Bulletin Number
VTB 81-6
Tax Type
Bank Franchise Tax
Description
Virginia Bank Franchise Tax; 1981 Amendments
Topic
Rate of Tax
Date Issued
06-01-1981
DATE: June 1, 1981
SUBJECT: Virginia Bank Franchise Tax
1981 Amendments
The Virginia Bank Franchise Tax which was enacted in 1980 as temporary legislation applicable only to tax years 1980, 1981 and 1982, was amended and made permanent law by the 1981 General Assembly. (Chapter 432 approved March 21, 1981). The amendments are effective for 1982 and subsequent tax years.
The 1981 legislation repealed the provision which would have increased the rate for 1982 to $9 per $100 of net capital. The tax will continue to be imposed at the rate of $1 per $100 of net capital.
The provision that no bank's franchise tax liability could be less than the amount of tax imposed for 1979 on the banks shareholders was repealed. Therefore, for tax years after 1981 there is no minimum tax based on the 1979 tax liability.
In addition, the special statute provision for bank franchise tax is no longer in effect because of repeal. The normal statute of limitation provisions are in effect for bank franchise tax purposes.
§§ 58-485.04 and 58-485.08 are amended as follows:
§ 58-485.04 was amended to correct an erroneous reference to sales and use taxes under Chapter 13. The section now correctly provides that Bank Franchise Tax shall be in lieu of all other taxes whatsoever for State, county or local purposes except the real estate and tangible personal property taxes enumerated in § 58-485.05, retail sales and use taxes under Chapter 8.1 (§ 58-441.1 et seq.) of Title 58, recordation taxes under § 58-54 et seq., motor vehicle sales and use taxes under Chapter 12.1 (§58-685.10 et seq.) of Title 58, aircraft sales and use taxes under Chapter 12.2.
§ 58-485.08 was amended to include in the deduction from gross capital for bank franchise tax purposes, the assessed value of the leasehold improvements to real estate. The leasehold improvement deduction is limited to the amount of the unencumbered equity in the improvement, if owned by the bank, or used or occupied by the bank and held by a majority-owned subsidiary or a bank holding company or a wholly owned subsidiary of a bank holding company. The deduction is allowed even if assessed in the name of a person other than the bank because of the ownership of the underlying land.
The Section was also amended to clarify that the real estate deduction shall be determined by the most recent assessment made prior to January one of the current bank franchise tax year for the real estate owned by the bank or affiliate on January one of the current year.
Tax Bulletins