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1999 SESSION
992885201Be it enacted by the General Assembly of Virginia:
1. That §§ 58.1-3700.1, 58.1-3703, 58.1-3708 and 58.1-3709 of the Code of Virginia are amended and reenacted as follows:
§ 58.1-3700.1. Definitions.
For the purposes of this chapter and any local ordinances adopted pursuant to this chapter, unless otherwise required by the context:
"Affiliated group" means:
1. One or more chains of corporations subject to inclusion connected through
stock ownership with a common parent corporation which is a corporation subject
to inclusion if:
a. Stock possessing at least eighty percent of the voting power of all classes
of stock and at least eighty percent of each class of the nonvoting stock of each of
the corporations subject to inclusion, except the common parent corporation, is
owned directly by one or more of the other corporations subject to inclusion;
and
b. The common parent corporation directly owns stock possessing at least eighty
percent of the voting power of all classes of stock and at least eighty percent of
each class of the nonvoting stock of at least one of the other subject to inclusion
corporations. As used in this subdivision, the term "stock" does not include
nonvoting stock which is limited and preferred as to dividends; the phrase
"corporation subject to inclusion" means any corporation within the affiliated
group irrespective of the state or country of its incorporation; and the term
"receipts" includes gross receipts and gross income.
2. Two or more corporations if five or fewer persons who are individuals,
estates or trusts own stock possessing:
a. At least eighty percent of the total combined voting power of all classes of
stock entitled to vote or at least eighty percent of the total value of shares of
all classes of the stock of each corporation; and
b. More than fifty percent of the total combined voting power of all classes of
stock entitled to vote or more than fifty percent of the total value of shares of
all classes of stock of each corporation, taking into account the stock ownership of
each such person only to the extent such stock ownership is identical with
respect to each such corporation.
When one or more of the corporations subject to inclusion, including the common
parent corporation, is a nonstock corporation, the term "stock" as used in this
subdivision shall refer to the nonstock corporation membership or membership
voting rights, as is appropriate to the context.
"Assessment" means a determination as to the proper rate of tax, the measure
to which the tax rate is applied, and ultimately the amount of tax, including
additional or omitted tax, that is due. An assessment shall include a written
assessment made pursuant to notice by the assessing official or a
self-assessment made by a taxpayer upon the filing of a return or otherwise not
pursuant to notice. Assessments shall be deemed made by an assessing official
when a written notice of assessment is delivered to the taxpayer by the
assessing official or an employee of the assessing official, or mailed to the
taxpayer at his last known address. Self-assessments shall be deemed made when
a return is filed, or if no return is required, when the tax is paid. A return
filed or tax paid before the last day prescribed by ordinance for the filing or
payment thereof shall be deemed to be filed or paid on the last day specified
for the filing of a return or the payment of tax, as the case may be.
"Base year" means the calendar year preceding the license year, except for
contractors subject to the provisions of § 58.1-3715 or unless the local
ordinance provides for a different period for measuring the gross receipts of a
business, such as for beginning businesses or to allow an option to use the same
fiscal year as for federal income tax purposes.
"Business" means a course of dealing which requires the time, attention and labor of the person so engaged for the purpose of earning a livelihood or profit. It implies a continuous and regular course of dealing, rather than an irregular or isolated transaction. A person may be engaged in more than one business. The following acts shall create a rebuttable presumption that a person is engaged in a business: (i) advertising or otherwise holding oneself out to the public as being engaged in a particular business or (ii) filing tax returns, schedules and documents that are required only of persons engaged in a trade or business.
"Definite place of business" means an office or a location at which occurs a
regular and continuous course of dealing for thirty consecutive days or more. A
definite place of business for a person engaged in business may include a
location leased or otherwise obtained from another person on a temporary or
seasonal basis and real property leased to another. A person's residence shall
be deemed to be a definite place of business if there is no definite place of
business maintained elsewhere and the person is not subject to licensure as a
peddler or itinerant merchant.
"Financial services" means the buying, selling, handling, managing, investing,
and providing of advice regarding money, credit, securities, or other
investments.
"Gross receipts" means the whole, entire, total receipts, without deduction.
“License fee” means the fee required to be paid by every business within a locality imposing the fee and may be referred to as a license tax.
"License year" means the calendar year for which a license is issued for the privilege of engaging in business.
"Professional services" means services performed by architects,
attorneys-at-law, certified public accountants, dentists, engineers, land surveyors,
surgeons, veterinarians, and practitioners of the healing arts (the arts and
sciences dealing with the prevention, diagnosis, treatment and cure or
alleviation of human physical or mental ailments, conditions, diseases, pain or
infirmities) and such occupations, and no others, as the Department of Taxation
may list in the BPOL guidelines promulgated pursuant to § 58.1-3701. The
Department shall identify and list each occupation or vocation in which a professed
knowledge of some department of science or learning, gained by a prolonged
course of specialized instruction and study, is used in its practical
application to the affairs of others, either advising, guiding, or teaching
them, and in serving their interests or welfare in the practice of an art or
science founded on it. The word "profession" implies attainments in
professional knowledge as distinguished from mere skill, and the application of
knowledge to uses for others rather than for personal profit.
"Purchases" means all goods, wares and merchandise received for sale at each
definite place of business of a wholesale merchant. The term shall also include the
cost of manufacture of all goods, wares and merchandise manufactured by any
wholesale merchant and sold or offered for sale. A wholesale merchant may elect
to report the gross receipts from the sale of manufactured goods, wares and
merchandise if it cannot determine the cost of manufacture or chooses not to
disclose the cost of manufacture.
"Real estate services" means providing a service with respect to the purchase,
sale, lease, rental, or appraisal of real property.
§ 58.1-3703. Counties, cities and towns may impose local license fees; limitation of authority.
A. The governing body of any county, city or town may charge a fee for issuing
a license in an amount not to exceed $100 for any locality with a population
greater than 50,000, fifty dollars for any locality with a population of 25,000 but
no more than 50,000 and thirty dollars for any locality with a population smaller
than 25,000. Such governing body and may levy and provide for the assessment
and collection of county, city or town license taxes such fee on businesses,
trades, professions, occupations and callings and upon the persons, firms and
corporations engaged therein within the county, city or town subject to the
limitations in (i) subsection B of this section and (ii) subsection A of §
58.1-3706, provided such tax shall not be assessed and collected on any amount of
gross receipts of each business upon which a license fee is charged. Any
county, city or town with a population greater than 50,000 shall reduce the fee to an
amount not to exceed fifty dollars by January 1, 2000. The ordinance imposing such license
fees and levying such license taxes shall include the provisions of §
58.1-3703.1.
B. Any county, city or town by ordinance may exempt in whole or in part from
the license tax the design, development or other creation of computer software for
lease, sale or license. which imposes a license fee shall impose such fee on
the business’ gross receipts in accordance with the following:
Gross Receipts Maximum fee allowed
$0--$100,000 $ 25.00
$100,001-$250,000 $ 50.00
$250,001-$500,000 $ 150.00
$500,001-$1,000,000 $ 500.00
$1,000,001-$5,000,000 $1,000.00
$5,000,001 and over $2,500.00
C. No county, city, or town shall impose a license fee or levy any license tax:
1. On any public service corporation or any motor carrier, common carrier, or
other carrier of passengers or property formerly certified by the Interstate
Commerce Commission or presently registered for insurance purposes with the
Surface Transportation Board of the United States Department of Transportation,
Federal Highway Administration, except as provided in § 58.1-3731 or as
permitted by other provisions of law;
2. For selling farm or domestic products or nursery products, ornamental or
otherwise, or for the planting of nursery products, as an incident to the sale
thereof, outside of the regular market houses and sheds of such county, city or
town, provided such products are grown or produced by the person offering them
for sale;
3. Upon the privilege or right of printing or publishing any newspaper,
magazine, newsletter or other publication issued daily or regularly at average
intervals not exceeding three months, provided the publication's subscription sales
are exempt from state sales tax, or for the privilege or right of operating or
conducting any radio or television broadcasting station or service;
4. On a manufacturer for the privilege of manufacturing and selling goods,
wares and merchandise at wholesale at the place of manufacture;
5. On a person engaged in the business of severing minerals from the earth for
the privilege of selling the severed mineral at wholesale at the place of severance,
except as provided in §§ 58.1-3712 and 58.1-3713;
6. Upon a wholesaler for the privilege of selling goods, wares and merchandise
to other persons for resale unless such wholesaler has a definite place of business
or store in such county, city or town. This subdivision shall not be construed as
prohibiting any county, city or town from imposing a local license tax on a
peddler at wholesale pursuant to § 58.1-3718;
7. Upon any person, firm or corporation for engaging in the business of
renting, as the owner of such property, real property other than hotels, motels,
motor lodges, auto courts, tourist courts, travel trailer parks, lodging houses,
rooming houses and boardinghouses; however, any county, city or town imposing
such a license tax on January 1, 1974, shall not be precluded from the levy of
such tax by the provisions of this subdivision;
8. [Repealed.]
9. On or measured by receipts for management, accounting, or administrative
services provided on a group basis under a nonprofit cost-sharing agreement by a
corporation which is an agricultural cooperative association under the provisions of
Article 2 (§ 13.1-312 et seq.) of Chapter 3 of Title 13.1, or a member or
subsidiary or affiliated association thereof, to other members of the same group.
This exemption shall not exempt any such corporation from such license or other
tax measured by receipts from outside the group;
10. On or measured by receipts or purchases by a corporation which is a member
of an affiliated group of corporations from other members of the same affiliated
group. This exclusion shall not exempt affiliated corporations from such license or
other tax measured by receipts or purchases from outside the affiliated group.
This exclusion also shall not preclude a locality from levying a wholesale
merchant's license tax on an affiliated corporation on those sales by the
affiliated corporation to a nonaffiliated person, company, or corporation,
notwithstanding the fact that the wholesale merchant's license tax would be
based upon purchases from an affiliated corporation. Such tax shall be based on
the purchase price of the goods sold to the nonaffiliated person, company, or
corporation. As used in this subdivision, the term "sales by the affiliated
corporation to a nonaffiliated person, company or corporation" means sales by
the affiliated corporation to a nonaffiliated person, company or corporation
where goods sold by the affiliated corporation or its agent are manufactured or
stored in the Commonwealth prior to their delivery to the nonaffiliated person,
company or corporation;
11. On any insurance company subject to taxation under Chapter 25 (§ 58.1-2500
et seq.) of this title or on any agent of such company;
12. On any bank or trust company subject to taxation in Chapter 12 (§ 58.1-1200
et seq.) of this title;
13. Upon a taxicab driver, if the locality has imposed a license tax upon the
taxicab company for which the taxicab driver operates;
14. On any blind person operating a vending stand or other business enterprise
under the jurisdiction of the Department for the Visually Handicapped, or a nominee
of the Department, as set forth in § 63.1-164;
15. [Expired.]
16. [Repealed.]
17. On an accredited religious practitioner in the practice of the religious
tenets of any church or religious denomination. "Accredited religious practitioner"
shall be defined as one who is engaged solely in praying for others upon
accreditation by such church or religious denomination;
18. (a) On or measured by receipts of a charitable nonprofit organization
except to the extent the organization has receipts from an unrelated trade or
business the income of which is taxable under Internal Revenue Code § 511 et
seq. For the purpose of this subdivision, "charitable nonprofit organization" means
an organization which is described in Internal Revenue Code § 501 (c) (3) and
to which contributions are deductible by the contributor under Internal Revenue Code
§ 170, except that educational institutions shall be limited to schools,
colleges and other similar institutions of learning.
(b) On or measured by gifts, contributions, and membership dues of a nonprofit
organization. Activities conducted for consideration which are similar to activities
conducted for consideration by for-profit businesses shall be presumed to be
activities that are part of a business subject to licensure. For the purpose of
this subdivision, "nonprofit organization" means an organization exempt from
federal income tax under Internal Revenue Code § 501 other than charitable
nonprofit organizations; or
19. On any venture capital fund or other investment fund, except commissions
and fees of such funds. Gross receipts from the sale and rental of real estate and
buildings remain taxable by the locality in which the real estate is located
provided the locality is otherwise authorized to tax such businesses and rental
of real estate.
§ 58.1-3708. Situs for local license taxation of businesses.
A. Except as otherwise provided by law and except as to public service
corporations, the situs for the local license taxation for any business,
profession, trade, occupation or calling subject to licensure, shall be the
county, city or town (hereinafter called "locality") in which the person so engaged
has a definite place of business. If any such person has a definite place of business
in any other locality, then such other locality may impose a license tax on
him, provided such other locality is otherwise authorized to impose a local
license tax with respect thereto.
B. Where a local license tax imposed by any locality is measured by volume, the
volume on which the tax may be computed shall be the volume attributable to all
definite places of business of the business, profession, trade, occupation or
calling in such locality. All volume attributable to any definite places of
business of the business, profession, trade, occupation or calling in any other
locality shall be deductible from the base in computing any local license tax measured by
volume imposed on himthe person engaged in the business by the locality in
which the first-mentioned definite place is located.
C. The word "volume," as used in this section, means gross receipts, sales, purchases, or other base for measuring a license tax which is related to the amount of business done.
D. This section shall not be construed as prohibiting any locality from requiring a separate license for each definite place of business located in such locality.
§ 58.1-3709. Business located in more than one jurisdiction.
A. In any case where a business subject to a local license tax is located
partially within a county, city or town and partially within another county,
city or town by reason of the boundary line between such political subdivisions
passing through such place of business, the situs for the local license of such
business shall be each county, city or town in which any part of such place of
business is located. If a local license tax is measured by the volume of
business done, the volume allocable to each political subdivision for measuring
the local license tax levied by it shall be such proportion of the total volume
of business done at such place of business as the area within that political
subdivision, which such place of business actually occupies and actively uses
in connection with such business, bears to the total area which such place of
business actually occupies and actively uses in connection with such business.
And in every such case, if a local license tax is a flat tax, the amount
thereof of the tax shall be adjusted so as to constitute such proportion
of the entire flat license tax levied by the political subdivision as the area within that
political subdivision, which such place of business actually occupies and actively uses in
connection with such business, bears to the total area which such place of
business actually occupies and actively uses in connection with such business.
The word "area," as used in this section, means the area of the land actually
occupied by the building or structure constituting the place of business; but
if such place of business actually occupies and actively uses only a part of
such building or structure, the land area below such part shall be the land
area which shall be used in making the apportionment, whether or not such
building or structure contains one story or floor or more than one story or
floor. If the place of business is of such nature that inventories are kept or
stored outside of a building or structure, then the land area used in keeping
or storing such inventories, together with the land area actually occupied by
any building or structure, or part thereof, which is actually occupied and
actively used in connection with such business shall constitute the land area
for making the apportionment. If the place of business has a parking area
contiguous thereto for the use of its vehicles or those of its customers to the
exclusion of any other business, such area shall be included in the word "area"
as used in this section. If the place of business has a contiguous parking area
used in common with other places of business, such parking area shall be
apportioned for the purpose of this section among such places of business in
the ratio of their total areas to the whole parking area, and the area so
apportioned shall be included within the word "area" as used in this section.
B. Any person whose place of business comes within the provisions of subsection A of this section and who considers himself aggrieved by the imposition upon him of a local license tax, may, at any time during the license year, apply for relief to any court of record having jurisdiction in any county or city involved, and the court shall issue against each such county or city a rule to show cause why relief should not be granted. The rule shall be served on the attorney for the Commonwealth for the county or on the city attorney for the city, as the case may be. The court shall hear the case without a jury and shall render judgment declaring the proper tax to be paid, and granting such relief as may be proper. In any case where the court finds that the tax imposed was excessive, no costs shall be awarded against the taxpayer, nor shall he be liable for penalty or interest on such tax if he pays the tax before the expiration of fifteen days after final judgment.
2. That the Department of Taxation, with the assistance of the Virginia Municipal League, the Virginia Association of Counties and any business organization or organizations which the Department of Taxation selects, shall review the provisions of the first enactment of this act and their effects beginning July 1, 2003, and shall make recommendations concerning their findings to the 2004 General Assembly.
3. That §§ 58.1-3701, 58.1-3704, 58.1-3706, 58.1-3710, 58.1-3714 through 58.1-3724 and 58.1-3726 through 58.1-3735 of the Code of Virginia are repealed.
4. That the provisions of this act shall become effective on January 1, 2000.