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1996 SESSION
961987212Be it enacted by the General Assembly of Virginia:
1. That §§ 58.1-3705, 58.1-3706, and 58.1-3732 of the Code of Virginia are amended and reenacted as follows:
§ 58.1-3705. License tax shall be uniform.
Whenever any county, city or town levies a license tax, the basis for such tax,
whether it be gross net receipts or otherwise, shall be
the same for all persons engaged in the same business, trade, occupation or
calling.
§ 58.1-3706. Limitation on rate of license taxes.
A. Except as specifically provided in this section, no local license tax imposed pursuant to the provisions of this chapter, except §§ 58.1-3712, 58.1-3712.1 and 58.1-3713, or any other provision of this title or any charter, shall be greater than thirty dollars or the rate set forth below for the class of enterprise listed, whichever is higher:
1. For contracting, and persons constructing for their own account for sale,
sixteen cents per $100 of gross net receipts;
2. For retail sales, twenty cents per $100 of gross
net receipts;
3. For financial, real estate and professional services, fifty-eight cents per
$100 of gross net receipts; and
4. For repair, personal and business services, and all other businesses and
occupations not specifically listed or excepted in this section, thirty-six
cents per $100 of gross net receipts. The rate
limitations prescribed in this section shall not be applicable to license taxes
on (i) wholesalers, which shall be governed by § 58.1-3716; (ii) public
service companies, which shall be governed by § 58.1-3731; (iii)
carnivals, circuses and speedways, which shall be governed by § 58.1-3728;
(iv) fortune-tellers, which shall be governed by § 58.1-3726; (v) massage
parlors; (vi) itinerant merchants or peddlers, which shall be governed by
§ 58.1-3717; (vii) permanent coliseums, arenas, or auditoriums having a
maximum capacity in excess of 10,000 persons and open to the public, which
shall be governed by § 58.1-3729; (viii) savings and loan associations,
which shall be governed by § 58.1-3730; (ix) photographers, which shall be
governed by § 58.1-3727; and (x) direct sellers, which shall be governed
by § 58.1-3719.1.
B. Any county, city or town which had, on January 1, 1978, a license tax rate, for any of the categories listed in subsection A, higher than the maximum prescribed in subsection A may maintain a higher rate in such category, but no higher than the rate applicable on January 1, 1978, subject to the following conditions:
1. A locality may not increase a rate on any category which is at or above the maximum prescribed for such category in subsection A.
2. If a locality increases the rate on a category which is below the maximum, it shall apply all revenue generated by such increase to reduce the rate on a category or categories which are above such maximum.
3. A locality shall lower rates on categories which are above the maximums
prescribed in subsection A for any tax year after 1982 if it receives more
revenue in tax year 1981, or any tax year thereafter, than the revenue base for
such year. The revenue base for tax year 1981 shall be the amount of revenue
received from all categories in tax year 1980, plus one-third of the amount, if
any, by which such revenue received in tax year 1981 exceeds the revenue
received for tax year 1980. The revenue base for each tax year after 1981 shall
be the revenue base of the preceding tax year plus one-third of the increase in
the revenues of the subsequent tax year over the revenue base of the preceding
tax year. If in any tax year the amount of revenues received from all
categories exceeds the revenue base for such year, the rates shall be adjusted
as follows: The revenues of those categories with rates at or below the maximum
shall be subtracted from the revenue base for such year. The resulting amount
shall be allocated to the category or categories with rates above the maximum
in a manner determined by the locality, and divided by the gross
net receipts of such category for the tax year. The resulting
rate or rates shall be applicable to such category or categories for the second
tax year following the year whose revenue was used to make the calculation.
C. Any person engaged in the short-term rental business as defined in § 58.1-3510 shall be classified in the category of retail sales for license tax rate purposes.
D. 1. Any person, firm, or corporation designated as the principal or prime contractor receiving identifiable federal appropriations for research and development services as defined in § 31.205-18 (a) of the Federal Acquisition Regulation in the areas of (i) computer and electronic systems, (ii) computer software, (iii) applied sciences, (iv) economic and social sciences, and (v) electronic and physical sciences shall be subject to a license tax rate not to exceed three cents per $100 of such federal funds received in payment of such contracts upon documentation provided by such person, firm or corporation to the local commissioner of revenue or finance officer confirming the applicability of this subsection.
2. Any gross receipts properly reported to a Virginia locality, classified for license tax purposes by that locality in accordance with subdivision 1 of this subsection, and on which a license tax is due and paid, or which gross receipts defined by subdivision 1 of this subsection are properly reported to but exempted by a Virginia locality from taxation, shall not be subject to local license taxation by any other locality in the Commonwealth.
3. Notwithstanding the provisions of subsection D 1 above, in any county operating under the county manager plan of government, the following shall govern the taxation of the licensees described in subsection D 1. Persons, firms, or corporations designated as the principal or prime contractors receiving identifiable federal appropriations for research and development services as defined in § 31.205-18 (a) of the Federal Acquisition Regulation in the areas of (i) computer and electronic systems, (ii) computer software, (iii) applied sciences, (iv) economic and social sciences, and (v) electronic and physical sciences may be separately classified by any such county and subject to tax at a license tax rate not to exceed the limits set forth in subsections A through C above as to such federal funds received in payment of such contracts upon documentation provided by such persons, firms, or corporations to the local commissioner of revenue or finance officer confirming the applicability of this subsection.
§ 58.1-3732. Limitation on "net receipts."
Gross Net receipts for license tax purposes shall not
include any amount paid to the United States, the Commonwealth or any county,
city or town for the Virginia retail sales or use tax, for any local sales tax
or any local excise tax on cigarettes, for any federal or state excise taxes on
motor fuels, or any amount paid for computer hardware and software that are
sold to a United States federal or state government entity provided that such
property was purchased within two years of the sale to said entity by the
original purchaser who shall have been contractually obligated at the time of
purchase to resell such property to a state or federal government entity. This
exclusion shall not occur until the time of resale and shall apply to only the
original cost of the property and not to its resale price, and the exclusion
shall not apply to any of the tangible personal property which was the subject
of the original resale contract if it is not resold to a state or federal
government entity in accordance with the original contract obligation.
In addition, net receipts shall not include expenses and deductions allowed on the federal income tax return for a business.