compensation benefits (to the extent substituted for Title 11 Social Security benefits) from the individual income tax. This act is effective for taxable years beginning on and after January 1, 1984.

    HOUSE BILL 69 (Chapter 674)

    This act amends §58-151.013 to provide a deduction from the Virginia taxable income of individuals equivalent to the credit base used in computing the federal disability income credit. This act is effective for taxable years beginning on and after January 1 , 1984.

    HOUSE BILL 196 (Chapter 636)

    This act amends §58-151.013 to increase the individual income tax deduction for mileage travelled on behalf of a charitable organization from nine to eighteen cents per mile. This act is effective for taxable years beginning on and after January 1, 1985.
    INTANGIBLE PERSONAL PROPERTY

    SENATE BILL 126 (Chapter 150)

    This act amends §58-405 to exempt wine while in the hands of a farm winery producer from inventory defined as intangible personal property and to classify such wine as an agricultural product exempt from state and local property taxation. This act is effective July 1, 1984.

    SENATE BILL 127 (Chapter 729)

    This act amends §58-405 to eliminate the rate of state tax on intangible personal property. The effective date of this act is January 1, 1985.

    HOUSE BILL 211 (Chapter 171)

    This act amends §58-405 to classify computer application software, except software which is inventory of a computer software manufacturer, as intangible personal property segregated for state taxation only and exempts such property from state taxation. The effective date of this act is July 1, 1984.

    HOUSE BILL 320 (Chapter 680)

    This act amends §58-405 to clarify the definition of intangible personal property by referencing capital of a trade or business. This act is effective July 1, 1984.

    HOUSE BILL 827 (Chapter 692)

    This act amends §58-405 to redefine the machinery and tools of cable television businesses as intangible personal property and to define the machines and tools of such businesses as tangible personal property. The effective date of this act is July 1, 1984.
    RETAIL SALES AND USE

    SENATE BILL 223 (Chapter 522)

    This act amends §58-441.6 to exempt purchases of hemodialysis and peritoneal drugs and supplies by physicians and others from the tax. This act is effective July 1, 1934.

    HOUSE BILL 106 (Chapter 419)

    This act amends §58-441.6 to exempt durable medical equipment and devices from the tax when purchased by the person medically in need of such items. This act is effective July 1, 1984.

    HOUSE BILL 628 (Chapter 683)

    This act amends §58-441.6 to exempt taxicab tires and repair parts from the tax. This act is effective July 1, 1984.

    HOUSE BILL 802 (Chapter 690)

    This act amends §58-441.3 to exempt machinery, tools, and supplies from the tax when used by a mining operation in the reclamation of mined lands. This act is effective July 1, 1984.

    HOUSE BILL 879 (Chapter 693)

    This act amends §58-441.3 to totally exempt from tax machinery, tools, repair parts, power, and supplies when the preponderance of such items' use is direct use in manufacturing, processing, refining, converting or mining. Under the provisions of this act, items used both directly and indirectly in such industrial activities will no longer be taxed based upon the percentage of the items' taxable use to overall use. Therefore, an item will be exempt from tax if it is used more than fifty percent of the time in exempt activities and will be taxable, based upon full value, if used fifty percent or more in taxable activities. This act is effective July 1, 1984.
    SET-OFF DEBT COLLECTION

    SENATE BILL 11 (Chapter 269)

    This act amends §§ 19.2-305.1 and 58-19.7 to permit participation in the set-off debt collection program by state district and circuit courts effective July 1, 1984.
    WATERCRAFT SALES AND USE

    HOUSE BILL 39 (Chapter 418)

    This act amends §58-685.40 to change the definition of watercraft subject to tax, substituting motor size in excess of 25 horsepower for the present weight requirement and adding any sail-powered vessel of eighteen feet or more in length measured along the center line. This act is effective July 1, 1984.
    WITHHOLDING

    HOUSE BILL 433 (Chapter 682)

    This act amends §58-151.2 to provide an allowance for income taxes paid to another state when computing the amount of tax to be withheld from employee wages. This act is effective for taxable years beginning on and after January 1, 1985.

    LOCAL TAXES
    GENERAL

    HOUSE BILL 112 (Chapter 168)

    This act adds §58-851.5:1 to permit localities imposing taxes collectible by dealers to authorize such dealers to deduct up to five percent of the tax collected for purposes of covering the costs of collection and administration by such dealers. This act is effective July 1, 1984.

    HOUSE BILL 504 (Chapter 328)

    This act adds §58-847.1 to permit localities to impose criminal penalties, at the locality's discretion but not to exceed those set for a Class 3 misdemeanor, for intentional failure to file a local tax return. This act is effective July 1, 1984.
    LICENSE

    HOUSE BILL 288 (Chapter 247)

    This act amends §58-266.1 and adds § 58-266.11 to create a separate classification for direct sellers of consumer products who conduct business primarily in private residences and maintain no public business location. In addition, this act prohibits localities from taxing a direct seller whose sales do not exceed $4,000 annually; however, all gross receipts are taxable if a direct seller's sales exceed $4,000 annually. The license rate limitations on a direct seller are 20 cents per $100 of retail sales and 5 cents per $100 of wholesale sales. This act is effective July 1, 1984.

    HOUSE BILL 502 (Chapter 327)

    This act amends §58-266.5:1 regarding the proration of licenses of businesses which permanently cease to engage in business, to limit such proration to licenses based upon gross receipts and to permit localities to offset any refunds to a business which has ceased operation by any past due taxes owed by the business. This act is effective July 1, 1984.
    PROPERTY

    SENATE BILL 92 (Chapter 273)

    This act amends §§58-778 and 58-895 to increase from 40,000 to 50,000 the population (as determined by the Tayloe Murphy Institute of the University of Virginia) necessary for a county to elect; by majority vote of its Board of Supervisors, to conduct general property reassessments at five- or six-year intervals. This act will become effective January 1, 1985.
    SENATE BILL 126 (Chapter 150)

    This act amends §58-829.1:1 to reclassify from machinery and tools the machinery and equipment used by farm wineries to farm machinery subject to personal property taxation. This act is effective July 1, 1984.

    SENATE BILL 231 (Chapter 276)

    This act amends §58-835.1 to permit Spotsylvania and York Counties to enact ordinances permitting the proration of the tangible personal property tax on motor vehicles, trailers, and boats effective July 1, 1984.

    SENATE BILL 325 (Chapter 92)

    This act amends §§58-769.6, 58-769.8, and 58-769.10 to permit Appomattox and Gloucester Counties to adopt use value taxation ordinances not later than May 1, 1984 with applications for use value taxation to be filed in 1984 within thirty days of the adoption of such ordinances. This act was effective March 9, 1984.

    HOUSE BILL 211 (Chapter 171)

    This act amends §58-405 to exempt computer application software from the tangible personal property tax effective July 1, 1984.

    HOUSE BILL 222 (Chapter 676)

    This act amends §58-769.10 to remove the requirement that interest charged on rollback taxes be equivalent to the local rate applicable to delinquent taxes. Instead, the local governing body may set its own rate of interest; however, such rate cannot exceed the rate applicable to delinquent taxes. This act is effective July 1, 1984.

    HOUSE BILL 253 (Chapter 305)

    This act amends §58-835.1 to permit the City of Lynchburg to adopt an ordinance to prorate the tangible personal property tax on motor vehicles, trailers, and boats effective July 1, 1984.

    HOUSE BILL 278 (Chapter 372)

    This act amends §58-811.2 to permit the abatement of-.real property assessments by localities when a building is razed or destroyed. This act is effective July 1, 1984.

    HOUSE BILL 319 (Chapter 679)

    This act amends §58-831 to exclude capitalized interest as part of the original total capitalized cost of items classified as machinery and tools. This act is effective July 1, 1984.

    HOUSE BILL 322 (Chapter 680)

    This act amends §58-16.2:2 to proportionally allocate all payments received from the Tennessee Valley Authority in lieu of local property taxes to the localities in which the Authority owns property or distributes power. This act is effective July 1, 1984.

    HOUSE BILL 418 (Chapter 681)

    This act amends §§58-769.10 and 58-769.10:1 to provide that rollback taxes shall only be assessed on that portion of real estate no longer qualifying for use value assessment. In addition, this act specifies that the one-hundred percent penalty for material misstatement of fact on an application shall not apply unless there is intent to defraud the locality. This act is effective July 1, 1984.

    HOUSE BILL 456 (Chapter 222)

    This act amends §58-769.10 to permit property which has enjoyed a use value assessment but has been rezoned to a higher usage .to again be eligible for use value assessment three years after a subsequent rezoning of the property to agricultural use. This act is effective July 1, 1984.

    HOUSE BILL 468 (Chapter 768)

    This act amends §58-829.1 to provide that household appliances used in residential rental property, including refrigerators, stoves, ranges, microwave ovens, dishwashers, trash compactors, clothes dryers, garbage disposals, and air conditioning units shall be deemed fixtures and assessed as part of real property effective July 1, 1984.

    HOUSE BILL 539 (Chapter 331)

    This act amends §15.1-244 to reduce the time necessary to publish the second notice of assessment for local improvements from ten days to at least seven days prior to hearings. This act is effective July 1, 1984.

    HOUSE BILL 547 (Chapter 471)

    This act amends §58-835.1 to permit Gloucester County to prorate assessments of tangible personal property tax. This act is effective July 1, 1984.

    HOUSE BILL 555 (Chapter 267)

    This act amends §58-760.1, providing that upon the death of an individual who qualifies for a real estate tax exemption or deferral for the elderly or handicapped, the exemption of such property enjoyed will be prorated for the taxable year when the ownership of the property is transferred to a non-qualified spouse. This act is effective July 1, 1984.

    HOUSE BILL 776 (Chapter 689)

    This act amends §58-829 to permit localities to value motor vehicles of two tons or greater (except mobile homes, antique motor vehicles, taxicabs, motor vehicles for the handicapped, and recreational vehicles) by using the lowest value specified in a recognized pricing guide. In addition, this act permits local assessing officers, when using a recognized pricing guide, to automatically extend the assessment if the pricing information is stored in a computer. This act is effective July 1, 1984.
    INDEX OF LEGISLATION

    SENATE BILL NUMBER PAGE

    SB 92 Property (6-year interval for certain reassessments)
    SB 126 Property (Farm wineries)
    SB 127 Income (A.C.R.S. deductions)
    SB 127 Intangible Personal Property (Elimination of tax rate)
    SB 161 Individual Income (Interest addition)
    SB 223 Sales and Use (Hemodialysis exemption)
    SB 231 Property (Proration-Spotsylvania County)
    SB 278 Aircraft (Retail Sales Tax Credit)
    SB 311 Corporate Income (ESOP Plan Deduction)
    SB 325 Property (Use Value-Appomattox and Gloucester Counties)
    SB 363 Egg Excise (Handler Defined)

    HOUSE BILL NUMBER

    HB 28 Individual Income (Railroad Retirement Benefit Exclusion)
    HB 39 Watercraft (Watercraft Redefined)
    HB 69 Individual Income (Disability Income Exclusion)
    HB 106 Sales and Use (Durable Medical Equipment Exemption)
    HB 112 Local (Discount for Collection of Tax)
    HB 193 Aircraft (Valuation)
    HB 196 Individual Income (Charitable Mileage Deduction Increase)
    HB 211 Intangible Personal Property (Computer Software)
    HB 211 Property (Computer Software)
    HB 222 Property (Interest on Roll Back Taxes)
    HB 239 Urban Enterprise Zones (Increases Number of Zones)
    HB 253 Property (Proration - Lynchburg)
    HB 278 Property (Abatement - Destroyed Buildings)
    HB 288 License (Direct Sellers Exemption)
    HB 319 Property (Machinery and Tools Valuation)
    HB 320 Intangible Personal Property (Capital of a Trade or Business
    HB 322 Property (TVA Payments)
    HB 418 Property (Assessments of Rollback Taxes)
    HB 425 Recordation (Corporate Change Exemption)
    HB 433 Withholding (Out-of-State Tax Allowance)
    HB 456 Property (Use Value Reclassification)
    HB 468 Property (Apartment Appliances)
    HB 502 License (Proration)
    HB 504 Local (Penalties for Failure to File Returns)
    HB 539 Property (Notice of Assessment)
    HB 547 Property (Proration - Gloucester County)
    HB 555 Property (Elderly and Handicapped Tax Relief)
    HB 628 Sales and Use (Taxicab Exemption)
    HB 674 Forest Products (Rate Increase)
    HB 776 Property (Valuation of Trucks)
    HB 802 Sales and Use (Mine Reclamation Exemption)
    HB 815 Set-Off Debt Collection (State Courts)
    HB 819 Grantors (Exemptions)
    HB 827 Intangible Personal Property (Redefines Certain
    Property of Cable TV Businesses)
    HB 879 Sales and Use (Preponderance of Use Test)


    Legislative Summaries

    Last Updated 08/25/2014 16:44