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2023 SESSION

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Senate Committee on Finance and Appropriations

Co-Chair: Janet D. Howell - Co-Chair: George L. Barker

Clerk: G. Conway, B. Khan, C. Dunn
Staff: Stephen Kinderman
Date of Meeting: February 8, 2023
Time and Place: 9:00 a.m. Shared Committee Room

H.B. 1369 Income tax, state; installment agreements for payment of taxes.

Patron: Coyner

Installment agreements for payment of taxes. Requires the Tax Commissioner to offer to enter into an installment agreement with any individual taxpayer under which the taxpayer may satisfy his entire tax liability over a payment term of up to five years. The bill maintains the current law for corporate taxpayers whereby the Tax Commissioner may enter into a written agreement with any taxpayer under which such taxpayer is allowed to satisfy his entire tax liability in installment payments if the Tax Commissioner determines that such agreement will facilitate collection. The bill also removes the power under which the Tax Commissioner may alter, modify, or terminate an installment agreement if it is determined that the financial condition of the taxpayer has significantly changed or if the taxpayer fails to provide a financial condition update upon request. The bill directs the Department of Taxation to convene a working group to study current federal and state policies concerning installment agreements and to make recommendations regarding how the Commonwealth's policies may better align with the installment agreement policies adopted by the Internal Revenue Service.

A BILL to amend and reenact § 58.1-1817 of the Code of Virginia, relating to installment agreements for payment of taxes.

23104368D

H.B. 1405 Income tax, corporate; returns, affiliated corporations.

Patron: McNamara

Corporate income tax; filing method for affiliated corporations. Removes the requirement that, in order for a group of affiliated corporations to be granted permission from the Tax Commissioner to change their filing status for corporate income tax purposes, for the previous tax year there would have been no decrease in tax liability computed under the proposed election as compared to the affiliated group's former filing method. The bill retains the current requirement that the affiliated group agree to file returns under both the new filing method and the former method and pay the greater of the two amounts for the taxable year in which the new election is effective and for the immediately succeeding taxable year.

A BILL to amend and reenact § 58.1-442 of the Code of Virginia, relating to corporate income tax; filing method for affiliated corporations.

23100947D

H.B. 1411 Virginia Community Development Financial Institutions Fund and Program; codifies Fund, etc.

Patron: Marshall

Virginia Community Development Financial Institutions Fund and Program; report. Codifies the Virginia Community Development Financial Institutions Fund (the Fund), originally created in the 2021 Appropriation Act, and establishes the Virginia Community Development Financial Institutions Program (the Program) to carry out the purposes of the Fund. The Program shall provide grants and loans to community development financial institutions and other similar entities for the purpose of providing financing to small businesses, housing development and rehabilitation projects, and community revitalization real estate projects in the Commonwealth. The bill requires the Department of Housing and Community Development to oversee the Fund and Program and to (i) identify qualified recipients of funding; (ii) ensure that grants and loans promote housing and community development, capital access, housing access, and small business support; (iii) ensure that qualified recipients emphasize microfinancing, defined as financing to small businesses in amounts of $100,000 or less, in using program funds; and (iv) utilize Program funds to promote collaborative and cooperative projects with public and private sector partners. The bill requires the Department to submit an annual report on the use and impact of funding provided.

A BILL to amend the Code of Virginia by adding in Chapter 8 of Title 36 a section numbered 36-140.01, relating to Virginia Community Development Financial Institutions Fund and Program; report.

23104735D

H.B. 1417 Cigars; modifies the statutory tax rate imposed on selling or distributing, etc.

Patron: Ware

Tax on cigars. Modifies the statutory tax rate imposed on selling or distributing cigars by a distributor or remote retail seller by setting such rate at 10 percent of the manufacturer's sales price or $0.30 per cigar, whichever is less. Under current law, the effective rate is 20 percent of the manufacturer's sales price due to language in the Appropriation Act which doubles the statutory rate.

 A BILL to amend and reenact §§ 58.1-1021.01 and 58.1-1021.02 of the Code of Virginia, relating to tax on cigars.

23104572D

H.B. 1436 Income tax, state; military benefits subtraction, age restriction.

Patron: McGuire

Income tax; military benefits subtraction; age restriction. Removes the age 55 or older restriction on those individuals allowed a military benefits income tax subtraction beginning with taxable year 2023.

A BILL to amend and reenact § 58.1-322.02, as it is currently effective and as it shall become effective, of the Code of Virginia, relating to income tax subtraction; military benefits; age restriction.

23102662D

H.B. 1442 Transient occupancy tax; administration.

Patron: McNamara

Transient occupancy tax; administration. Requires the Department of Taxation to annually publish on its website the current transient occupancy tax rates imposed in each locality. The bill also (i) requires the tax-assessing officer of a locality to administer and enforce the assessment and collection of transient occupancy taxes from accommodations intermediaries, and (ii) specifies certain return filing requirements for accommodations intermediaries.

A BILL to amend the Code of Virginia by adding a section numbered 58.1-210.1 and by adding in Article 6 of Chapter 38 of Title 58.1 a section numbered 58.1-3827, relating to transient occupancy tax; administration.

23104573D

H.B. 1456 Income tax, state; pass-through entities.

Patron: McNamara

Income tax; pass-through entities. Makes changes to the elective entity level tax on pass-through entities. The bill would impose the tax only on the share of income, gain, loss, or deduction attributable to eligible owners, as opposed to imposing the tax on the entire entity. The pro rata or distributive share of the Virginia taxable income of each nonresident eligible owner shall be limited to income that is attributable to Virginia sources. "Eligible owner" is defined in the bill as an owner of a pass-through entity that is a natural person or a person eligible to be a shareholder in an S corporation. The bill also strikes the requirement that to qualify for the tax a pass-through entity must be 100 percent owned by natural persons or persons eligible to be shareholders in an S corporation.

A BILL to amend and reenact §§ 58.1-390.1 and 58.1-390.3 of the Code of Virginia, relating to income tax; pass-through entities.

23103991D

H.B. 1486 Personal property tax; farm machinery and farm implements.

Patron: Webert

Personal property tax; farm machinery and farm implements. Expands the list of certain farm machinery and farm implements that a locality may exempt from personal property taxes to include (i) motor vehicles used primarily for agricultural purposes, (ii) privately owned trailers primarily used by farmers in their farming operations, and (iii) season-extending vegetable hoop houses used for in-field production of produce. The bill states that a locality that exempts motor vehicles or privately owned trailers pursuant to these provisions shall not collect any unpaid tangible personal property taxes, including interest or penalties, that are owed to the locality as of July 1, 2023. Any such unpaid taxes shall be stricken from the books of the treasurer.

A BILL to amend and reenact § 58.1-3505 of the Code of Virginia, relating to personal property tax; farm equipment.

23101757D

H.B. 1496 Commonwealth Mass Transit Fund; 3.5 percent of Fund may be allocated to NVTC.

Patron: Austin

Commonwealth Mass Transit Fund. Allocates 3.5 percent of the Commonwealth Mass Transit Fund (the Fund) to commuter rail systems jointly operated by the Northern Virginia Transportation Commission and the Potomac and Rappahannock Transportation Commission and excludes such commuter rail systems from receiving allocations pursuant to other distributions of the Fund. The bill requires such commuter rail systems to submit reports to the Commonwealth Transportation Board. The bill limits allocations by the Northern Virginia Transportation Commission (NVTC) for distribution to the Washington Metropolitan Area Transit Authority (WMATA) to 50 percent of the total operating and capital assistance required to be provided by NVTC or other Virginia entities in the approved WMATA budget and establishes reporting requirements for WMATA. The bill codifies requirements for WMATA to adopt and submit certain planning documents first required pursuant to the eighth enactment of Chapter 854 and the eighth enactment of Chapter 856 of the Acts of Assembly of 2018 and repeals the original requirements.

A BILL to amend and reenact § 33.2-1526.1 of the Code of Virginia and to repeal the eighth enactment of Chapter 854 and the eighth enactment of Chapter 856 of the Acts of Assembly of 2018, relating to the Commonwealth Mass Transit Fund.

23104630D

H.B. 1563 Sales and use tax; agricultural exemptions.

Patron: Fowler

Sales and use tax; agricultural exemptions. Provides a sales and use tax exemption for property used to produce agricultural products for market in an indoor, closed, controlled-environment commercial agricultural facility. The property exempted includes (i) internal structural components required to create the necessary growing environment for plants, including watering systems, towers for growing plants, and lighting and air systems, and (ii) transparent elements of external structural components of such facilities, including windows, walls, and roofs, that allow sunlight in for the commercial production of agricultural products. The exemption shall not apply to property used in producing cannabis. The bill allows contractors working on behalf of owners of facilities exempt under these new provisions to use the exemption when purchasing materials that would otherwise qualify for the exemption.

A BILL to amend and reenact §§ 58.1-609.2 and 58.1-610 of the Code of Virginia, relating to sales and use tax; agricultural exemptions.

23104837D

H.B. 1595 Internal Revenue Code; conformity of the Commonwealth's taxation system.

Patron: Robinson

Conformity of the Commonwealth's taxation system with the Internal Revenue Code; emergency. Advances Virginia's date of conformity with the Internal Revenue Code from December 31, 2021, to December 31, 2022.

A BILL to amend and reenact § 58.1-301 of the Code of Virginia, relating to conformity of the Commonwealth's taxation system with the Internal Revenue Code; emergency.

23101202D

EMERGENCY

H.B. 1645 Litter tax; penalty for failure to timely pay.

Patron: Anderson

Litter tax; penalty for failure to timely pay. Prohibits the Department of Taxation from imposing any penalty or interest for failure to pay the litter tax without notifying the taxpayer 30 days prior to the date that a return must be filed. 

A BILL to amend and reenact § 58.1-1709 of the Code of Virginia, relating to litter tax; penalty for failure to timely pay.

23105259D

H.B. 1677 Retail Sales and Use tax; diagnostic work for automotive repair and emergency roadside service.

Patron: Taylor

Retail sales and use tax; service exemptions; diagnostic work for automotive repair and emergency roadside service. Exempts any amount charged for labor for diagnostic work for automotive repair and emergency roadside service for motor vehicles from retail sales and use tax, regardless of whether there is a sale of a repair or replacement part or a shop supply charge.

A BILL to amend and reenact § 58.1-609.5 of the Code of Virginia, relating to retail sales and use tax; service exemptions.

23101072D

H.B. 1685 Business local; taxes, penalties.

Patron: Greenhalgh

Local business taxes; penalties. Requires license application forms to include the due date for the application, and the amount of the penalty charged for late application filing, the underpayment of estimated tax, and the late payment of tax.  The bill requires the assessing official, upon assessing any such penalty or any interest, to notify the affected taxpayer of the amount of such penalty, any interest assessed, and the total amount of tax owed. The bill is a recommendation of the Small Business Commission.

 

A BILL to amend and reenact §§ 58.1-3703.1 and 58.1-3916 of the Code of Virginia, relating to local business taxes; penalties.

23105427D

H.B. 1942 Real property tax; notice of rate and assessment changes.

Patron: Durant

Real property tax; notice of rate and assessment changes. Requires certain information to be included in the notice that a locality is required to send to taxpayers after conducting a reassessment of real property. The bill provides that, in any county, city, or town that conducts an annual or biennial reassessment of real estate or in which reassessment of real estate is conducted primarily by employees of the county, city, or town under direction of the commissioner of the revenue, that has not yet established its real property tax rate when such notice is sent, the locality shall set out in the notice the effective tax rate increase.

A BILL to amend and reenact § 58.1-3330 of the Code of Virginia, relating to real property tax; notice of rate and assessment changes.

23105484D

H.B. 2110 Delinquent tax lands; extends maximum duration of an installment agrmt. between locality/landlord.

Patron: Bourne

Delinquent tax lands. Extends the maximum duration of an installment agreement between a locality and a landowner to pay delinquent taxes from 60 to 72 months.

A BILL to amend and reenact § 58.1-3965 of the Code of Virginia, relating to delinquent tax lands.

23105187D

H.B. 2138 Income tax, state and corporate; business interest, qualified business income deduction.

Patron: McNamara


Income tax; business interest; qualified business income deduction; corporate rate reduction. Increases from 30 percent to 50 percent the Virginia individual and corporate income tax deduction for business interest disallowed as a deduction under § 163(j) of the Internal Revenue Code beginning in taxable year 2024. The bill allows an individual income tax deduction in an amount equal to 50 percent of certain federal qualified business income deductions, excluding qualified real estate investment trust dividends. The bill also reduces from six percent to five percent the corporate income tax rate beginning in taxable year 2023.

A BILL to amend and reenact §§ 58.1-322.03, as it is currently effective as it shall become effective, and 58.1-400, and 58.1-402 of the Code of Virginia, relating to income tax; business interest; qualified business income deduction; corporate rate reduction.

23104208D

H.B. 2238 Precision Plastic Manufacturing Grant Fund; established.

Patron: Cherry

Precision Plastic Manufacturing Grant Fund; established. Establishes the Precision Plastic Manufacturing Grant Fund to provide up to $56 million in grants between July 1, 2027, and July 1, 2035, to a qualified company that engages in the manufacture and distribution of precision plastic products in an eligible county and that between June 1, 2022, and December 31, 2035, is expected to make a capital investment of at least $1 billion and create at least 1,761 new full-time jobs related to or supportive of its business.

A BILL to amend the Code of Virginia by adding in Title 59.1 a chapter numbered 22.20, consisting of a section numbered 59.1-284.41, relating to Precision Plastic Manufacturing Grant Fund; established.

23100959D

H.B. 2319 Income tax, state; lowers rates and raises standard deductions.

Patron: McNamara

Income tax; rates and deductions. Lowers the top income tax rate from 5.75 percent to 5.5 percent for taxable years beginning on and after January 1, 2024. The bill also raises the standard deduction to $9,000 for single individuals and $18,000 for married persons for taxable years beginning on and after January 1, 2024, but before January 1, 2026.

A BILL to amend and reenact §§ 58.1-320 and 58.1-322.03, as it is currently effective and as it shall become effective, of the Code of Virginia and to repeal the eighth enactment of Chapter 2 of the Acts of Assembly of 2022, Special Session I, relating to individual income tax; rates and deductions.

23103700D

H.B. 2334 Retail Sales and Use Tax; exemption for oil and gas drilling equipment, extends sunset provision.

Patron: Morefield

Sales and use tax; exemption for oil and gas drilling equipment. Extends from July 1, 2022, to July 1, 2024, the sunset date of the sales and use tax exemption for materials and equipment used in the drilling, extraction, or processing of natural gas or oil and the reclamation of a well area.

A BILL to amend and reenact § 58.1-609.3 of the Code of Virginia, relating to sales and use tax; exemption for oil and gas drilling equipment.

23103767D

H.B. 2362 Military spouses; burial fees.

Patron: Wiley

Burial fees for military spouses. Provides that, from such funds as may be appropriated, the Commonwealth shall pay the burial fees for (i) a member of the National Guard and Reserve, (ii) a spouse of an active duty member or veteran of the Armed Forces of the United States or a spouse of a member of the National Guard and Reserve, or (iii) a surviving spouse of such member or veteran.

A BILL to amend the Code of Virginia by adding in Chapter 1 of Title 44 an article numbered 14, consisting of a section numbered 44-122.1, relating to burial fees for military spouses.

23105237D