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2012 SESSION
12102883DBe it enacted by the General Assembly of Virginia:
1. That § 58.1-422 of the Code of Virginia is amended and reenacted as follows:
§ 58.1-422. Manufacturing companies; apportionment.
A. For taxable years beginning on or after July 1, 2011, the Virginia taxable income of a manufacturing company, excluding income allocable under § 58.1-407, may be apportioned within and without the Commonwealth as provided in § 58.1-408 or as follows:
1. From July 1, 2011, until July 1, 2013, by multiplying such income by a fraction, the numerator of which is the property factor plus the payroll factor plus triple the sales factor and the denominator of which is five, except when the sales factor does not exist, the denominator of the fraction shall be the number of existing factors, and when the sales factor exists but the payroll factor or property factor does not exist, the denominator of the fraction shall be the number of existing factors plus two;
2. From July 1, 2013, until July 1, 2014, by multiplying such income by a fraction, the numerator of which is the property factor plus the payroll factor plus quadruple the sales factor and the denominator of which is six, except when the sales factor does not exist, the denominator of the fraction shall be the number of existing factors, and when the sales factor exists but the payroll factor or property factor does not exist, the denominator of the fraction shall be the number of existing factors plus three; and
3. From July 1, 2014, and thereafter, by multiplying such income by the sales factor.
B. If the taxpayer makes one or more of the elections described in subdivision A 1, A 2, or A 3, the taxpayer may not revoke the election for a period of three taxable years.
In addition, the taxpayer shall certify to the Department that
the average weekly wage of its full-time employees is greater than the lower of
the state or local average weekly wages for the
taxpayer's industry wage.
C. If the average annual
number of full-time employees of a manufacturing company for the first three
taxable years (in which the manufacturing company used the alternative
apportionment set forth in this section) is less than the base year employment,
then the Department of Taxation shall assess the manufacturing company with
additional taxes pursuant to this article computed as the difference between
(i) the taxes that would have been due under the apportionment formula provided
under § 58.1-408 for such three taxable years, minus (ii) the taxes due under
the alternative apportionment provided under this section for such three
taxable years. In addition to such additional taxes, the Department shall
assess the manufacturing company a penalty of 10 percent of the amount of such
additional taxes. Interest shall accrue and shall be assessed on such additional
taxes at the rate prescribed under § 58.1-15, with such interest accruing from
the original due date for filing of the income tax return to the date of
payment of such additional taxes.
Such additional taxes,
penalty, and interest are hereby imposed on manufacturing companies using the
alternative apportionment set forth in this section.
DC. As used in this section,
unless the context clearly shows
otherwise, the term or phrase requires another meaning:
"Base year
employment" means the average number of full-time employees employed by
the manufacturing company in the Commonwealth in the taxable year that ended
immediately prior to the first taxable year in which the manufacturing company
used the alternative apportionment set forth in this section.
"Full-time employee" means an employee of a manufacturing company who is employed for an indefinite duration in the Commonwealth for which the standard fringe benefits are paid by the manufacturing company, for which employment requires a minimum of either (i) 35 hours of an employee's time per week for the entire normal year of such manufacturing company's operations, which "normal year" shall consist of at least 48 weeks, or (ii) 1,680 hours per year.
"Manufacturing company" means a domestic or foreign corporation primarily engaged in activities that, in accordance with the North American Industrial Classification System (NAICS), United States Manual, United States Office of Management and Budget, 1997 Edition, would be included in Sector 11, 31, 32, or 33.
E. The General Assembly
of Virginia finds that job creation is essential to the continued fiscal health
of the Commonwealth. In this modern economy, states often compete for quality
manufacturing jobs. Accordingly, the provisions of this section relating to
manufacturing companies that increase their employment in Virginia are integral
to the purpose of the election allowed pursuant to this section. If any
provision of this section is for any reason held to be invalid or
unconstitutional by the decision of a court of competent jurisdiction, that
provision shall not be deemed severable.