CCH Tax Day Report
Virginia Gov. Terry McAuliffe has signed the biennial budget bill that contains a variety of retail sales and use tax provisions, as detailed below.
Separate stories discuss income (TAXDAY, 2017/05/17, S.20) and other tax provisions (TAXDAY, 2017/05/17, S.19) also contained in the bill.
Nexus: If a dealer has inventory in Virginia, such dealer will have a physical presence in Virginia and will be deemed to have sufficient activity within Virginia to require registration for retail sales and use tax purposes.
Accelerated sales tax payments: The bill maintains the accelerated sales tax threshold at taxable sales and/or purchases of $2.5 million or greater in the previous fiscal year for the accelerated sales tax payment due in June 2017. The threshold will increase to taxable sales and/or purchases of $4 million or greater in the previous fiscal year for the accelerated sales tax payment due in June 2018. Each dealer meeting this threshold is required to make a payment in June equal to 90% of its retail sales and use tax liability for June of the previous year. The accelerated sales tax payment is due on or before June 30 if paying by electronic funds transfer. If payment is made by another method, the payment must be made on or before June 25. For the June 2017 accelerated sales tax payments, payments made by electronic funds transfer are due June 30, all other payments are due June 26. For the June 2018 accelerated sales tax payments, payments made by electronic funds transfer are due July 2, all other payments are due June 25.
Research and development exemption: Beginning July 1, 2016, the sales and use tax exemption for tangible personal property purchased or leased for use or consumption directly and exclusively in basic research or research and development in the experimental or laboratory sense will apply to such property used in a federally funded research and development center, regardless of whether the property is used by the purchaser, lessee, or another person or entity.
Internet services exemption: For purchases made on or after July 1, 2006, any sales and use tax exemption applicable to production, distribution, and other equipment used to provide Internet access services by Internet service providers must be claimed as a refund request to the Tax Commissioner.
Dealer discounts: Beginning with the return for June 2010, due July 2010, dealer discounts will not be available to any dealer required to remit retail sales and use tax by electronic funds transfer. The compensation available to all other dealers will be limited to the following percentages of the first 3% of the sales and use tax levied:
– monthly taxable sales of $0 to $62,500—1.6%;
– monthly taxable sales of $62,501 to $208,000—1.2%; and
– monthly taxable sales of $208,001 and above—0.8%.
Also beginning with the June 2010 return that is due in July 2010, the bill suspends provisions that allow compensation to retailers liable for the tire recycling fee, the communications sales and use tax, the tobacco products tax, and the tax for enhanced E-911 service. However, beginning with the return for June 2011, due July 2011, the compensation allowed for the tobacco products tax under Va. Code §58.1-1021.03 is reinstated.
Sunset dates for exemptions: The sunset date on any existing sales tax exemption may not be extended beyond June 30, 2022. Any new sales tax exemption enacted prior to the 2021 regular legislative session must have a sunset date not later than June 30, 2022. However, this requirement does not apply to tax exemptions administered by the Department of Taxation for nonprofit entities and for exemptions with sunset dates after June 30, 2022, enacted or advanced during the 2016 session of the General Assembly.
Stafford County admissions tax: Stafford County is authorized to impose a tax on admissions to an entertainment venue located in the county (i) that is licensed to do business in the county for the first time on or after July 1, 2015, (ii) that requires at least 75 acres of land for its operations, and (iii) where such land is purchased or leased by the entertainment venue owner on or after June 1, 2015. The tax must not exceed 10% of the amount charged for admission to any such venue. The authority to impose the tax will expire on July 1, 2019, if no entertainment venues exist in Stafford County by that date.
Subscribers can view the text of the bill at https://budget.lis.virginia.gov/bill/2017/1/HB1500/Chapter/.
Ch. 836 (H.B. 1500), Laws 2017, effective April 28, 2017, except as noted