§ 58.1-1. Definitions.

As used in this title:

“Department” means the Department of Taxation. Whenever the words “Department of Taxation,” or other words denoting that Department, appear in any provision of law or in any legal or other proceeding or in any other manner, the same shall be construed to mean the Tax Commissioner. When any provision of law imposes a duty upon, or vests power in, the Department, such duty shall be performed and such power shall be exercised by the Tax Commissioner.

“Resident” for purposes of taxation, except as to Chapter 3 (§ 58.1-300 et seq.) of this title or as otherwise specifically provided, includes every person domiciled in the Commonwealth on the first day of any tax year, and every other person who has had his place of abode in the Commonwealth for the longer portion of the twelve months next preceding January 1 in each year, unless on or before that day he has changed his place of abode to a place outside the Commonwealth with the bona fide intention of continuing actually to abide permanently outside the Commonwealth.

The fact that a person who has so changed his place of abode, within six months from so doing, again abides within the Commonwealth shall be prima facie evidence that he did not intend permanently to have his actual place of abode outside the Commonwealth. Such person so changing his actual place of abode and not intending permanently to continue it outside the Commonwealth and not having listed his property for taxation as a resident of the Commonwealth for the purpose of having his personal property listed for taxation in the Commonwealth, shall be deemed to have resided on the day when such property should have been listed, at his last place of abode in the Commonwealth. The fact that a person whose place of abode during the greater portion of such twelve months has been in the Commonwealth does not claim or exercise the right to vote at public elections in the Commonwealth shall not, of itself, constitute him a nonresident of the Commonwealth within the meaning of this term.

“Tax Commissioner” means the chief executive officer of the Department of Taxation or his delegate.

“Tax day” or “date of assessment,” except as otherwise specifically provided, is January 1 of each year.

“Tax exempt organization” or “an organization exempt from taxation under § 501(c) of the Internal Revenue Code” means any corporation, partnership, organization or trust which has received written notice of its exempt status from the Internal Revenue Service, if such notice is required by the Internal Revenue Service to obtain exempt status.

“Tax year,” except when otherwise specifically provided, begins on January 1 of each year and ends on December 31 of each year.

“Taxes” and “levies” as used in this title are synonymous. The terms “taxes” and “levies,” however, shall not include the assessments for local improvements provided for in Article 2 (§ 15.2-2404 et seq.) of Chapter 24 of Title 15.2 or the charter of any city or town.

“Taxpayer” includes every person, corporation, partnership, organization, trust or estate subject to taxation under the laws of this Commonwealth, or under the ordinances, resolutions or orders of any county, city, town or other political subdivision of this Commonwealth.

History. Code 1950, §§ 58-1 through 58-4, 58-5 through 58-8; 1964, c. 468; 1972, c. 88; 1984, c. 675; 1997, c. 694.

Transition provisions.

House Joint Resolution 291 of the 1981 Session directed the Code Commission to make a study of the organization of Title 58 and report its findings to the Governor and the General Assembly in the form of a recodification of that title. In January, 1984, its report, containing a proposed revision of Title 58, was sent to the Governor and the General Assembly. The report was published as House Document No. 16 of the 1984 Session and served as the basis for this title, which was enacted by Acts 1984, c. 675, effective January 1, 1985.

In addition to its revision by Acts 1984, c. 675, former Title 58 was amended by certain other acts during the 1984 Session. These amendments have been incorporated, as appropriate, into comparable provisions of this title, pursuant to § 30-152 and Acts 1984, c. 675, cl. 5.

Acts 1984, c. 675, cl. 2, 3, 4 and 6 provide:

“2. That whenever any of the conditions, requirements, provisions or contents of any section, article or chapter of Title 58 or any other title of this Code as such titles existed prior to January 1, 1985, are transferred in the same or modified form to a new section, article or chapter of this title or any other title of this Code and whenever any such former section, article or chapter is given a new number in this or any other title, all references to any such former section, article or chapter of Title 58 or other title appearing in this Code shall be construed to apply to the new or renumbered section, article or chapter containing such conditions, requirements, provisions, contents or portions thereof.

“3. That the rules and regulations of the Department of Taxation in effect on the effective date of this act shall continue in effect to the extent that they are not in conflict with this act and shall be deemed to be regulations promulgated under this act.

“4. That this recodification of Title 58 and Title 58.1 shall not be construed to require the reappointment of any officer or any member of a board, council, committee or other appointed body referred to in Title 58.1, and each such officer and member shall continue to serve the term for which appointed pursuant to the provisions of Title 58.

“6. That the repeal by this act of any law validating any prior conveyance, contract, loan or other action or agreement shall not be construed as invalidating such conveyance, contract, loan or other action or agreement.”

Cross references.

As to levy of taxes by county, city or town on a fiscal year basis of July 1 to June 30, see § 58.1-3010 .

As to date of assessment in county, city or town, see § 58.1-3011 .

Law Review.

For survey of the Virginia law on taxation for the year 1961-1962, see 48 Va. L. Rev. 1554 (1962).

For survey of the Virginia law on taxation for the year 1964-1965, see 51 Va. L. Rev. 1444 (1965).

For survey of the Virginia law on taxation for the year 1967-1968, see 54 Va. L. Rev. 1484 (1968).

For survey of the Virginia law on taxation for the year 1989, see 23 U. Rich. L. Rev. 839 (1989).

For survey of the Virginia law on taxation for the year 1989-1990, see 24 U. Rich. L. Rev. 769 (1990).

For 1992 survey of taxation law in Virginia, see 26 U. Rich. L. Rev. 857 (1992).

Michie’s Jurisprudence.

For related discussion, see 18 M.J. Taxation, §§ 2, 10, 37.

§ 58.1-2. Reciprocal agreements with other states for collection of taxes.

1. The Governor may enter into reciprocal agreements on behalf of the Commonwealth with the appropriate authorities of any state within the United States and of the District of Columbia, with respect to the collection of all taxes imposed by the Commonwealth or any political subdivision thereof.
2. All agreements entered into by the Governor with respect to any method of collection as to which provision is expressly made by statute shall conform to the provisions of such statute. As to any other method of collection appropriate to the powers vested in the Governor by this section, the Governor may agree to such terms and conditions as in his judgment are best calculated to promote the interests of this Commonwealth. Except as hereinabove provided, it is the policy of this Commonwealth to grant reciprocity to another state when such state grants reciprocity to the Commonwealth.

History. Code 1950, § 58-27.1; 1962, c. 25; 1984, c. 675.

Michie’s Jurisprudence.

For related discussion, see 18 M.J. Taxation, § 96.

§ 58.1-3. Secrecy of information; penalties.

1. Except in accordance with a proper judicial order or as otherwise provided by law, the Tax Commissioner or agent, clerk, commissioner of the revenue, treasurer, or any other state or local tax or revenue officer or employee, or any person to whom tax information is divulged pursuant to this section or § 58.1-512 or 58.1-2712.2 , or any former officer or employee of any of the aforementioned offices shall not divulge any information acquired by him in the performance of his duties with respect to the transactions, property, including personal property, income or business of any person, firm or corporation. Such prohibition specifically includes any copy of a federal return or federal return information required by Virginia law to be attached to or included in the Virginia return. This prohibition shall apply to any reports, returns, financial documents or other information filed with the Attorney General pursuant to the provisions of Article 3 (§ 3.2-4204 et seq.) of Chapter 42 of Title 3.2. Any person violating the provisions of this section is guilty of a Class 1 misdemeanor. The provisions of this subsection shall not be applicable, however, to:
   1. Matters required by law to be entered on any public assessment roll or book;
   2. Acts performed or words spoken, published, or shared with another agency or subdivision of the Commonwealth in the line of duty under state law;
   3. Inquiries and investigations to obtain information as to the process of real estate assessments by a duly constituted committee of the General Assembly, or when such inquiry or investigation is relevant to its study, provided that any such information obtained shall be privileged;
   4. The sales price, date of construction, physical dimensions or characteristics of real property, or any information required for building permits;
   5. Copies of or information contained in an estate’s probate tax return, filed with the clerk of court pursuant to § 58.1-1714 , when requested by a beneficiary of the estate or an heir at law of the decedent or by the commissioner of accounts making a settlement of accounts filed in such estate;
   6. Information regarding nonprofit entities exempt from sales and use tax under § 58.1-609.11 , when requested by the General Assembly or any duly constituted committee of the General Assembly;
   7. Reports or information filed with the Attorney General by a Stamping Agent pursuant to the provisions of Article 3 (§ 3.2-4204 et seq.), when such reports or information are provided by the Attorney General to a tobacco products manufacturer who is required to establish a qualified escrow fund pursuant to § 3.2-4201 and are limited to the brand families of that manufacturer as listed in the Tobacco Directory established pursuant to § 3.2-4206 and are limited to the current or previous two calendar years or in any year in which the Attorney General receives Stamping Agent information that potentially alters the required escrow deposit of the manufacturer. The information shall only be provided in the following manner: the manufacturer may make a written request, on a quarterly or yearly basis or when the manufacturer is notified by the Attorney General of a potential change in the amount of a required escrow deposit, to the Attorney General for a list of the Stamping Agents who reported stamping or selling its products and the amount reported. The Attorney General shall provide the list within 15 days of receipt of the request. If the manufacturer wishes to obtain actual copies of the reports the Stamping Agents filed with the Attorney General, it must first request them from the Stamping Agents pursuant to subsection C of § 3.2-4209. If the manufacturer does not receive the reports pursuant to subsection C of § 3.2-4209, the manufacturer may make a written request to the Attorney General, including a copy of the prior written request to the Stamping Agent and any response received, for copies of any reports not received. The Attorney General shall provide copies of the reports within 45 days of receipt of the request.
2. 1. Nothing contained in this section shall be construed to prohibit the publication of statistics so classified as to prevent the identification of particular reports or returns and the items thereof or the publication of delinquent lists showing the names of taxpayers who are currently delinquent, together with any relevant information which in the opinion of the Department may assist in the collection of such delinquent taxes. Notwithstanding any other provision of this section or other law, the Department, upon request by the General Assembly or any duly constituted committee of the General Assembly, shall disclose the total aggregate amount of an income tax deduction or credit taken by all taxpayers, regardless of (i) how few taxpayers took the deduction or credit or (ii) any other circumstances. This section shall not be construed to prohibit a local tax official from disclosing whether a person, firm or corporation is licensed to do business in that locality and divulging, upon written request, the name and address of any person, firm or corporation transacting business under a fictitious name. Additionally, notwithstanding any other provision of law, the commissioner of revenue is authorized to provide, upon written request stating the reason for such request, the Tax Commissioner with information obtained from local tax returns and other information pertaining to the income, sales and property of any person, firm or corporation licensed to do business in that locality. B. 1. Nothing contained in this section shall be construed to prohibit the publication of statistics so classified as to prevent the identification of particular reports or returns and the items thereof or the publication of delinquent lists showing the names of taxpayers who are currently delinquent, together with any relevant information which in the opinion of the Department may assist in the collection of such delinquent taxes. Notwithstanding any other provision of this section or other law, the Department, upon request by the General Assembly or any duly constituted committee of the General Assembly, shall disclose the total aggregate amount of an income tax deduction or credit taken by all taxpayers, regardless of (i) how few taxpayers took the deduction or credit or (ii) any other circumstances. This section shall not be construed to prohibit a local tax official from disclosing whether a person, firm or corporation is licensed to do business in that locality and divulging, upon written request, the name and address of any person, firm or corporation transacting business under a fictitious name. Additionally, notwithstanding any other provision of law, the commissioner of revenue is authorized to provide, upon written request stating the reason for such request, the Tax Commissioner with information obtained from local tax returns and other information pertaining to the income, sales and property of any person, firm or corporation licensed to do business in that locality.
   2. This section shall not prohibit the Department from disclosing whether a person, firm, or corporation is registered as a retail sales and use tax dealer pursuant to Chapter 6 (§ 58.1-600 et seq.) or whether a certificate of registration number relating to such tax is valid. Additionally, notwithstanding any other provision of law, the Department is hereby authorized to make available the names and certificate of registration numbers of dealers who are currently registered for retail sales and use tax.
   3. This section shall not prohibit the Department from disclosing information to nongovernmental entities with which the Department has entered into a contract to provide services that assist it in the administration of refund processing or other services related to its administration of taxes.
   4. This section shall not prohibit the Department from disclosing information to taxpayers regarding whether the taxpayer’s employer or another person or entity required to withhold on behalf of such taxpayer submitted withholding records to the Department for a specific taxable year as required pursuant to subdivision C 1 of § 58.1-478 .
   5. This section shall not prohibit the commissioner of the revenue, treasurer, director of finance, or other similar local official who collects or administers taxes for a county, city, or town from disclosing information to nongovernmental entities with which the locality has entered into a contract to provide services that assist it in the administration of refund processing or other non-audit services related to its administration of taxes. The commissioner of the revenue, treasurer, director of finance, or other similar local official who collects or administers taxes for a county, city, or town shall not disclose information to such entity unless he has obtained a written acknowledgement by such entity that the confidentiality and nondisclosure obligations of and penalties set forth in subsection A apply to such entity and that such entity agrees to abide by such obligations.
3. Notwithstanding the provisions of subsection A or B or any other provision of this title, the Tax Commissioner is authorized to (i) divulge tax information to any commissioner of the revenue, director of finance, or other similar collector of county, city, or town taxes who, for the performance of his official duties, requests the same in writing setting forth the reasons for such request; (ii) provide to the Commissioner of the Department of Social Services, upon entering into a written agreement, the amount of income, filing status, number and type of dependents, whether a federal earned income tax credit as authorized in § 32 of the Internal Revenue Code and an income tax credit for low-income taxpayers as authorized in § 58.1-339.8 have been claimed, and Forms W-2 and 1099 to facilitate the administration of public assistance or social services benefits as defined in § 63.2-100 or child support services pursuant to Chapter 19 (§ 63.2-1900 et seq.) of Title 63.2, or as may be necessary to facilitate the administration of outreach and enrollment related to the federal earned income tax credit authorized in § 32 of the Internal Revenue Code and the income tax credit for low-income taxpayers authorized in § 58.1-339.8 ; (iii) provide to the chief executive officer of the designated student loan guarantor for the Commonwealth of Virginia, upon written request, the names and home addresses of those persons identified by the designated guarantor as having delinquent loans guaranteed by the designated guarantor; (iv) provide current address information upon request to state agencies and institutions for their confidential use in facilitating the collection of accounts receivable, and to the clerk of a circuit or district court for their confidential use in facilitating the collection of fines, penalties, and costs imposed in a proceeding in that court; (v) provide to the Commissioner of the Virginia Employment Commission, after entering into a written agreement, such tax information as may be necessary to facilitate the collection of unemployment taxes and overpaid benefits; (vi) provide to the Virginia Alcoholic Beverage Control Authority, upon entering into a written agreement, such tax information as may be necessary to facilitate the collection of state and local taxes and the administration of the alcoholic beverage control laws; (vii) provide to the Director of the Virginia Lottery such tax information as may be necessary to identify those lottery ticket retailers who owe delinquent taxes; (viii) provide to the Department of the Treasury for its confidential use such tax information as may be necessary to facilitate the location of owners and holders of unclaimed property, as defined in § 55.1-2500 ; (ix) provide to the State Corporation Commission, upon entering into a written agreement, such tax information as may be necessary to facilitate the collection of taxes and fees administered by the Commission; (x) provide to the Executive Director of the Potomac and Rappahannock Transportation Commission for his confidential use such tax information as may be necessary to facilitate the collection of the motor vehicle fuel sales tax; (xi) provide to the Commissioner of the Department of Agriculture and Consumer Services such tax information as may be necessary to identify those applicants for registration as a supplier of charitable gaming supplies who have not filed required returns or who owe delinquent taxes; (xii) provide to the Department of Housing and Community Development for its confidential use such tax information as may be necessary to facilitate the administration of the remaining effective provisions of the Enterprise Zone Act (§ 59.1-270 et seq.), and the Enterprise Zone Grant Program (§ 59.1-538 et seq.); (xiii) provide current name and address information to private collectors entering into a written agreement with the Tax Commissioner, for their confidential use when acting on behalf of the Commonwealth or any of its political subdivisions; however, the Tax Commissioner is not authorized to provide such information to a private collector who has used or disseminated in an unauthorized or prohibited manner any such information previously provided to such collector; (xiv) provide current name and address information as to the identity of the wholesale or retail dealer that affixed a tax stamp to a package of cigarettes to any person who manufactures or sells at retail or wholesale cigarettes and who may bring an action for injunction or other equitable relief for violation of Chapter 10.1, Enforcement of Illegal Sale or Distribution of Cigarettes Act; (xv) provide to the Commissioner of Labor and Industry, upon entering into a written agreement, such tax information as may be necessary to facilitate the collection of unpaid wages under § 40.1-29 ; (xvi) provide to the Director of the Department of Human Resource Management, upon entering into a written agreement, such tax information as may be necessary to identify persons receiving workers’ compensation indemnity benefits who have failed to report earnings as required by § 65.2-712 ; (xvii) provide to any commissioner of the revenue, director of finance, or any other officer of any county, city, or town performing any or all of the duties of a commissioner of the revenue and to any dealer registered for the collection of the Communications Sales and Use Tax, a list of the names, business addresses, and dates of registration of all dealers registered for such tax; (xviii) provide to the Executive Director of the Northern Virginia Transportation Commission for his confidential use such tax information as may be necessary to facilitate the collection of the motor vehicle fuel sales tax; (xix) provide to the Commissioner of Agriculture and Consumer Services the name and address of the taxpayer businesses licensed by the Commonwealth that identify themselves as subject to regulation by the Board of Agriculture and Consumer Services pursuant to § 3.2-5130; (xx) provide to the developer or the economic development authority of a tourism project authorized by § 58.1-3851.1 , upon entering into a written agreement, tax information facilitating the repayment of gap financing; (xxi) provide to the Virginia Retirement System and the Department of Human Resource Management, after entering into a written agreement, such tax information as may be necessary to facilitate the enforcement of subdivision C 4 of § 9.1-401 ; (xxii) provide to the Department of Medical Assistance Services and the Department of Social Services, upon entering into a written agreement, the name, address, social security number, email address, dependent information provided pursuant to subdivision B 2 of § 58.1-341.1 , number and type of personal exemptions, tax-filing status, adjusted gross income, and any additional information voluntarily provided by the taxpayer for disclosure pursuant to subdivisions B 1 and 2 of § 58.1-341.1 , of an individual, or spouse in the case of a married taxpayer filing jointly, who has voluntarily consented to such disclosure for purposes of identifying persons who would like to newly enroll in medical assistance; (xxiii) provide to the Commissioner of the Department of Motor Vehicles information sufficient to verify that an applicant for a driver privilege card or permit under § 46.2-328.3 or an applicant for an identification privilege card under § 46.2-345.3 reported income and deductions from Virginia sources, as defined in § 58.1-302 , or was claimed as a dependent, on an individual income tax return filed with the Commonwealth within the preceding 12 months; and (xxiv) provide to the Virginia Health Benefit Exchange, upon entering into a written agreement, for taxable years starting on January 1, 2023, or as soon thereafter as practicable, as determined by the Department of Taxation and the Virginia Health Benefit Exchange, the name, address, social security number, email address, dependent information provided pursuant to subdivision B 2 of § 58.1-341.1, number and type of personal exemptions, tax-filing status, adjusted gross income, and any additional information voluntarily provided by the taxpayer for disclosure pursuant to subdivision B 3 of § 58.1-341.1, of an individual, or spouse in the case of a married taxpayer filing jointly, who has voluntarily consented to such disclosure for purposes of identifying persons who do not meet the income eligibility requirements for medical assistance and would like to newly enroll in a qualified health plan. The Tax Commissioner is further authorized to enter into written agreements with duly constituted tax officials of other states and of the United States for the inspection of tax returns, the making of audits, and the exchange of information relating to any tax administered by the Department of Taxation. Any person to whom tax information is divulged pursuant to this section shall be subject to the prohibitions and penalties prescribed herein as though he were a tax official. taxable years starting on January 1, 2023, or as soon thereafter as practicable, as determined by the Department of Taxation and the Virginia Health Benefit Exchange, the name, address, social security number, email address, dependent information provided pursuant to subdivision B 2 of § 58.1-341.1, number and type of personal exemptions, tax-filing status, adjusted gross income, and any additional information voluntarily provided by the taxpayer for disclosure pursuant to subdivision B 3 of § 58.1-341.1, of an individual, or spouse in the case of a married taxpayer filing jointly, who has voluntarily consented to such disclosure for purposes of identifying persons who do not meet the income eligibility requirements for medical assistance and would like to newly enroll in a qualified health plan. The Tax Commissioner is further authorized to enter into written agreements with duly constituted tax officials of other states and of the United States for the inspection of tax returns, the making of audits, and the exchange of information relating to any tax administered by the Department of Taxation. Any person to whom tax information is divulged pursuant to this section shall be subject to the prohibitions and penalties prescribed herein as though he were a tax official.
4. Notwithstanding the provisions of subsection A or B or any other provision of this title, the commissioner of revenue or other assessing official is authorized to (i) provide, upon written request stating the reason for such request, the chief executive officer of any county or city with information furnished to the commissioner of revenue by the Tax Commissioner relating to the name and address of any dealer located within the county or city who paid sales and use tax, for the purpose of verifying the local sales and use tax revenues payable to the county or city; (ii) provide to the Department of Professional and Occupational Regulation for its confidential use the name, address, and amount of gross receipts of any person, firm or entity subject to a criminal investigation of an unlawful practice of a profession or occupation administered by the Department of Professional and Occupational Regulation, only after the Department of Professional and Occupational Regulation exhausts all other means of obtaining such information; and (iii) provide to any representative of a condominium unit owners’ association, property owners’ association or real estate cooperative association, or to the owner of property governed by any such association, the names and addresses of parties having a security interest in real property governed by any such association; however, such information shall be released only upon written request stating the reason for such request, which reason shall be limited to proposing or opposing changes to the governing documents of the association, and any information received by any person under this subsection shall be used only for the reason stated in the written request. The treasurer or other local assessing official may require any person requesting information pursuant to clause (iii) of this subsection to pay the reasonable cost of providing such information. Any person to whom tax information is divulged pursuant to this subsection shall be subject to the prohibitions and penalties prescribed herein as though he were a tax official.Notwithstanding the provisions of subsection A or B or any other provisions of this title, the treasurer or other collector of taxes for a county, city or town is authorized to provide information relating to any motor vehicle, trailer or semitrailer obtained by such treasurer or collector in the course of performing his duties to the commissioner of the revenue or other assessing official for such jurisdiction for use by such commissioner or other official in performing assessments.This section shall not be construed to prohibit a local tax official from imprinting or displaying on a motor vehicle local license decal the year, make, and model and any other legal identification information about the particular motor vehicle for which that local license decal is assigned.
5. Notwithstanding any other provisions of law, state agencies and any other administrative or regulatory unit of state government shall divulge to the Tax Commissioner or his authorized agent, upon written request, the name, address, and social security number of a taxpayer, necessary for the performance of the Commissioner’s official duties regarding the administration and enforcement of laws within the jurisdiction of the Department of Taxation. The receipt of information by the Tax Commissioner or his agent that may be deemed taxpayer information shall not relieve the Commissioner of the obligations under this section.
6. Additionally, it is unlawful for any person to disseminate, publish, or cause to be published any confidential tax document that he knows or has reason to know is a confidential tax document. A confidential tax document is any correspondence, document, or tax return that is prohibited from being divulged by subsection A, B, C, or D and includes any document containing information on the transactions, property, income, or business of any person, firm, or corporation that is required to be filed with any state official by § 58.1-512 . This prohibition shall not apply if such confidential tax document has been divulged or disseminated pursuant to a provision of law authorizing disclosure. Any person violating the provisions of this subsection is guilty of a Class 1 misdemeanor.

History. Code 1950, § 58-46; 1972, cc. 311, 565; 1974, c. 134; 1978, c. 161; 1980, c. 49; 1983, c. 372; 1984, cc. 319, 675; 1985, c. 78; 1988, c. 544; 1989, cc. 99, 327; 1990, c. 678; 1992, c. 386; 1993, cc. 41, 519; 1994, c. 493; 1995, c. 38; 1996, cc. 614, 784, 793, 919, 988; 1997, cc. 517, 705, 787; 2000, cc. 717, 880, 901; 2001, c. 84; 2002, cc. 64, 747; 2003, cc. 757, 758, 884; 2004, cc. 166, 515, 536, 582, 594; 2005, cc. 863, 884; 2006, cc. 31, 159, 590, 780; 2008, cc. 387, 689, 785; 2010, c. 34; 2012, c. 395; 2013, cc. 29, 163, 230; 2014, cc. 194, 195, 225; 2015, cc. 38, 247, 730; 2016, cc. 227, 344, 677; 2018, c. 40; 2019, cc. 261, 786, 853; 2020, cc. 325, 916, 917, 1227, 1246; 2021, Sp. Sess. I, cc. 162, 544.

Editor’s note.

Acts 1998, c. 855, which amended this section and enacted former § 58.1-339.5 , provided in cl. 2: “That the provisions of this act shall become effective upon written notice from the U.S. Department of Health and Human Services that (i) the income tax credit provided by this act qualifies as a portion of the Commonwealth’s maintenance of effort under its Temporary Assistance to Needy Families (TANF) plan; (ii) the Commonwealth is exempt from the reporting requirements found in § 275.3 of Title 45 of the Code of Federal Regulations for families receiving the tax credit; and (iii) the exemption above will not disqualify the Commonwealth from receiving a work participation rate reduction based on a reduction in the TANF caseload, from receiving a high performance bonus, or from being considered for a reduction in penalties for failing to meet the work participation requirements.” Virginia has received notice that former § 58.1-339.5 and the earned income tax program for low income families does not qualify under federal guidelines for federal funds. Hence, the amendment by Acts 1998, c. 855, to this section did not take effect. Section 58.1-339.5 was repealed by Acts 2016, c. 305, cl. 2.

Acts 1999, cc. 202 and 470, cl. 3, provide: “That the Tax Commissioner shall publish in a public forum, notice of all requests for correction filed pursuant to § 58.1-3 983.1, subject to the privacy limitations of § 58.1-3 .”

Acts 2006, cc. 159 and 590, in cl. 2 provide: “That in the implementation of the provisions of this act the Department of Social Services shall only provide information on customers on file with the Department to the Department of Taxation and the Department of Taxation shall only provide information on taxpayers who have claimed the federal earned income tax credit for the taxable year to the Department of Social Services.”

Acts 2006, c. 780, cl. 4, provides: “That all taxes and fees imposed in accordance with the provisions of any Code of Virginia section or any local charter that are repealed or otherwise amended by this act and that remain unpaid as of January 1, 2007, shall be subject to payment and collection in accordance with any administrative or judicial remedies existing prior or subsequent to this act’s enactment and any bad debt associated with such taxes and fees that occurs after January 1, 2007, shall be offset against revenues collected from the Communications Sales and Use Tax.”

Acts 2006, c. 780, cl. 8, effective July 1, 2006, provides: “That the Auditor of Public Accounts (APA) shall determine the amount of revenues received by every county, city, and town for the fiscal year commencing July 1, 2005, and ending June 30, 2006, at rates adopted on or before January 1, 2006, for each of the following taxes and fees collected by the service providers: gross receipts tax in excess of 0.5%, local consumer utility tax, video program excise tax, cable franchise fee, and 911 taxes and fees, where they are collected. Based on each locality’s percentage of the total Fiscal Year 2006 receipts from these sources, the APA shall calculate each locality’s percentage share of future distributions of the Telecommunications Sales and Use Tax by the Department of Taxation. Local governments and service providers shall cooperate with the APA and provide information to him as requested. Every town with a population of less than 3,500, and any other county, city, or town whose annual audited financial statement cannot be completed by October 1, 2006, shall provide to the APA by that date a statement of its receipts during Fiscal Year 2006 from such telecommunications and cable sources, verified in writing by an independent certified public accountant. Any locality that fails to furnish the information required to make this calculation in a timely manner shall not be entitled to participate in the distribution of such tax, and its percentage share shall be disregarded in calculating the distribution to other localities. The APA or his agent shall not divulge any information acquired by him in the performances of his duties under this section that may identify specific service providers. The APA shall report his findings on a tax-by-tax basis to the chairmen of the House and Senate Finance Committees and the Department of Taxation no later than December 1, 2006. Further, the APA shall collect annually from local governments and service providers the necessary data to determine changes in: (i) market area and number of customers served, (ii) types of services available, (iii) population, and (iv) possible local reimbursement. The APA shall report his findings to the Chairmen of the House and Senate Committees on Finance no later than December 1 each year.”

Acts 2006, c. 780, cl. 9, provides: “That if any of the provisions of this act are declared invalid in a nonappealable court order, then the remaining provisions of this act shall be invalid and the provisions of §§ 15.2-2108 , 56-468.1, 56-484.4, 56-484.5, 56-484.6, 56-484.12, 58.1-3812 , 58.1-3813.1 , 58.1-3815 , 58.1-3816.2 , and 58.1-3818.1 through 58.1-3818.7 of the Code of Virginia and the third enactment clause of Chapter 858 of the 1972 Acts of Assembly as they were in effect immediately prior to the effective date of this act shall be given effect beginning 90 days after the nonappealable court order is issued.”

Acts 2013, cc. 29 and 163, cl. 2 provides: “That the provisions of this act shall become effective for the taxable years commencing on or after January 1, 2013.”

Acts 2015, cc. 38 and 730, cl. 4, as amended by Acts 2017, cc. 698 and 707, cl. 2, provides: “That the provisions of this act shall become effective on January 15, 2018, except that the provisions of the (i) thirteenth, fourteenth, and fifteenth enactments of this act shall become effective on July 1, 2015; (ii) third enactment of this act shall become effective on July 1, 2018; and (iii) eleventh enactment of this act shall become effective on January 1, 2019.”

Acts 2016, c. 677, cl. 5 provides: “That the provisions of this act shall become effective on July 1, 2017, except the provisions of the fourth enactment of this act, which shall become effective on July 1, 2016.”

To conform to the recodification of Title 55 by Acts 2019, c. 712, effective October 1, 2019, the following substitution was made at the direction of the Virginia Code Commission: substituted “55.1-2500” for “55-210.2.”

Acts 2020, cc. 916 and 917, cl. 5 provides: “That the State Corporation Commission shall implement the provisions of this act as it receives notice of approval by the Centers for Medicare and Medicaid Services and to the extent of such approval.”

Acts 2020, cc. 1227 and 1246, cl. 2 provides: “That the provisions of this act shall become effective on January 1, 2021.”

Acts 2020, cc. 1227 and 1246, cl. 4 provides: “That the provisions of this act may result in a net increase in periods of imprisonment or commitment. Pursuant to § 30-19.1:4 of the Code of Virginia, the estimated amount of the necessary appropriation cannot be determined for periods of imprisonment in state adult correctional facilities; therefore, Chapter 854 of the Acts of Assembly of 2019 requires the Virginia Criminal Sentencing Commission to assign a minimum fiscal impact of $50,000. Pursuant to § 30-19.1:4 of the Code of Virginia, the estimated amount of the necessary appropriation cannot be determined for periods of commitment to the custody of the Department of Juvenile Justice.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 32 F 4, effective for the biennium ending June 30, 2022, provides: “Notwithstanding the provisions of subsection A or B of § 58.1-3 or any other provision of law, unless prohibited by federal law, an agreement with a federal entity, or a court decree, the Tax Commissioner is authorized to provide to JLARC such tax information as may be necessary to conduct oversight of economic development initiatives and policies.”

Acts 2021, Sp. Sess. I, c. 162, cl. 2 provides: “That for taxable years beginning on and after January 1, 2021, upon entering into a written agreement, the Department of Taxation shall provide to the Department of Medical Assistance Services the following information authorized for disclosure pursuant to clause (xxii) of subsection C of § 58.1-3 of the Code of Virginia, as amended by this act: the name, address, social security number, number and type of personal exemptions, tax-filing status, and adjusted gross income of an individual, or spouse in the case of a married taxpayer filing jointly, who has voluntarily consented to such disclosure for purposes of identifying persons who would like to newly enroll in medical assistance.”

Acts 2021, Sp. Sess. I, c. 162, cl. 3 provides: “That for taxable years beginning on and after January 1, 2022, upon entering into a written agreement, the Department of Taxation shall provide to the Department of Medical Assistance Services and the Department of Social Services all information authorized for disclosure pursuant to clause (xxii) of subsection C of § 58.1-3 of the Code of Virginia, as amended by this act.”

Acts 2021, Sp. Sess. I, c. 162, cl. 4 provides: “That all information authorized for disclosure pursuant to clause (xxiv) of subsection C of § 58.1-3 of the Code of Virginia, as amended by this act, shall be provided to the Virginia Health Benefit Exchange beginning with the first taxable year after completion of the establishment of the American Health Benefit Exchange or as soon thereafter as practicable as determined by the Virginia Health Benefit Exchange.”

Acts 2021, Sp. Sess. I, c. 544, cl. 2 provides: “That the provisions of this act shall become effective on January 1, 2022.”

Acts 2021, Sp. Sess. I, c. 544, cl. 3 provides: “That the provisions of this act may result in a net increase in periods of imprisonment or commitment. Pursuant to § 30-19.1:4 of the Code of Virginia, the estimated amount of the necessary appropriation cannot be determined for periods of imprisonment in state adult correctional facilities; therefore, Chapter 1289 of the Acts of Assembly of 2020 requires the Virginia Criminal Sentencing Commission to assign a minimum fiscal impact of $50,000. Pursuant to § 30-19.1:4 of the Code of Virginia, the estimated amount of the necessary appropriation cannot be determined for periods of commitment to the custody of the Department of Juvenile Justice.”

The 2003 amendments.

The 2003 amendments by cc. 757 and 758, effective July 1, 2004, are identical, and added subdivision A 6.

The 2003 amendment by c. 884 substituted “Director of the Department of Charitable Gaming” for “Executive Secretary of the Charitable Gaming Commission” in subsection C.

The 2004 amendments.

The 2004 amendment by c. 166 added clause (xv) at the end of the first sentence in subsection C; and made minor stylistic changes.

The 2004 amendments by cc. 515 and 536 are identical, and substituted “§ 58.1-609.11 ” for “§ 58.1-611 ” in subdivision A 6.

The 2004 amendment by c. 582, in subsection C, inserted “and holders” and “as defined in § 55-210.2” in clause (viii) of the first sentence.

The 2004 amendment by c. 594 also added a clause (xv) at the end of the first sentence in subsection C and made related changes. The clause has been redesignated, at the direction of the Virginia Code Commission, as clause (xvi).

The 2005 amendments.

The 2005 amendments by cc. 863 and 884 are identical, and in subsection C, inserted “remaining effective provisions of the” preceding “Enterprise Zone Act” and “and the Enterprise Zone Grant Program (§ 59.1-530 et seq.)” following “Enterprise Zone Act (§ 59.1-270 et seq.” in clause (xii); and deleted “or by § 59.1-282.4” from the end of the second sentence of subsection F.

The 2006 amendments.

The 2006 amendment by c. 31 added the third sentence in subsection A.

The 2006 amendments by cc. 159 and 590 are identical, and inserted “filing status, number and type of dependents, and whether a federal earned income tax credit has been claimed as” in clause (ii) of subsection C.

The 2006 amendment by c. 780, effective January 1, 2007, in subsection C, inserted clause (xvii) and made a related change. See Acts 2006, c. 780, cl. 9, for expiration.

The 2008 amendments.

The 2008 amendments by cc. 387 and 689 are identical, and substituted “Commissioner” for “Director” and “Agriculture and Consumer Services” for “Charitable Gaming” in clause (xi) of subsection C.

The 2008 amendment by c. 785 inserted “58.1-512 or” in the first sentence of subsection A, and added “and includes any document containing information on the transactions, property, income, or business of any person, firm, or corporation that is required to be filed with any state official by § 58.1-512 ” at the end of the second sentence in subsection F.

The 2010 amendments.

The 2010 amendment by c. 34 added clause (xviii) of subsection C and made related stylistic changes.

The 2012 amendments.

The 2012 amendment by c. 395 added subdivision A 7, and made a related change; and deleted “of this section” following “subsection A, B, C, or D” in the second sentence of subsection F.

The 2013 amendments.

The 2013 amendments by cc. 29 and 163, effective for the taxable years commencing on or after January 1, 2013, are identical and substituted “spoken, published, or shared with another agency or subdivision of the Commonwealth in the line of duty under state law” for “spoken or published in the line of duty under the law” in subdivision A 2.

The 2013 amendment by c. 230 inserted “and (xix) provide to the Commissioner of Agriculture and Consumer Services the name and address of the taxpayer businesses licensed by the Commonwealth that identify themselves as subject to regulation by the Board of Agriculture and Consumer Services pursuant to § 3.2-5130” in subsection C.

The 2014 amendments.

The 2014 amendment by c. 194, in subsections A and F, substituted “is guilty” for “shall be guilty” and “Class 1” for “Class 2.”

The 2014 amendment by c. 195, in subsection B, added the second sentence.

The 2014 amendment by c. 225 substituted “Virginia Lottery” for “State Lottery Department” in clause (vii) of subsection C.

The 2015 amendment by c. 247 designated the first paragraph in subsection B as subdivision B 1; added subdivisions B 2 and B 3; in subsection C, added clause (xx) and made related changes.

The 2015 amendments.

The 2015 amendment by cc. 38 and 730, effective January 15, 2018, are identical and in clause (vii) of subsection C, substituted “Virginia Alcoholic Beverage Control Authority” for “Alcoholic Beverage Control Board.”

The 2016 amendments.

The 2016 amendments by cc. 227 and 344 are identical, and added subdivision B 4.

The 2016 amendment by c. 677, effective July 1, 2017, added clause (xxi) in the second from last sentence in subsection C.

The 2018 amendments.

The 2018 amendment by c. 40, in subsection A, inserted “this section or” preceding “§ 58.1-512 or 58.1-2712.2 ” in the first sentence; and added subdivision B 5.

The 2019 amendments.

The 2019 amendment by cc. 261 and 789 are identical, and inserted “or by the commissioner of accounts making a settlement of accounts filed in such estate” in subdivision A 5.

The 2019 amendment by c. 853, in subsection C, substituted “upon entering into a written agreement, the amount of income, filing status, number and type of dependents, and Forms W-2 and 1099 to facilitate the administration of public assistance or social services benefits as defined in § 63.2-100 or child support services pursuant to Chapter 19 (§ 63.2-1900 et seq.) of Title 63.2” for “upon written request, information on the amount of income, filing status, number and type of dependents, and whether a federal earned income tax credit has been claimed as reported by persons on their state income tax returns who have applied for public assistance or social services benefits as defined in § 63.2-100 ” in clause (ii).

The 2020 amendments.

The 2020 amendment by c. 325, in clause (ii) in subsection C, inserted “whether a federal earned income tax credit as authorized in § 32 of the Internal Revenue Code and an income tax credit for low-income taxpayers as authorized in § 58.1-339.8 have been claimed,” and “or as may be necessary to facilitate the administration of outreach and enrollment related to the federal earned income tax credit authorized in § 32 of the Internal Revenue Code and the income tax credit for low-income taxpayers authorized in § 58.1-339.8 .”

The 2020 amendments by cc. 916 and 917 are identical, and added clause (xxii) in the next-to-last sentence in subsection C and made stylistic changes.

The 2020 amendments by cc. 1227 and 1246, effective January 1, 2021, are identical, and added clause (xxiii) in the first sentence of subsection C and made stylistic changes.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 162, effective July 1, 2021, in clause (xxii) of subsection C, inserted “and the Department of Social Services,” “email address, dependent information provided pursuant to subdivision B 2 of § 58.1-341.1 ,” and “and any additional information voluntarily provided by the taxpayer for disclosure pursuant to subdivisions B 1 and 2 of § 58.1-341.1 ” and added clause (xxiv); and made stylistic changes.

The 2021 amendment by Sp. Sess. I, c. 544, effective January 1, 2022, inserted “or an applicant for an identification privilege card under § 46.2-345.3 ” in clause (xxiii) of subsection C; and made stylistic changes.

Cross references.

As to records which are excluded from the provisions of the Virginia Freedom of Information Act, see § 2.2-3705.7 .

As to the rights of data subjects to refuse to provide personal information, see § 2.2-3806 .

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

Law Review.

For survey of Virginia law on taxation for the year 1971-1972, see 58 Va. L. Rev. 1338 (1972).

For survey of Virginia law on taxation for the year 1974-1975, see 61 Va. L. Rev. 1849 (1975).

For 2003/2004 survey of the law of taxation, see 39 U. Rich. L. Rev. 413 (2004).

For article on recent developments in the law affecting Virginia taxation, see 43 U. Rich. L. Rev. 405 (2008).

Research References.

Bryson on Virginia Civil Procedure (Matthew Bender). Chapter 9 Discovery. § 9.04 Privileges Against Discovery. Bryson.

Virginia Forms (Matthew Bender). No. 1-1205. Order Regarding Confidentiality.

Michie’s Jurisprudence.

For related discussion, see 16 M.J. Right of Privacy, § 1.

§ 58.1-3.1. Availability of information necessary to audit local tax returns and other such privileged or confidential tax information.

1. Notwithstanding the provisions of § 58.1-3 , any commissioner of revenue or other such local revenue assessing or tax collecting officer of a county, city or town, upon written request by the State Auditor of Public Accounts or by a certified public accountant engaged in making an audit of the accounts of such political subdivision in conformity with authorization of its governing body or by law, or upon the initiative of such officer to seek an audit of the operations of his office, shall make available to such auditors or their representatives such information as he possesses relating to local tax returns, reports and other data on file in his office as may be deemed necessary by any such auditors for their proper verification of the assessments and collections of local taxes and other local revenues including any abatements or exonerations thereof or exclusions therefrom in accordance with law.
2. The provisions of this section shall not be construed to apply to any tax returns, reports and other data or information relating solely to state taxes and other state revenues including abatements and exonerations thereof or exclusions therefrom.
3. Any information furnished to any person in accordance with the provisions of this section shall be deemed privileged and confidential; and each lawful recipient thereof shall be subject to the penalties imposed by § 58.1-3 for any unauthorized dissemination of such information in any manner or at any time.

History. Code 1950, § 58-46.2; 1975, c. 19; 1984, c. 675.

Law Review.

For survey of Virginia law on taxation for the year 1974-1975, see 61 Va. L. Rev. 1849 (1975).

§ 58.1-3.2. Attorney General’s and Tax Commissioner’s authority to request and share information.

Notwithstanding the provisions of § 58.1-3 , the Attorney General and the Tax Commissioner are authorized to disclose any information collected by him, or reported or provided to him, on (i) the sales or purchases of cigarettes or other tobacco products, (ii) tax information relating to such sales or purchases, and (iii) tax information relating to sellers and purchasers of cigarettes or other tobacco products, to any federal, state, or local agency, including any agency of another state or local agency thereof, or any national or regional association of federal, state, or local agencies. Such tax information shall include any information acquired by him in the performance of his duties with respect to the transactions, property, including personal property, income, business or tax returns of any person, firm, or corporation.

Further, the Attorney General and the Tax Commissioner are authorized to disclose information collected by him, or reported or provided to him, on the sales or purchases of cigarettes or other tobacco products to any tobacco product manufacturer required to establish a qualified escrow fund under § 3.2-4201. Such information provided to any tobacco product manufacturer shall be limited to brands or products of that manufacturer only.

History. 2002, cc. 683, 722; 2012, c. 395; 2015, c. 247.

Editor’s note.

At the direction of the Virginia Code Commission, Title 3.2 references were substituted for Title 3.1 references to conform to the title revision by Acts 2008, c. 860, effective October 1, 2008.

Acts 2002, c. 683, cl. 2, and c. 722, cl. 2, are identical, and provide: “That the provisions of this act may result in a net increase in periods of imprisonment or commitment. Pursuant to § 30-19.1:4, the estimated amount of the necessary appropriation cannot be determined for periods of imprisonment in state adult correctional facilities and is $0 for periods of commitment to the custody of the Department of Juvenile Justice.”

The 2012 amendments.

The 2012 amendment by c. 395 substituted “the Attorney General and the Tax Commissioner are authorized” for “the Tax Commissioner is authorized” near the beginning of each paragraph.

The 2015 amendments.

The 2015 amendment by c. 247 added designators for clauses (i) and (ii), and inserted “and (iii) tax information relating to sellers and purchasers of cigarettes or other tobacco products”; and made related changes.

§ 58.1-3.3. Deemed consent to disclosure.

When a credit or other tax attribute has been transferred from a transferor to a transferee pursuant to a statutory provision permitting such transfer, then:

1. The transferor shall be deemed to consent to the disclosure to the transferee of any confidential tax information relevant to the eligibility and value of the credit or other tax attribute transferred; and
2. The transferee shall be deemed to consent to the disclosure by the Department to the transferor of the amount of the transferred credit or other tax attribute used or absorbed on the transferee’s tax return when such disclosure is necessary in the administration of the chapter.

History. 2008, c. 549.

Editor’s note.

Acts 2008, c. 549, cl. 2, provides: “That the provisions of this act shall apply to disclosures made in the course of assessing tax on or after July 1, 2008, and to administrative proceedings pending on or filed after July 1, 2008.”

Law Review.

For article on recent developments in the law affecting Virginia taxation, see 43 U. Rich. L. Rev. 405 (2008).

§ 58.1-3.4. Tax Commissioner’s authority to request and share information regarding employer worker reclassification.

Notwithstanding the provisions of § 58.1-3 , the Tax Commissioner is authorized to work and share information with the following agencies to identify employers who fail to properly classify individuals as employees pursuant to the provisions of Chapter 19 (§ 58.1-1900 et seq.) and to enforce the provisions of Chapters 3 (§ 58.1-3 00 et seq.) and 19: the Department of Labor and Industry, the Virginia Employment Commission, the Department of Small Business and Supplier Diversity, the Department of General Services, the Workers’ Compensation Commission, and the Department of Professional and Occupational Regulation. If any such agency has reason to believe that an employer has failed to properly classify individuals as employees in violation of Chapter 19, it shall notify the Department. Except as otherwise provided by law, such agencies shall share with the Department any information that may assist the Department in enforcing the provisions of Chapters 3 and 19.

History. 2020, cc. 681, 682.

Editor’s note.

Acts 2020, cc. 681 and 682, cl. 2 provides: “That the Department of Taxation shall develop guidelines implementing the provisions of this act. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).”

Acts 2020, cc. 681 and 682, cl. 3 provides: “That the provisions of this act shall become effective on January 1, 2021.”

§ 58.1-4. Person preparing tax return for another not to disclose information without consent.

No person, firm or corporation who undertakes the preparation of (i) any tax return required pursuant to this title or (ii) a federal income or an estate tax return required pursuant to federal law, for or without compensation, shall sell, dispose of or otherwise disclose, for the purpose of solicitation by mail or otherwise, the name or address of the person for whom such return is prepared, or disclose, for the purpose of solicitation by mail or otherwise, any information given by the person in the preparation of such return, without the written consent of the person requesting the preparation of such return. Violators of this section shall be guilty of a Class 2 misdemeanor, and each such disclosure shall constitute a separate offense.

History. Code 1950, §§ 58-27.4, 58-428; 1971, Ex. Sess., c. 195; 1984, c. 675.

Cross references.

As to punishment for Class 2 misdemeanors, see § 18.2-11 .

Research References.

Bryson on Virginia Civil Procedure (Matthew Bender). Chapter 9. Discovery. § 9.04 Privileges against discovery, et seq. Bryson.

§ 58.1-5. Persons, etc., engaged in more than one business.

When any person, firm or corporation is engaged in more than one business which is made by law subject to taxation, such person, firm or corporation shall pay the tax provided by law on each branch of his, their or its business.

History. Code 1950, § 58-23; 1984, c. 675.

§ 58.1-6. Priority of taxes, etc., in distributions.

In any distribution of the assets of any person or corporation assessed with taxes, levies and fees, together with penalties and interest thereon, due to the Commonwealth or any of its political subdivisions, whether heretofore or hereafter imposed, the claims of the Commonwealth and the political subdivisions for such taxes, levies and fees, penalties and interest thereon shall be paramount and prior to all claims of general creditors, except claims given higher dignity by federal law. Nothing in this section shall be construed in derogation of any lien of the Commonwealth or any of its political subdivisions now existing or hereafter created by law; nor shall anything herein be construed to affect the laws now in force with regard to the marshalling of a decedent’s estate and in regard to the exemption of a poor debtor.

History. Code 1950, § 58-24; 1984, c. 675.

§ 58.1-7. Same; liability of recipient of improper corporate distribution.

If any corporation assessed with a tax, including penalties and interest thereon, distributes its assets without first paying such assessment to the Commonwealth or to the proper political subdivision, as the case may be, any person with actual notice of such assessment receiving any moneys or other property from such distribution shall be held personally liable for such assessment to an amount not in excess of his participation in such distribution and any purchaser with actual notice of any such assessment shall be liable therefor to the extent of the assets of the corporation coming into his hands. Nothing in this section shall be construed so as to affect the rights of any bona fide purchaser for value.

History. Code 1950, § 58-25; 1984, c. 675.

§ 58.1-8. Filing of tax returns and payment of taxes which fall due on Saturday, Sunday or legal holiday.

When the last day on which a tax return may be filed or a tax may be paid without penalty or interest falls on a Saturday, Sunday or legal holiday, then any return required by this title may be filed or such payment may be made without penalty or interest on the next succeeding business day.

History. Code 1950, § 58-4.1; 1966, c. 690; 1984, c. 675.

§ 58.1-9. Filing of tax returns or payment of taxes by mail or otherwise; penalty.

1. When remittance of a tax return or a tax payment is made by mail or by means of a recognized commercial delivery service, receipt of such return or payment by the person with whom such return is required to be filed or to whom such payment is required to be made, in a sealed envelope or container bearing a postmark or a confirmation of shipment on or before midnight of the day such return is required to be filed or such payment made without penalty or interest, shall constitute filing and payment as if such return had been filed or such payment made before the close of business on the last day on which such return may be filed or such tax may be paid without penalty or interest.
2. When remittance of a tax payment is made by electronic funds transfer, receipt of funds available for withdrawal, in a bank account designated to receive such payments by the person to whom such payment is required to be made, on or before midnight of the day such payment is required to be made without penalty or interest, shall constitute payment as if such payment had been made before the close of business on the last day on which such tax may be paid without penalty or interest.
3. Notwithstanding any provision of law, the Tax Commissioner may allow the electronic filing of any state tax return, statement or document. For purposes of this subsection, the Tax Commissioner may determine alternative methods for the signing, subscribing or verifying of a state tax return, statement or document that shall have the same validity and consequences as the actual signing by the taxpayer. The Tax Commissioner may prescribe methods of execution, recording, reproduction and certification of electronically filed information pursuant § 59.1-496.The Tax Commissioner shall devise a method by which a taxpayer will only receive bulletins, publications, or other information provided by the Department electronically upon request.
4. If an income tax return preparer prepared 100 or more individual income tax returns for a taxable year that began on or after January 1, 2004, or 50 or more such returns for a taxable year that began on or after January 1, 2010, then for every taxable year thereafter, all individual income tax returns for taxable years prepared by that income tax return preparer shall be filed using electronic means. If an individual tax return shall be accompanied by attachments or schedules that cannot be accepted through electronic means, the income tax preparer shall file the return using software that produces a two dimensional barcode using 2D technology reflecting information contained in the return in a standard format as prescribed by the Tax Commissioner. This subsection shall not apply to an individual income tax return for a taxpayer who has indicated that he does not want his individual income tax return filed using electronic means or 2D technology.The Tax Commissioner shall have the authority to waive the requirement to file by electronic means upon finding that the requirement would cause an undue hardship. The income tax return preparer otherwise required to file individual income tax returns using electronic means shall request in writing the waiver from the Tax Commissioner and clearly demonstrate the nature of the undue hardship. The Tax Commissioner shall respond to the income tax return preparer within 45 days after receiving the request for waiver.For purposes of this subsection, “income tax return preparer” means a person who prepares, or employs one or more individuals to prepare, an income tax return for compensation. Preparation of a substantial portion of an individual income tax return shall be deemed preparation of the entire individual income tax return for purposes of this section.For purposes of this subsection, “income tax return preparer” shall not include volunteers who prepare tax returns for the elderly or poor as part of a nonprofit organization’s program.

History. Code 1950, § 58-4.2; 1966, c. 690; 1984, c. 675; 1996, cc. 370, 449, 635, 657; 2000, c. 995; 2004, c. 562; 2008, c. 217; 2010, cc. 36, 151, 635; 2011, c. 368.

Editor’s note.

Acts 2008, c. 217, cl. 2, provides: “That the provisions of this act shall be effective for taxable years beginning on and after January 1, 2008.”

The 2000 amendments.

The 2000 amendment by c. 995 added the last sentence in subsection C.

The 2004 amendments.

The 2004 amendment by c. 562 added subsection D.

The 2008 amendments.

The 2008 amendment by c. 217, effective for taxable years beginning on and after January 1, 2008, in subsection D, rewrote the first paragraph, and in the second paragraph, deleted “or using 2D technology” following “electronic means” in the first sentence and deleted “or 2D technology” following “electronic means” in the second sentence.

The 2010 amendments.

The 2010 amendments by cc. 36 and 151 are identical, and inserted “or 50 or more such returns for a taxable year that began on or after January 1, 2010,” near the middle of the first sentence of subsection D.

The 2010 amendment by c. 635 added the second paragraph of subsection C.

The 2011 amendments.

The 2011 amendment by c. 368 inserted “or by means of a recognized commercial delivery service,” “or container” and “or a confirmation of shipment” in the first sentence in subsection A.

Law Review.

For annual survey article, “Taxation,” see 46 U. Rich. L. Rev. 203 (2011).

§ 58.1-10. Collection of taxes accrued prior to repeal.

Any state or local tax heretofore or hereafter repealed shall be subject to all procedures for the collection of delinquent taxes or for the correction of erroneous assessment as may have been applicable to such tax immediately before such repeal.

History. Code 1950, § 58-27.3; 1971, Ex. Sess., c. 10; 1984, c. 675.

§ 58.1-11. Oaths or affirmations unnecessary on returns; misdemeanor to make false return.

No return of any state or local tax need be verified by the oath or affirmation of the person or persons who are required by law to sign the return but the signature of such person or persons to any such return shall be sufficient. Any such person who willfully subscribes any such return which he does not believe to be true and correct as to every material matter shall be guilty of a Class 1 misdemeanor.

History. Code 1950, § 58-27; 1972, c. 316; 1984, c. 675.

Cross references.

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

§ 58.1-12. Payment of tax by bad check.

1. If any check tendered for any tax due under this title is not paid by the bank on which it is drawn, the taxpayer for whom such check was tendered shall remain liable for the payment of the tax the same as if such check had not been tendered.
2. If such person fails to pay the amount shown on the face of the check within five days after notice of such nonpayment has been mailed to the taxpayer by the tax assessing official, a penalty of twenty-five dollars shall be added to the tax due. Such penalty shall be in addition to any and all other penalties provided by law.

History. Code 1950, §§ 58-26.1, 58-151.13:1, 58-441.35; 1966, c. 151; 1972, c. 351; 1979, c. 423; 1984, c. 675; 1992, c. 678.

Cross references.

As to applicability of this section to bad checks tendered to a public body in the course of its duties, see § 2.2-614.1 .

§ 58.1-13. State taxes to be paid into the general fund.

Except when otherwise specifically provided, all state taxes, including penalties and interest, collected under the provisions of this title, shall, when paid into the state treasury, be paid into the general fund of the state treasury for the support of the government.

History. Code 1950, § 58-26; 1984, c. 675.

Cross references.

For constitutional provision, see Va. Const., Art. X, § 7.

§ 58.1-13.1. Repealed by Acts 2002, c. 719.

§ 58.1-14. Out-of-state tax collections.

Any state of the United States, or any political subdivision thereof, shall have the right to sue in the courts of Virginia to recover any tax which may be owing to it when the like right is accorded to the Commonwealth of Virginia and its political subdivisions by such state, whether such right is granted by statutory authority or as a matter of comity.

History. Code 1950, § 58-1021.1; 1952, c. 323; 1984, c. 675.

§ 58.1-15. Rate of interest.

1. Unless otherwise specifically provided, interest on omitted taxes, assessments and refunds under this title shall be computed at the rates equal to the rates of interest established pursuant to § 6621 of the Internal Revenue Code. The rate of interest on omitted taxes and assessments under this title shall be the “Underpayment Rate” established pursuant to § 6621(a)(2) of the Internal Revenue Code plus two percent. The rate of interest on refunds under this title shall be the “Overpayment Rate” for noncorporate taxpayers established pursuant to § 6621(a)(1) of the Internal Revenue Code plus two percent. Separate computations shall be made by multiplying the deficiency or overpayment for each period by the rate of interest applicable to that period.
2. In determining the addition to tax under § 58.1-492 for failure by individuals to pay estimated tax, the “Underpayment Rate” plus two percent which applies during the third month following such taxable year shall also apply during the first fifteen days of the fourth month following such taxable year in the case of individuals filing on a basis other than a calendar year. In the case of all other individuals, the “Underpayment Rate” plus two percent which applies during the third month following such taxable year shall also be applicable through May 1.
3. In determining the addition to tax under § 58.1-504 for failure by corporations to pay estimated tax, the “Underpayment Rate” plus two percent which applies during the third month following such taxable year shall also apply during the first fifteen days of the fourth month following such taxable year.

History. Code 1950, § 58-1160.1; 1980, c. 663; 1984, c. 675; 1987, c. 484; 1991, cc. 316, 331; 1999, cc. 146, 180.

Cross references.

As to direct payment permits under the Virginia Communications Sales and Use Tax, see § 58.1-658 .

As to interest, administrative charges and penalty fees under the Virginia Debt Collection Act, see § 2.2-4805 .

The 1999 amendments.

The 1999 amendment by cc. 146 and 180, effective January 1, 2000, are identical, and in subsection A, in the third sentence, inserted “for noncorporate taxpayers” and inserted “plus two percent.”

Law Review.

For 1987 survey of Virginia taxation law, see 21 U. Rich. L. Rev. 837 (1987).

For 2003/2004 survey of the law of taxation, see 39 U. Rich. L. Rev. 413 (2004).

For annual survey article, “Taxation,” see 46 U. Rich. L. Rev. 203 (2011).

Michie’s Jurisprudence.

For related discussion, see 18 M.J. Taxation, § 101.

§ 58.1-16. Overcollection of tax.

Any person responsible for collecting any tax administered by the Department or the Division of Motor Vehicles who overcollects such tax and fails to account for and pay such overcollection to the appropriate state agency by the time his regular monthly or quarterly return is due shall be liable for the amount of such overcollection, and in addition a penalty of twenty-five percent of such overcollection. The Commissioner administering such tax may waive such penalty for good cause.

History. Code 1950, § 58-44.2; 1979, c. 133; 1984, c. 675.

§ 58.1-17. Donations to the general fund.

Any taxpayer wanting to donate money in excess of his tax liability to the Commonwealth may do so at any time by writing a check payable to the State Treasurer and designating it as a donation to the Commonwealth’s general fund. Such donations shall be used only for public purposes and shall be deductible as a charitable contribution to the extent allowed under § 170 of the Internal Revenue Code of 1986, as amended. Taxpayers making donations pursuant to this section may (i) include their donations when filing their Virginia income tax return, or (ii) deliver such donations, either in person or by mail, to the Tax Commissioner. The Tax Commissioner shall report to the State Treasurer the amount donated monthly and the State Treasurer shall credit such amount to the general fund.

History. 2002, c. 268.

Editor’s note.

Acts 2002, c. 268, cl. 2 provides: “That the Tax Commissioner shall include information in the instructions of any state tax package about donations that may be made to the general fund pursuant to the provisions of this act. In addition, the Tax Commissioner shall, with the consent of the taxpayer, publish the names of taxpayers making donations pursuant to the provisions of this act on the Department of Taxation’s website at least monthly.”

§ 58.1-20. Repealed by Acts 2009, c. 35.

§ 58.1-21. No decree for distribution until taxes paid or provided for.

No decree or order shall be entered by any court of the Commonwealth directing the payment or other distribution of any funds, securities, moneys or other property under its control or under the control or in the hands of any receiver, commissioner or other officer of the court or any executor, administrator, trustee or other fiduciary unless it be made to appear to such court that all taxes and levies upon such funds, securities, moneys or other property have been paid or unless the payment thereof be provided for in such decree or order. No commissioner, executor, administrator, trustee or other fiduciary, receiver, trustee, bank or other person or corporation shall pay out any funds in hand under the order of any court unless a receipt for taxes is produced showing the taxes have been paid, or unless such order shall so state.

History. Code 1950, § 58-870; 1984, c. 675.

§ 58.1-22. Accounts not to be settled until taxes paid or provided for.

No commissioner of accounts shall, under § 64.2-1211 , file any report of an account of the transactions of any fiduciary not governed by § 58.1-911 until the commissioner finds that all taxes, whether state, county or city, assessed and chargeable upon property in the hands of the person for whom such account is settled have been paid or unless such account shall show that there remains in the hands of such person a sufficient sum, over and above the charges of administration, to pay all taxes charged against such person in his capacity as fiduciary.

History. Code 1950, § 58-871; 1984, c. 675; 1997, c. 496; 2002, c. 35.

Editor’s note.

At the direction of the Virginia Code Commission, the reference to “26-32” was changed to “64.2-1211” to conform to the recodification of Title 64.1 by Acts 2012, c. 614, effective October 1, 2012.

The 2002 amendments.

The 2002 amendment by c. 35 deleted “or assistant commissioner” following “of accounts,” substituted “any fiduciary not governed by § 58.1-911 until the commissioner finds” for “any executor, administrator, trustee, receiver or other fiduciary, including trustees in foreclosure actions until it shall be made to appear to the commissioner,” deleted “or” preceding “county or city,” deleted “belonging to the estate concerned in such settlement” following “is settled,” and deleted “executor, administrator, trustee, receiver or other” preceding “fiduciary” at the end of the section.

Law Review.

For 2002 survey of Virginia law on wills, trusts, and estates, see 37 U. Rich. L. Rev. 357 (2002).

Research References.

Virginia Forms (Matthew Bender). No. 15-476 Account for Decedent’s Estate; et seq.

§ 58.1-23. Inquiries required of fiduciaries.

Every personal representative, before settling the estate in his hands, shall make inquiry of the treasurer of the county or city wherein the decedent last resided and of the Department with respect to any unpaid taxes and levies assessed against his decedent.

History. Code 1950, § 58-872; 1984, c. 675.

Research References.

Virginia Forms (Matthew Bender). No. 15-488. Affidavit by Fiduciary as to Payment of Taxes.

§ 58.1-24. Fiduciary to be reimbursed out of estate.

When taxes or levies are paid by any fiduciary on any estate in his hands or for which he may be liable, such taxes and levies shall be refunded out of the estate.

History. Code 1950, § 58-873; 1984, c. 675.

§ 58.1-100. Property subject to state taxation only.

Insurance taxes, licenses on insurance companies, taxable intangible personal property, rolling stock of all corporations operating railroads and all other classes of property not specifically exempted or reserved for local taxation, are hereby segregated and made subject to state taxation only.

History. Code 1950, § 58-10; 1984, c. 675.

Cross references.

As to power of General Assembly to segregate property for state or local taxation only, see Va. Const., Art. X, § 1.

For property subject to local taxation only, see Va. Const., Art. X, § 4, and § 58.1-3000 .

Law Review.

For note, “Taxation of Machinery and Tools Used in a Manufacturing or Mining Business,” see 39 Va. L. Rev. 249 (1953).

For note, “Property Taxation in Virginia,” see 11 U. Rich. L. Rev. 589 (1977).

For a book review, “Rights, Costs, and the Incommensurability Problem Reviewing the Cost of Rights: Why Liberty Depends on Taxes,” see 86 Va. L. Rev. 1303 (2000).

§ 58.1-101. Waiver of time limitation on assessment of taxes.

Where before the expiration of the time prescribed for the assessment of any tax imposed pursuant to this title and assessable by the Department both the Tax Commissioner and the taxpayer have consented in writing to its assessment after such time, the tax may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.

History. Code 1950, § 58-45.1; 1971, Ex. Sess., cc. 48, 245; 1984, c. 675.

§ 58.1-102. Retention of records by taxpayer.

It shall be the duty of every taxpayer to retain suitable records and documents substantiating all information contained on any return required by this subtitle and any such other pertinent records or documents as the Tax Commissioner may require by regulation.

The records and documents shall be preserved for a period of three years from the required date for filing a return to which such records or documents pertain.

History. 1984, c. 675.

§ 58.1-103. Inspection of records and documents by the Department.

All records and documents required by this subtitle or by rule or regulation shall be available during regular business hours for inspection by the Tax Commissioner or his duly authorized agents. Persons violating the provisions of this section shall be guilty of a Class 2 misdemeanor.

History. 1984, c. 675.

Cross references.

As to punishment for Class 2 misdemeanors, see § 18.2-11 .

§ 58.1-104. Period of limitations.

Except as provided in Chapters 3 (§ 58.1-300 et seq.) and 6 (§ 58.1-600 et seq.) of this title, any tax imposed by this subtitle shall be assessed within three years from the last day prescribed by law for the timely filing of the return. In the case of a false or fraudulent return with the intent to evade payment of any tax imposed by this subtitle, or a failure to file a required return, the taxes may be assessed, or a proceeding in court for the collection of such taxes may be begun without assessment, at any time within six years from the last day prescribed by law for the timely filing of the return.

History. 1984, c. 675; 1991, cc. 362, 456.

§ 58.1-105. Offers in compromise; Department may accept; authority and duty of Tax Commissioner.

1. In all cases in which under the laws of this Commonwealth a prosecution is authorized for violation of the revenue laws and in all cases in which a penalty is imposed upon the taxpayer for failure to comply with the requirements of the tax laws, the Department shall in its discretion have authority to accept offers made in compromise of such prosecution and in compromise or in lieu of such penalties. An offer in lieu of the assessment of a penalty shall be deemed to be made by the filing of a return or payment of tax without payment of a penalty if information filed with the return or payment of tax or obtained from other sources demonstrates reasonable cause for the failure or omission for which the penalty would be imposed. The reason for the acceptance of such offers in compromise shall be preserved among the records of the Department.
2. The Tax Commissioner may compromise and settle doubtful or disputed claims for taxes or tax liability of doubtful collectibility. An offer in compromise shall be deemed accepted only when the taxpayer is notified in writing of the acceptance by the Tax Commissioner. Whenever such a compromise and settlement is made, the Tax Commissioner shall make a complete record of the case showing the tax assessed, recommendations, reports and audits of departmental personnel, if any, the taxpayer’s grounds for dispute or contest together with all evidences thereof, and the amounts, conditions and settlement or compromise of same.
3. The Department may deposit into the state treasury all payments submitted with offers in compromise, unless the taxpayer specifically and clearly directs otherwise.

History. Code 1950, § 58-45; 1973, c. 446; 1984, c. 675; 1994, c. 800; 1996, cc. 640, 655.

Editor’s note.

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 V 1, effective for the biennium ending June 30, 2022, provides: “Notwithstanding any other provision of law, effective July 1, 2017, the Department of Taxation shall charge a fee of $275 for each request, except those requested by the local assessing officer, for a letter ruling to be issued pursuant to § 58.1-203 , Code of Virginia, or for an advisory opinion issued pursuant to §§ 58.1-3701 or 58.1-3983.1 , Code of Virginia; $50 for each request for an offer in compromise with respect to doubtful collectability authorized by § 58.1-105 , Code of Virginia; and $100 for each request for permission to change a corporation’s filing method pursuant to § 58.1-442 , Code of Virginia.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 V 2, effective for the biennium ending June 30, 2022, provides: “The Tax Commissioner shall have the authority to waive such fees. Waivers shall be granted only if the Tax Commissioner finds that such fee creates an unreasonable burden on the person making such request. All requests for waiver shall be submitted to the Tax Commissioner in writing.”

§ 58.1-105.1. Certified mail; subsequent mail or notices may be sent by regular mail.

Whenever in this title the Commissioner or the Department is required to send any mail or notice by certified mail and such mail or notice is sent certified mail, return receipt requested, then any subsequent, identical mail or notice that is sent by the Commissioner or the Department may be sent by regular mail.

History. 2011, c. 566.

§ 58.1-106. Tax Commissioner authorized to make reproductions of tax documents.

Notwithstanding any other provision of law, the Tax Commissioner may cause all or any part of the state tax returns, correspondence, documents, forms, statements, reports or working papers kept by or in the possession of the Department to be reproduced. As used in this title, the term “reproduction” shall be deemed to include photographs, microphotographs, microfilm, microcard, printouts, optical imaging or other reproductions of electronically stored data, or any other reproduction of an original from a process which forms a durable medium for its recording, storing, and reproducing.

History. Code 1950, § 58-48.1; 1972, c. 350; 1984, c. 675; 1985, c. 204; 1999, c. 103.

The 1999 amendment inserted “correspondence, documents, forms, statements, reports or working papers” in the first sentence and inserted “optical imaging” in the second sentence.

§ 58.1-107. Destruction of original documents so reproduced; destruction of other returns, reports, etc.

Whenever reproductions have been made pursuant to § 58.1-106 and provision has been made for preserving, examining and using the same, the Tax Commissioner may, notwithstanding any other provisions of law, cause the original tax returns, correspondence, documents, forms, statements, reports or working papers so reproduced, or any part thereof, to be destroyed. All other records of the Department may be destroyed after three years upon order of the Tax Commissioner.

History. Code 1950, § 58-48.2; 1972, c. 350; 1981, c. 73; 1984, c. 675; 1985, c. 204; 1999, c. 103.

The 1999 amendment, in the first sentence, inserted “original” preceding “tax returns” and inserted “correspondence, documents, forms, statements, reports or working papers,” and substituted “records” for “returns, reports and working papers” in the second sentence.

§ 58.1-108. Admissibility of reproductions of documents in evidence.

A reproduction or enlargement of any tax return, correspondence, document, form, statement, report or working paper, when duly attested by the Tax Commissioner, shall be received as evidence in any court or other proceeding for any purpose for which the original could be received without proof of the official character or the person whose name is signed thereto. The introduction of a reproduced tax return, correspondence, document, form, statement, report or working paper or of an enlargement thereof shall not preclude admission of the original.

History. Code 1950, § 58-48.3; 1972, c. 350; 1984, c. 675; 1999, c. 103.

The 1999 amendment inserted “correspondence, document, form, statement, report or working paper” in the first and second sentences.

§ 58.1-109. Compliance with subpoena, etc., requiring production of confidential returns.

The Tax Commissioner and each employee of the Department, when served with any summons, subpoena, subpoena duces tecum or order, directing him to produce any confidential tax returns kept by or in the possession of the Department, may comply therewith by certifying a reproduction or enlargement thereof in accordance with § 58.1-108 and mailing such reproduction or enlargement in a sealed envelope to the clerk of court. Such envelope shall not be opened unless and until a judge of such court determines that the information contained therein is of such importance that the ends of justice require that the secrecy and confidentiality of such returns be violated and no reproduction of said returns shall be allowed by the court. Unless otherwise directed by a judge of such court, the clerk shall return all such reproductions and enlargements to the Department after the entry of a final order in the case. A charge not exceeding one dollar per page may be made for each such copy and shall be paid by the party requesting such order. Upon good cause shown, any court may direct the Tax Commissioner or any employee of the Department to appear in person, notwithstanding any other provision of this section.

History. Code 1950, § 58-48.4; 1972, c. 350; 1984, c. 675.

Research References.

Bryson on Virginia Civil Procedure (Matthew Bender). Chapter 9. Discovery. § 9.04 Privileges against discovery, et seq. Bryson.

§ 58.1-110. Effect of Tax Commissioner’s affidavit as evidence.

In any judicial proceeding, civil or criminal, involving any tax administered by the Department, a duly executed affidavit by the Tax Commissioner may be accepted by the court as prima facie evidence as to whether or not a tax return has been filed or the tax has been paid.

History. Code 1950, § 58-48.5; 1972, c. 350; 1984, c. 675.

§ 58.1-111. Taxpayer refusing to file return; estimated tax.

Whenever any taxpayer liable under the law to file a state tax return with the Department shall fail or refuse on demand to file a correct and proper return, the Department may make an estimate of the amount of taxes due the Commonwealth by such taxpayer, from any information in its possession, and assess the taxes, penalties and interest due the Commonwealth by such taxpayer.

History. Code 1950, § 58-40; 1984, c. 675.

§ 58.1-112. Return filing frequency; waiver of penalties.

1. In the case of any return or payment for a tax administered by the Department that is required to be filed or paid more often than annually, the Tax Commissioner shall have the authority to set thresholds or other conditions in which such returns or payments for all or any class of taxpayers may be filed or paid less frequently, but at least annually.
2. The Tax Commissioner shall have the authority to waive penalties and grant extensions of time to file a return or pay a tax, or both, to any class of taxpayers when the Tax Commissioner in his discretion finds that the normal due date has caused, or would cause, undue hardship to the class of taxpayers because of a natural disaster or other reason.
3. The Tax Commissioner shall have the authority to waive interest for any class of taxpayers when the Tax Commissioner in his discretion finds that imposing interest has caused, or would cause, undue hardship to the class of taxpayers because of a natural disaster or other reason. The Tax Commissioner may grant a waiver of interest only to the extent that the Governor declares a state of emergency to exist in the Commonwealth pursuant to subdivision (7) of § 44-146.17 with respect to such natural disaster or other reason.
4. Any action of the Department under this section shall be exempt from the Administrative Process Act and the Virginia Register Act, but the Department shall preserve the reason for its action among its records. The Department shall promulgate its action in a manner that is reasonably calculated to inform the affected class of the action.

History. 1996, cc. 640, 655; 2021, Sp. Sess. I, c. 536.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 536, effective April 7, 2021, substituted “has caused, or would cause” for “has, or would, cause” in subsection B; and added a new subsection C and redesignated former subsection C as subsection D.

§ 58.1-113. Nonprofit hospitals to provide returns and information to the Department.

Any hospital described under § 501(c) of the U.S. Internal Revenue Code of 1986, as amended, shall provide to the Department of Taxation a copy of the hospital’s federal 990 or 990-EZ tax form (or the successor form to such form) that was filed with the Internal Revenue Service for the relevant year. Such hospital shall provide the copy to the Department within 30 days following the filing of the federal 990 or 990-EZ tax form with the Internal Revenue Service. In addition, such hospital shall provide to the Department a copy of any interim tax form, report, or return that the hospital filed with or provided to the Internal Revenue Service for the relevant year pursuant to Title 26 of the United States Code or the rules and regulations thereunder. The copy of the interim tax form, report, or return shall be provided to the Department within 30 days following the filing of the same with, or the providing of the same to, the Internal Revenue Service.

History. 2007, c. 746.

§ 58.1-200. Tax Commissioner.

The Tax Commissioner shall be appointed by the Governor, subject to confirmation by the General Assembly, if in session when such appointment is made, and, if not in session, then at its next succeeding session. He shall hold office at the pleasure of the Governor for a term coincident with that of each governor making the appointment, or until his successor shall be appointed and qualified. Vacancies shall be filled in the same manner as original appointments are made. No person shall be appointed Tax Commissioner unless he is a person of proved executive ability and knowledge of taxation. He shall devote his full time to his duties and shall receive such compensation for his services as provided by law.

History. Code 1950, § 58-28; 1976, c. 728; 1984, cc. 675, 720.

Editor’s note.

Acts 2021, Sp. Sess. I, c. 414, cl. 1, provides: “That the Department of Taxation shall, with input from affected stakeholders, analyze the prospect of establishing an online portal for tax practitioners who possess a valid Power of Attorney and Declaration of Representative form to access confidential client information. In its analysis, the Department shall evaluate (i) comparable services offered by the Internal Revenue Service or by other states that provide electronic access to confidential taxpayer information and (ii) cybersecurity concerns associated with providing such services. The Department shall identify the estimated costs associated with creation of such a portal and report its findings and recommendations to the Chairmen of the House Committee on Appropriations, House Committee on Finance, and Senate Committee on Finance and Appropriations no later than December 1, 2021.”

Law Review.

For article on Virginia tax procedures, see 38 Wash. & Lee L. Rev. 1115 (1981).

§ 58.1-201. Oath and bond.

Before entering upon the discharge of his duties, the Tax Commissioner shall take an oath that he will faithfully and honestly execute the duties of the office during his continuance therein, and he shall be bonded in accordance with § 2.2-1840 , conditioned upon the faithful discharge of his duties.

History. Code 1950, § 58-29; 1984, c. 675; 2021, Sp. Sess. I, c. 152.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 152, effective July 1, 2021, substituted “be bonded in accordance with § 2.2-1840 ” for “give bond in such amount as may be fixed by the Governor” in the first sentence, and deleted the second sentence, which read: “The premium on such bond shall be paid out of the moneys appropriated to the Department.”

§ 58.1-202. General powers and duties of Tax Commissioner.

In addition to the powers conferred and the duties imposed elsewhere by law upon the Tax Commissioner, he shall:

1. Supervise the administration of the tax laws of the Commonwealth, insofar as they relate to taxable state subjects and assessments thereon, with a view to ascertaining the best methods of reaching all such property, of effecting equitable assessments and of avoiding conflicts and duplication of taxation of the same property.
2. Recommend to the Governor and the General Assembly measures to promote uniform assessments, just rates and harmony and cooperation among all officials connected with the revenue system of the Commonwealth.
3. Exercise general supervision over all commissioners of the revenue so far as the duties of such officers pertain to state revenues, and confer with, instruct and advise all such officers in the performance of their duties to the extent stated.
4. Investigate at any time the assessment and collection of state taxes in any county or city and when the assessment is found unreasonable and unjust take steps to correct the same in the manner provided by law.
5. Institute proceedings by motion in writing in the proper court for the removal or suspension of commissioners of the revenue for incompetency, neglect or other official misconduct and order the Comptroller to withhold compensation from any commissioner of the revenue who fails to comply with any law governing the duties or any lawful instruction of the Tax Commissioner, until such commissioner of the revenue complies with such law or instruction.
6. Provide commissioners of the revenue with information and assistance in the assessment of personal property, including the maintenance of a reference library and the conduct of instructional programs.
7. Prescribe the forms of books, schedules and blanks to be used in the assessment and collection of state taxes and call for and prescribe the forms of such statistical reports, notices and other papers as he may deem necessary to the proper administration of the law, and prescribe and install uniform systems to be used by assessing officials.
8. Direct such proceedings, actions and prosecutions to be instituted as may be needful to enforce the revenue laws of the Commonwealth and call on the Attorney General or other proper officer to prosecute such actions and proceedings.
9. Intervene, by petition or otherwise, whenever deemed advisable in any action or proceeding pending in any court wherein the constitutionality or construction of any state tax or revenue statute or the validity of any state tax is in question. The court wherein such action or proceeding is pending may, by order entered therein, make the Tax Commissioner a party thereto whenever deemed necessary.
10. Upon request by any local governing body, local board of equalization or any ten citizens and taxpayers of the locality, render advisory aid and assistance to such board in the matter of equalizing the assessments of real estate and tangible personal property as among property owners of the locality.
11. Annually make available to every county and city and, where appropriate, towns, a general reassessment procedures manual which provides the legal requirements for conducting general reassessments, and guidelines suggesting the broad range of factors in addition to market data that are appropriate for consideration in the determination of fair market value of both rural and urban land and structures.
12. Issue an annual report to the members of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance and Appropriations detailing procedures used in the collections process and how the Virginia Taxpayer Bill of Rights (§ 58.1-1845 ) is implemented to assist with such collections.
13. Ensure that employees of the Department are not paid, evaluated, or promoted on the basis of the amount of assessments or collections from taxpayers.
14. Issue an annual report to the members of the General Assembly and post such report on the Department’s website that details the total amount of corporate income tax relief provided in the Commonwealth during the second preceding tax year. The report shall (i) include the total dollar amount of income tax subtractions, deductions, exclusions, and exemptions claimed cumulatively by corporations; (ii) identify all tax credits claimed; (iii) provide an analysis of the fiscal impact of the corporate tax relief; and (iv) provide summary information regarding the types of taxpayers who claim the tax relief. The report shall also provide information on the number of companies that have qualified for the major business facility job tax credit established under § 58.1-439 and the amount of such credits. The report shall be submitted by October 1 of each year.
15. Obtain information from each income tax taxpayer as to whether the taxpayer claimed a federal earned income tax credit and the amount claimed, unless such information can be calculated based on other information in the taxpayer’s return.

History. Code 1950, §§ 58-33, 58-33.4; 1980, c. 744; 1983, c. 304; 1984, c. 675; 1996, c. 634; 2005, c. 216; 2006, cc. 159, 590; 2009, c. 24; 2010, c. 379.

Editor’s note.

Acts 2006, cc. 159 and 590, cl. 2 provides: “That in the implementation of the provisions of this act the Department of Social Services shall only provide information on customers on file with the Department to the Department of Taxation and the Department of Taxation shall only provide information on taxpayers who have claimed the federal earned income tax credit for the taxable year to the Department of Social Services.”

Acts 2009, c. 797, cl. 3 provides: “That no provisions of this act or any components of this act shall affect the collection of any amounts owed to the Commonwealth for taxes administered by the Department of Taxation.”

Acts 2018, c. 343, cl. 1 provides: “§ 1. The Tax Commissioner of the Department of Taxation shall take such steps as are necessary for Virginia to become an associate member of the Multistate Tax Commission without payment of any membership fees, and shall participate in available Multistate Tax Commission discussions and meetings concerning model legislation and uniform tax policies that could affect the Commonwealth.”

Acts 2018, c. 625, cl. 1 provides: “§ 1. The Department of Taxation shall reestablish an accelerated refund program for Virginia taxpayers filing income tax returns in person or via the United States mail with a local commissioner of the revenue for taxable years beginning on and after January 1, 2018. Such program shall be similar to the program discontinued on December 1, 2016.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 J 2, effective for the biennium ending June 30, 2022, provides: “Notwithstanding the provisions of § 58.1-202 , Code of Virginia, no report detailing the total amount of corporate income tax relief provided in Virginia shall be required after the completion of such report due on October 1, 2013. The Department of Taxation shall satisfy the requirement of § 58.1-202 that it issue an annual report detailing the total amount of corporate income tax relief provided in Virginia by publishing its Annual Report on its website.”

The Virginia Code Commission authorized the substitution of “House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance and Appropriations” for “House Appropriations Committee, the House Finance Committee, and the Senate Finance Committee” in subdivision 12. March 10, 2021.

The 2005 amendments.

The 2005 amendment by c. 216 added subdivision 14.

The 2006 amendments.

The 2006 amendments by cc. 159 and 590 are nearly identical, and added subdivision 15. Subdvision 15 has been set out in the form above at the direction of the Virginia Code Commission.

The 2009 amendments.

The 2009 amendment by c. 24, in subdivision 14, deleted the former next-to-last sentence, which read: “A preliminary report shall be submitted by December 1, 2006, and each year thereafter” and rewrote the last sentence.

The 2010 amendments.

The 2010 amendment by c. 379, in subdivision 14, substituted “General Assembly and post such report on the Department’s website that details” for “House Appropriations Committee, the House Finance Committee, and the Senate Finance Committee detailing,” added clause (iv), and made a related change.

Michie’s Jurisprudence.

For related discussion, see 18 M.J. Taxation, § 70.

§ 58.1-202.1. Payment of taxes by electronic funds transfer.

1. In accordance with the limitations contained in subsection B, the Tax Commissioner shall have the authority to require, consistent with the cash management policies of the Department of Treasury and the Department of Accounts, taxpayers subject to the taxes imposed pursuant to Articles 10 (§ 58.1-400 et seq.) and 16 (§ 58.1-460 et seq.) of Chapter 3 of this title and Chapter 6 (§ 58.1-600 et seq.) of this title to remit taxes by electronic funds transfer. Electronic funds transfer shall be made by automated clearinghouse debit transactions; however, the Tax Commissioner may authorize the use of any other means which ensures the availability of such funds to the Commonwealth on or before the due date of the tax.
2. A taxpayer required to remit any of the taxes enumerated in subsection A of this section shall be required to remit such taxes by electronic funds transfer if the average monthly liability for such taxes exceeds $20,000. The $20,000 threshold will apply to each of the taxes on a separate basis. The Tax Commissioner shall promulgate guidelines to determine eligibility criteria and periods. In developing such guidelines, the Department shall seek the counsel of interested groups including tax practitioners and representatives of the business community.
3. All persons who act on a taxpayer’s behalf to remit the tax imposed pursuant to Article 16 (§ 58.1-460 et seq.) of Chapter 3 of this title shall be required to remit such withholding by electronic funds transfer if the payment of individual income tax withholding is made on behalf of 100 or more taxpayers. For the purposes of this subsection, electronic funds transfer shall be made by automated clearinghouse credit payment transactions; however, the Tax Commissioner may authorize the use of any other means that ensures the availability of such funds to the Commonwealth on or before the due date of the tax.

History. 1996, cc. 370, 449; 1997, c. 193; 2003, cc. 36, 39.

Editor’s note.

Acts 2018, c. 344, cl. 1 provides: “§ 1. The Department of Taxation (Department) and the Virginia Employment Commission (Commission) shall consider the feasibility of permitting taxpayers to submit tax reports and payments electronically for both the Virginia Employment Commission and the Department of Taxation using a single sign-on. The Department and the Commission shall also consider the feasibility, merits, and costs of developing and implementing an identity management system or retaining a contractor to do so.”

The 2003 amendments.

The 2003 amendments by cc. 36 and 39, effective July 1, 2004, are identical, and added subsection C.

§ 58.1-202.2. Public-private partnerships; Public Private Partnership Oversight Committee.

1. The Tax Commissioner is hereby authorized through the Department of General Services in accordance with the Virginia Public Procurement Act to enter into public-private partnership contracts to finance agency technology needs. The Tax Commissioner may issue a request for information to seek out potential private partners interested in providing programs pursuant to an agreement under this section. The compensation for such services shall be computed with reference to and paid from the increased revenue attributable to the successful implementation of the technology program for the period specified in the contract.
2. The Public Private Partnership Oversight Committee, hereinafter referred to as the “Committee” is established as an advisory committee in the executive branch of state government to review and approve the terms of contracts under this section relating to the measurement of the revenue attributable to the technology program. The Committee shall consist of five members as follows: one legislative employee appointed by the Senate Committee on Rules after the consideration of the recommendation of the President pro tempore of the Senate, if any; one legislative employee appointed by the Speaker of the House of Delegates; and the State Comptroller, the Director of the Department of Planning and Budget, and the State Inspector General, as ex officio voting members. All members shall be citizens of the Commonwealth.Ex officio members shall serve terms coincident with their terms of office. Legislative employee members shall be appointed for a term of two years and may be reappointed for successive terms. Appointments to fill vacancies, other than by expiration of a term, shall be for the unexpired terms. Vacancies shall be filled in the same manner as the original appointments.The Tax Commissioner shall preside over the meetings of the Committee. The Committee may select an alternative to preside in the absence of the Tax Commissioner. A majority of the members shall constitute a quorum. The meetings of the Committee shall be held at the call of the Tax Commissioner or whenever the majority of the members so request.The Tax Commissioner shall submit an annual executive summary and report no later than November 30 to the Governor and General Assembly on all agreements under this section, describing each technology program, its progress, revenue impact, and such other information as may be relevant. The executive summary and report shall be submitted as provided in the procedures of the Division of Legislative Automated Systems for the processing of legislative documents and reports and shall be posted on the General Assembly’s website.
3. The Tax Commissioner shall determine annually the total amount of increased revenue attributable to the successful implementation of a technology program under this section and such amount shall be deposited in a special fund known as the Technology Partnership Fund (the Fund). The Tax Commissioner is authorized to use moneys deposited in the Fund to pay private partners pursuant to the terms of contracts under this section. All moneys in excess of that required to be paid to private partners, as determined by the Department, shall be reported to the Comptroller and transferred to the appropriate general or nongeneral fund.

History. 1996, cc. 643, 653; 2004, c. 1000; 2011, cc. 798, 871.

Editor’s note.

Acts 2003, cc. 24 and 52, cl. 2 provides: “Notwithstanding §§ 2.2-4309 and 58.1-202.2 of the Code of Virginia, the Tax Commissioner is hereby authorized to contract for all goods and services related to the conduct of an amnesty program as an enlargement of the scope and cost of the public/private partnership contract authorized by § 58.1-202.2 . The conduct of an amnesty program shall be defined as a ‘technology need,’ which term shall include any costs associated with the adjustment to the schedule for existing technology projects as a consequence of the conduct of the amnesty program.”

Acts 2003, cc. 24 and 52, cl. 3 provides: “That any enlargement of the scope and cost of the public/private partnership contract authorized by § 58.1-202.2 of the Code of Virginia, as described in the second enactment, shall be reported in writing to the Chairmen of the Senate Finance and House Appropriations Committees prior to execution of said contract revision or such enlargement of such scope and cost of the public/private partnership.”

Acts 2011, cc. 798 and 871, cl. 7 provides: “That the provisions of this act shall become effective on July 1, 2012, except that the provisions of the fifth enactment of this act shall become effective on July 1, 2011.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 281 B, effective for the biennium ending June 30, 2022, provides: “Notwithstanding the provisions of § 58.1-202.2 , Code of Virginia, no report on public-private partnership contracts shall be required in years following the final report upon the completion of contract or when no such contract is active.”

The 2004 amendments.

The 2004 amendment by c. 1000 rewrote subsection B.

The 2011 amendments.

The 2011 amendments by cc. 798 and 871, effective July 1, 2012, are identical, and substituted “State Inspector General” for “State Internal Auditor” in the first paragraph in subsection B.

§ 58.1-202.3. Fillable tax forms.

The Tax Commissioner shall ensure that all required state tax forms are fillable forms in a portable document format for taxable periods beginning on and after January 1, 2012, and are available on the Department of Taxation’s website. The Tax Commissioner shall begin making fillable forms available no later than January 1, 2012, and shall make all fillable forms available no later than March 1, 2013.

The Tax Commissioner shall develop guidelines for using such forms and publish them on the Department’s website.

Nothing in this section shall replace, supersede, modify, duplicate, or compete with the Virginia Free File program in its provision of online interactive tax software and filing products and services for Virginia taxpayers.

History. 2011, c. 680.

Editor’s note.

Acts 2020, c. 1289, Item 283 C, as amended by Acts 2021, Sp. Sess. I, c. 552, effective for the biennium ending June 30, 2022, provides: “Notwithstanding any other provision of law, the requirement that the Department of Taxation print and distribute local tax forms, instructions, and property tax books shall be satisfied by the posting of such documents on the department’s web site.”

§ 58.1-203. Regulations and rulings.

1. The Tax Commissioner shall have the power to issue regulations relating to the interpretation and enforcement of the laws of this Commonwealth governing taxes administered by the Department. Such regulations shall not be inconsistent with the Constitutions and applicable laws of this Commonwealth and of the United States. Such regulations shall take precedence over any rules or regulations of the Secretary of the Treasury of the United States or his delegate which are in conflict therewith.
2. In promulgating regulations, the Tax Commissioner shall follow the applicable provisions of the Administrative Process Act (§ 2.2-4000 et seq.), except that notice of a proposed regulation shall appear at least sixty days in advance of the date prescribed for submittals. The Tax Commissioner may prescribe the extent, if any, to which any ruling or regulation shall be applied without retroactive effect.
3. Rulings in individual cases shall not be subject to the Administrative Process Act.

History. Code 1950, § 58-48.6; 1980, c. 633; 1983, c. 551; 1984, c. 675.

Editor’s note.

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 V 1, effective for the biennium ending June 30, 2022, provides: “Notwithstanding any other provision of law, effective July 1, 2017, the Department of Taxation shall charge a fee of $275 for each request, except those requested by the local assessing officer, for a letter ruling to be issued pursuant to § 58.1-203 , Code of Virginia, or for an advisory opinion issued pursuant to §§ 58.1-3701 or 58.1-3983.1 , Code of Virginia; $50 for each request for an offer in compromise with respect to doubtful collectability authorized by § 58.1-105 , Code of Virginia; and $100 for each request for permission to change a corporation’s filing method pursuant to § 58.1-442 , Code of Virginia.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 V 2, effective for the biennium ending June 30, 2022, provides: “The Tax Commissioner shall have the authority to waive such fees. Waivers shall be granted only if the Tax Commissioner finds that such fee creates an unreasonable burden on the person making such request. All requests for waiver shall be submitted to the Tax Commissioner in writing.”

Law Review.

For article on Virginia tax procedures, see 38 Wash. & Lee L. Rev. 1115 (1981).

§ 58.1-204. Publication of rulings, decisions, orders and regulations.

1. The Department shall publish the following documents:
   1. Regulations finally adopted by the Tax Commissioner as provided in § 58.1-203 ;
   2. Orders of the Tax Commissioner under §§ 58.1-1822 and 58.1-1824 ;
   3. Final orders entered by a circuit court under § 58.1-1826 or 58.1-1827 , and any written opinion or memorandum of the court;
   4. Tax bulletins, guidelines, and any written ruling or other interpretation of Virginia law which the Tax Commissioner believes may be of interest to taxpayers and practitioners.
2. Notwithstanding § 58.1-4 or any other provision of law, the Tax Commissioner may publish the documents described above with such changes of name, alterations and deletions as he deems necessary to preserve privileged taxpayer information.
3. For purposes of this section, documents shall be deemed to be published if they are (i) compiled at regular intervals not exceeding three months, (ii) made available for inspection and copying at the Department, and (iii) published on the Department’s website as the Tax Commissioner deems necessary to inform taxpayers and practitioners.

History. Code 1950, § 58-48.7; 1980, c. 633; 1984, c. 675; 2011, c. 800.

Editor’s note.

Acts 2011, c. 800, cl. 2 provides: “That the provisions of this act shall be effective in proceedings commenced on or after July 1, 2011.”

The 2011 amendments.

The 2011 amendment by c. 800, in subdivision A 4, inserted “Tax bulletins, guidelines, and” and made a related change; and in subsection C, added the clause (i) through (iii) designations, and in the latter, substituted “published on the Department’s website” for “distributed to such national and state tax services and other publications.” For applicability clause, see Editor’s note.

§ 58.1-205. Effect of regulations, rulings, etc., and administrative interpretations.

In any proceeding relating to the interpretation or enforcement of the tax laws of this Commonwealth, the following rules shall apply:

1. Any assessment of a tax by the Department shall be deemed prima facie correct.
2. Any regulation promulgated as provided by subsection B of § 58.1-203 shall be sustained unless unreasonable or plainly inconsistent with applicable provisions of law.
3. Rulings issued in conformity with § 58.1-203 , tax bulletins, guidelines, and other documents published as provided in § 58.1-204 , and guidance documents listed in the Virginia Register of Regulations as provided in § 2.2-4103.1 shall be accorded judicial notice.
4. In any proceeding commenced under § 58.1-1821 , 58.1-1824 or 58.1-1825 , rulings and administrative interpretations other than those described in subdivisions 2 and 3 shall not be admitted into evidence and shall be accorded no weight, except that an assessment made pursuant to any such ruling or interpretation shall be entitled to the presumption of correctness specified in subdivision 1.

History. Code 1950, § 58-48.8; 1980, c. 633; 1984, c. 675; 2011, c. 800; 2017, c. 488.

Editor’s note.

Acts 2011, c. 800, cl. 2 provides: “That the provisions of this act shall be effective in proceedings commenced on or after July 1, 2011.”

The 2011 amendments.

The 2011 amendment by c. 800 rewrote subdivision (3), which read: “Rulings issued in conformity with § 58.1-203 and published as provided in § 58.1-204 , shall be accorded judicial notice”; and combined former subdivisions (4) and (5), deleting the subdivision (5) designation, and rewriting subdivision (4). For applicability clause, see Editor’s note.

The 2017 amendments.

The 2017 amendment by c. 488 substituted “§ 2.2-4103 .1” for “§§ 2.2-4008 and 2.2-4103 ” in subdivision 3.

Law Review.

For annual survey article, “Taxation,” see 46 U. Rich. L. Rev. 203 (2011).

Michie’s Jurisprudence.

For related discussion, see 18 M.J. Taxation, § 70.

§ 58.1-206. Continuing education program for assessing officers and boards of equalization.

There shall be established within the Department a program of continuing education for county, city and town officers responsible for the assessment of real estate, and for members and prospective members of boards of assessors and boards of equalization. Such program shall be composed of basic courses embodying the fundamental instruction essential for the equitable assessment of real estate or tangible personal property and an advanced course designed basically to meet the requirements for full certification by the International Association of Assessing Officers. Such assessing officers and board members attending shall be reimbursed for the actual expenses incurred by their attendance at such program.

History. Code 1950, § 58-33.1; 1975, c. 616; 1979, cc. 576, 577; 1984, c. 675.

Cross references.

For continuing education requirement for members of board of equalization, see § 58.1-3374 .

Law Review.

For article on Virginia tax procedures, see 38 Wash. & Lee L. Rev. 1115 (1981).

§ 58.1-207. Collection and publication of property tax data.

1. The Tax Commissioner annually shall make and issue comprehensive assessment sales ratio studies for each major class of real property in each county or city in the Commonwealth. In order to determine the degree of assessment uniformity in the assessment of major classes of property within each county or city, the Tax Commissioner shall compute measures of central tendency and dispersion in accordance with appropriate standard statistical techniques.
2. The Tax Commissioner shall construct and maintain a system for the collection and analysis of real property tax facts so as to enable him to make intrajurisdictional comparisons as well as intercounty and intercity comparisons based on assessment sales ratio data.
3. The Tax Commissioner shall publish annually the findings of the assessment sales ratio studies.
4. The appropriate county or city assessing officer shall post annually in his office the assessment sales ratio studies as published by the Tax Commissioner.

History. Code 1950, § 58-33.2; 1975, c. 617; 1984, c. 675.

Law Review.

For survey of Virginia law on taxation for the year 1974-1975, see 61 Va. L. Rev. 1849 (1975).

§ 58.1-208. Classifications of real property.

The Tax Commissioner shall establish a classification system of real property appropriate for inclusion on local land books. Such classification shall be placed on the local land books or the land books shall be organized in a manner appropriate for identification of the classifications by the Tax Commissioner in conducting the annual sales ratio studies. The local assessing officer of any county, city, or town may subdivide such classifications into lesser included classifications should he deem such subclassification desirable.

The Tax Commissioner shall cooperate with and seek the counsel of local assessing officers in establishing such classification system.

History. Code 1950, § 58-33.3; 1975, c. 623; 1984, c. 675.

Editor’s note.

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 283 B, effective for the biennium ending June 30, 2022, provides: “In the expenditure of funds out of its appropriations for determination of true values of locally taxable real estate for use by the Board of Education in state school fund distributions, the Department of Taxation shall use a sufficiently representative sampling of parcels, in accordance with the classification system as established in § 58.1-208 , Code of Virginia, to reflect actual true values; further, the department shall, upon request of any local school board, review its initial determination and promptly inform the Board of Education of corrections in such determination.”

Law Review.

For survey of Virginia law on taxation for the year 1974-1975, see 61 Va. L. Rev. 1849 (1975).

§ 58.1-209. Disclosure of social security account numbers.

Notwithstanding any other provision of law, the Department may require disclosure of the social security account number of a taxpayer for any purpose relating to taxes administered by the Department, including verification of the identity of any individual. Such numbers shall be regarded as confidential tax information pursuant to the provisions of § 58.1-3 .

History. Code 1950, § 58-46.3; 1976, c. 663; 1984, c. 675.

§ 58.1-210. Publication showing rates of local levies.

The Department shall annually publish a pamphlet giving the then current rates of local levies. Every tax assessing officer of a county, city or town shall send to the Department, on forms to be prescribed and furnished by the Department, the information as to his county, city or town necessary to enable the Department to publish such pamphlet. Such information shall be so furnished by such tax assessing officers as soon as it is available after request by the Department. If any such assessing officer fails, without good cause, to furnish the same to the Department, on demand, he shall be guilty of nonfeasance in office. The Department shall furnish to any taxpayer, upon application in writing, a copy of such pamphlet so published.

History. Code 1950, § 58-47; 1984, c. 675.

§ 58.1-211. Department to advise Comptroller of amounts to be charged state collecting officers.

Whenever the Department has information concerning amounts properly chargeable to any collecting or receiving officer by reason of the fact that such collecting officer has been delivered an assessment of state taxes for collection, or otherwise, the Department shall as soon as practicable advise the Comptroller thereof so that he may make the proper entries in his books.

History. Code 1950, § 58-48; 1984, c. 675.

§ 58.1-212. Office of Tax Commissioner; sessions and investigations elsewhere.

The office of the Tax Commissioner shall be in the City of Richmond and suitable space shall be provided by the Governor for its offices. The Tax Commissioner, however, may hold sessions and conduct investigations and hearings at any other place when necessary for the proper performance of the duties prescribed by law.

History. Code 1950, § 58-32; 1960, c. 339; 1984, c. 675.

§ 58.1-213. Assistants and clerks.

The Tax Commissioner may, subject to the provisions of the Virginia Personnel Act (§ 2.2-2900 et seq.), employ and remove such assistants and clerks as may from time to time be necessary, prescribe their duties and fix their compensation.

History. Code 1950, §§ 58-30, 58-441.42; 1966, c. 151; 1984, c. 675.

§ 58.1-214. Promulgation and distribution of tax forms.

To ensure a full collection and accounting for all taxes administered by the Department, it shall design, prepare, print and, upon request, distribute all forms and instructions necessary for filing any return required by this subtitle. In addition, all instructions shall include, in bold type, the address and telephone number of the Department of Taxation and, if available, its e-mail and Internet addresses.

The failure of a taxpayer to receive or procure such forms or instructions shall not, however, relieve such taxpayer from the payment of the tax at the time and in the manner prescribed by law.

History. Code 1950, § 58-441.44; 1966, c. 151; 1984, c. 675; 1996, c. 316.

Editor’s note.

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 I, effective for the biennium ending June 30, 2022, provides: “Notwithstanding the provisions of § 58.1-214 , Code of Virginia, the department shall not be required to mail its forms and instructions unless requested by a taxpayer or his representative.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 O, effective for the biennium ending June 30, 2022, provides: “Notwithstanding any provision of the Code of Virginia or this act to the contrary, the Department of Taxation is authorized to provide Form 1099 in an electronic format to taxpayers. The Tax Commissioner shall ensure that taxpayers may elect to receive the electronic version of the form.”

§ 58.1-215. Charge for sale of publications.

The Tax Commissioner is authorized to impose a charge for the sale of reprints of this title, or portions thereof, for copies of rules and regulations promulgated by the Tax Commissioner and for other publications of the Department. Receipts from such sales shall be credited to the Department for reimbursement of printing expenses. No charge shall be made for state tax forms or instructions.

History. Code 1950, §§ 58-31, 58-441.44; 1966, c. 151; 1972, c. 291; 1973, c. 281; 1984, c. 675.

§ 58.1-216. Writs, notices, processes, and orders.

1. The Tax Commissioner may, in all matters within his jurisdiction, award and issue and have served, executed and returned any writ, notice, process, order or order of publication which may by law be awarded, issued, served, executed or returned by or to any court in this Commonwealth for the purpose of compelling the attendance of witnesses, the production of books and papers and the enforcement and execution of his findings, orders and judgments. Such a summons to any witness or to produce any document may be personally served by an employee of the Department or served in the manner provided by § 58.1-217 .  But all memoranda of liens for the collection of taxes shall issue under the provisions of § 58.1-1805 or § 58.1-1806 .
2. Any person summoned as a witness, or summoned to produce books and papers, or both, who fails or refuses to attend, or to produce such books and papers, or both, may be proceeded against in the circuit court of the city or of the county in which such person resides by a rule or attachment issued on motion of the Tax Commissioner in the name of the Commonwealth to compel such person to attend as a witness, or to produce such books and papers, or both, at such time and place as may be designated by the court.
3. The Tax Commissioner and such other officers or employees of the Department as the Tax Commissioner may authorize in writing may administer oaths in the performance of their duties.

History. Code 1950, §§ 58-35, 58-36, 58-426; 1952, c. 414; 1960, c. 508; 1984, c. 675; 1992, c. 763.

§ 58.1-217. Form of writs, processes and orders; how served.

All writs, processes and orders of the Tax Commissioner shall run in the name of the Commonwealth, shall be signed by the Tax Commissioner, and shall be directed to the sheriff or constable of the county or city wherein such writ, process or order is to be executed. All writs, notices, processes or orders of the Tax Commissioner may be executed and returned in like manner and upon like persons or property as the processes, writs, notices or orders of the courts of record of this Commonwealth and when so served, executed and returned shall have the same legal effect. The officer serving or executing any writ, notice, process or order of the Tax Commissioner shall receive the same fees allowed by law for the like services to sheriffs of the counties and cities. Any officer who fails to execute and return any writ, process, notice or order of the Tax Commissioner shall be subject to the same penalties provided by law for the failure to execute and return the process of any court, which penalties, after due notice to the officer so failing, may be enforced by the judgment of the Tax Commissioner.

History. Code 1950, § 58-37; 1971, Ex. Sess., c. 155; 1984, c. 675.

§ 58.1-218. Fees and mileage of witnesses.

The Tax Commissioner shall make such allowances for fees and mileage of witnesses summoned before him as are allowed by law for witnesses summoned by the Commonwealth in felony cases, to be paid out of the funds at the disposal of the Tax Commissioner.

History. Code 1950, § 58-38; 1984, c. 675.

§ 58.1-219. Examination of books and records of taxpayers.

The Tax Commissioner may, in any case, in lieu of proceeding under § 58.1-216 , cause the books and records of any taxpayer containing information concerning the tax liability of such taxpayer to be examined by one of his authorized auditors or agents in order that the tax and revenue laws of the Commonwealth may be enforced; but, in any such case, if any taxpayer refuses to submit his books and records for examination, as aforesaid, the Department may proceed under § 58.1-216 .

History. Code 1950, § 58-39; 1984, c. 675.

§ 58.1-220. Waiver of time limitation on assessment of omitted or additional state taxes.

Where before the expiration of the time prescribed for the assessment of an omitted or additional state tax, both the Tax Commissioner and the taxpayer have consented in writing to its assessment after such time, the tax may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.

History. Code 1950, § 58-1162.1; 1954, c. 509; 1984, c. 675.

§ 58.1-300. Incomes not subject to local taxation.

No county, city, town or other political subdivision of this Commonwealth shall impose any tax or levy upon incomes, incomes being hereby segregated for state taxation only.

History. Code 1950, § 58-151.04; 1971, Ex. Sess., c. 171; 1984, c. 675; 1989, c. 245; 2013, c. 766.

Cross references.

As to tax Commissioner’s authority to request and share information regarding employer worker reclassification, see § 58.1-3.4 .

Editor’s note.

Acts 2003, c. 890, cl. 1 provides: Ҥ 1. Any campaign committee, political party committee, or political committee established to participate in federal elections and solicit contributions or make expenditures in Virginia in connection with a federal election or an election for office in Virginia shall be subject to requirements of Virginia law and regulations as provided herein to the same extent that Virginia campaign committees are subject to regulation under federal law.

“Any such committee shall be subject to the laws and regulations pertaining to the regulation and registration of business entities pursuant to Chapters 9 (§ 13.1-601 et seq.), 10 (§ 13.1-801 et seq.) and 12 (§ 13.1-1000 et seq.) of Title 13.1 of the Code of Virginia. The State Corporation Commission shall enforce registration and filing requirements applicable to such committees.

“Any such committee shall be subject to the laws and regulations pertaining to the taxation of the income of individuals or entities pursuant to Chapter 3 (§ 58.1-300 et seq.) of Title 58.1 of the Code of Virginia. The Virginia Department of Taxation shall enforce the application of Chapter 3 to such committees.”

The 2013 amendments.

The 2013 amendment by c. 766 deleted “Except as provided in § 58.1-540 ,” at the beginning of the section.

Law Review.

For a book review, “Rights, Costs, and the Incommensurability Problem Reviewing the Cost of Rights: Why Liberty Depends on Taxes,” see 86 Va. L. Rev. 1303 (2000).

For article, “State Income Tax Jurisdiction: A Jurisprudential and Policy Perspective,” see 45 Wm. & Mary L. Rev. 319 (2003).

Michie’s Jurisprudence.

For related discussion, see 12A M.J. Limited Liability Companies, § 53.

§ 58.1-301. Conformity to Internal Revenue Code.

1. Any term used in this chapter shall have the same meaning as when used in a comparable context in the laws of the United States relating to federal income taxes, unless a different meaning is clearly required.
2. Any reference in this chapter to the laws of the United States relating to federal income taxes shall mean the provisions of the Internal Revenue Code of 1954, and amendments thereto, and other provisions of the laws of the United States relating to federal income taxes, as they existed on December 31, 2021, except for:
   1. The special depreciation allowance for certain property provided for under §§ 168(k), 168(l), 168(m), 1400L, and 1400N of the Internal Revenue Code;
   2. The carry-back of certain net operating losses for five years under § 172(b)(1)(H) of the Internal Revenue Code;
   3. The original issue discount on applicable high yield discount obligations under § 163(e)(5)(F) of the Internal Revenue Code;
   4. The deferral of certain income under § 108(i) of the Internal Revenue Code. For Virginia income tax purposes, income from the discharge of indebtedness in connection with the reacquisition of an “applicable debt instrument” (as defined under § 108(i) of the Internal Revenue Code) reacquired in the taxable year shall be fully included in the taxpayer’s Virginia taxable income for the taxable year, unless the taxpayer elects to include such income in the taxpayer’s Virginia taxable income ratably over a three-taxable-year period beginning with taxable year 2009 for transactions completed in taxable year 2009, or over a three-taxable-year period beginning with taxable year 2010 for transactions completed in taxable year 2010 on or before April 21, 2010. For purposes of such election, all other provisions of § 108(i) of the Internal Revenue Code shall apply mutatis mutandis. No other deferral shall be allowed for income from the discharge of indebtedness in connection with the reacquisition of an “applicable debt instrument”;
   5. For taxable years beginning on and after January 1, 2019, the suspension of the overall limitation on itemized deductions under § 68(f) of the Internal Revenue Code;
   6. For taxable years beginning on and after January 1, 2017, but before January 1, 2018, and for taxable years beginning on and after January 1, 2019, the 7.5 percent of federal adjusted gross income threshold set forth in § 213(a) of the Internal Revenue Code that is used for purposes of computing the deduction allowed for expenses for medical care pursuant to § 213 of the Internal Revenue Code. For such taxable years, the threshold utilized for Virginia income tax purposes to compute the deduction allowed for expenses for medical care pursuant to § 213 of the Internal Revenue Code shall be 10 percent of federal adjusted gross income;
   7. The provisions of §§ 2303(a) and 2303(b) of the federal Coronavirus Aid, Relief, and Economic Security Act, P.L. 116-136 (2020), related to the net operating loss limitation and carryback;
   8. The provisions of § 2304(a) of the federal Coronavirus Aid, Relief, and Economic Security Act, P.L. 116-136 (2020), related to a loss limitation applicable to taxpayers other than corporations;
   9. The provisions of § 2306 of the federal Coronavirus Aid, Relief, and Economic Security Act, P.L. 116-136 (2020), related to the limitation on business interest; and
   10. For taxable years beginning before January 1, 2021, the provisions of §§ 276(a), 276(b)(2), 276(b)(3), 278(a)(2), 278(a)(3), 278(b)(2), 278(b)(3), 278(c)(2), 278(c)(3), 278(d)(2), and 278(d)(3) of the federal Consolidated Appropriations Act, P.L. 116-260 (2020), and §§ 9672(2), 9672(3), 9673(2), and 9673(3) of the federal American Rescue Plan Act, P.L. 117-2 (2021), related to deductions, tax attributes, and basis increases for certain loan forgiveness and other business financial assistance. The Department of Taxation is hereby authorized to develop procedures or guidelines for implementation of the provisions of this section, which procedures or guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.).

History. Code 1950, § 58-151.01; 1971, Ex. Sess., c. 171; 1980, c. 633; 1984, c. 675; 1994, c. 1; 2003, cc. 2, 163; 2004, c. 512; 2005, cc. 5, 26; 2006, cc. 63, 162; 2007, cc. 59, 782; 2008, cc. 1, 2; 2009, cc. 2, 3, 781; 2010, cc. 872, 874; 2011, cc. 2, 866, 890; 2012, cc. 2, 335, 480, 578; 2013, cc. 4, 693; 2014, c. 1; 2014, cc. 1, 2; 2015, cc. 1, 61; 2016, cc. 2, 19; 2017, cc. 1, 2; 2018, cc. 14, 15; 2019, cc. 17, 18; 2020, cc. 1, 255; 2021, Sp. Sess. I, cc. 117, 118, 552; 2022 3, § 1, effective February 23, 2022.

Editor’s note.

The amendment to this section by Acts 1993, c. 640, was repealed by Acts 1994, c. 1, cl. 1, effective February 15, 1994, and applicable for all taxable years beginning on and after January 1, 1993. Therefore, this section is now set out as it read prior to the 1993 amendment.

Acts 2011, cc. 2 and 866, cl. 2 provides: “That the modifications to subdivisions B 6 and B 7 of § 58.1-301 shall be retroactive to taxable years beginning on and after January 1, 2010.”

Acts 2011, cc. 2 and 866, cl. 3 provides: “That the third enactment of Chapter 874 of the Acts of Assembly of 2010 is repealed and that § 4-12.00 of such act shall not be applicable with respect to the conflict between the third enactment of such act and the provisions of this act, and that the provisions of this act shall prevail over any conflict with the third enactment of Chapter 874 of the Acts of Assembly of 2010.”

Acts 2019, cc. 17 and 18, cl. 3 provides: “That the provisions of this act amending § 58.1-301 of the Code of Virginia shall be effective only for taxable years beginning on and after January 1, 2018.”

Acts 2019, cc. 17 and 18, cl. 4 provides: “That in addition to any refund due pursuant to § 58.1-309 of the Code of Virginia, and for taxable years beginning on and after January 1, 2018, but before January 1, 2019, an individual filing a final return before July 1, 2019, or married persons filing a final joint return before July 1, 2019, shall be issued a refund out of the Taxpayer Relief Fund (the Fund) established in the fifth enactment of this act in an amount up to $110 for an individual, or $220 for married persons filing a joint return. The Governor, in consultation with the State Comptroller and the Tax Commissioner, shall certify to the General Assembly on or before September 1, 2019, the estimated amount available in the Fund for the issuance of such refunds after taking into account the amounts in the Fund necessary to fund the tax policy changes set forth in the first enactment of this act for taxable years beginning on and after January 1, 2018, but before January 1, 2019. If such estimated amount is insufficient to issue refunds of $110 for an individual, or $220 for married persons filing a joint return, then such refunds shall be reduced and prorated based on the amount of available funds. An individual shall only be allowed a refund pursuant to this enactment up to the amount of such individual’s tax liability after the application of any deductions, subtractions, or credits to which the individual is entitled pursuant to Chapter 3 ( § 58.1-300 et seq.) of Title 58.1 of the Code of Virginia. Married persons filing a joint return shall only be allowed a refund pursuant to this enactment up to the amount of such married persons’ tax liability after the application of any deductions, subtractions, or credits to which the married persons are entitled pursuant to Chapter 3 of Title 58.1 of the Code of Virginia. Any refund issued pursuant to this enactment shall be subject to collection under the provisions of the Setoff Debt Collection Act ( § 58.1-520 et seq. of the Code of Virginia). Refunds due pursuant to this enactment shall be issued on or after October 1, 2019, but before October 15, 2019.”

Acts 2019, cc. 17 and 18, cl. 5 provides: “That there is hereby established a special nonreverting fund to be known as the “Taxpayer Relief Fund” (the Fund). Any revenues generated by the individual reform provisions contained in Subtitle A of Title I and §§ 13611-13613 of the federal Tax Cuts and Jobs Act, P.L. 115-97 (2017), from the collection of taxes during Fiscal Years 2019 through 2025, estimated to be approximately $450 million annually, beyond those revenues reasonably expected to be collected due to general economic growth and absent the federal policy changes, less the estimated reduction in revenues needed to implement the tax policy changes set forth in the first enactment of this act for the relevant fiscal year, shall be transferred to the Fund. The Governor, in consultation with the State Comptroller and the Tax Commissioner, shall certify to the General Assembly on or before September 1 each year the estimated amount to be transferred to the Fund pursuant to this act. The amount certified shall take into account changes in taxpayer behavior and changes in general revenue collections unrelated to federal tax policy changes. The amount certified shall also take into account and be adjusted accordingly for additional tax policy changes adopted by the federal government after January 1, 2019, that may be reasonably expected to positively or negatively impact revenues of the Commonwealth. The General Assembly shall appropriate any revenues in the Fund to effectuate permanent or temporary tax reform measures.”

Acts 2020, cc. 1 and 255, cl. 3 provides: “That the provisions of this act shall apply to taxable years beginning on and after January 1, 2018.”

The 2003 amendments.

The 2003 amendments by cc. 2 and 163, effective February 17, 2003, and applicable to taxable years beginning on and after January 1, 2001, are virtually identical, and in subsection B, added subdivisions B 1 and B 2, and at the end of the introductory paragraph, substituted “as they existed on December 31, 2002, except for” for “as the same may be or become effective at any time or from time to time.”

The 2004 amendments.

The 2004 amendment by c. 512, effective April 12, 2004, substituted “2003” for “2002” in subsection B.

The 2005 amendments.

The 2005 amendments by c. 5, effective February 24, 2005, and c. 26, effective March 20, 2005, are identical, and substituted “January 7, 2005” for “December 31, 2003” in subsection B.

The 2006 amendments.

The 2006 amendments by c. 63, effective March 7, 2006, and c. 162, effective March 23, 2006, are identical, and substituted “December 31” for “January 7” in subsection B.

The 2007 amendments.

The 2007 amendments by c. 59, effective February 19, 2007, and c. 782, effective March 23, 2007, are identical, and substituted “December 31, 2006” for “December 31, 2005” in subsection B.

The 2008 amendments.

The 2008 amendments by c. 1, effective February 4, 2008, and by c. 2, effective February 11, 2008, are identical, and substituted “2007” for “2008” in subsection B.

The 2009 amendments.

The 2009 amendments by cc. 2 and 3, effective February 11, 2009, are identical, and in subsection B, substituted “2008” for “2007” near the end of the introductory language, and inserted “168(l), 168(m), 1400L, and 1400N” in subdivision 1.

The 2010 amendments.

The 2010 amendments by Acts 2009, c. 781, as amended by Acts 2010, c. 872, cl. 4, substituted “January 22, 2010” for “December 31, 2008” near the end of the introductory paragraph of subsection B, added subdivisions B 3 through B 7 and the concluding paragraph of subsection B, and made a minor stylistic change.

The 2011 amendments.

The 2011 amendments by Acts 2011, c. 2, effective February 16, 2011, and Acts 2011, c. 866, effective April 6, 2011, are identical, and in subsection B, substituted “December 31, 2010” for “January 22, 2010” in the introductory language, substituted “the taxable year” for “taxable year 2009” twice and added the language beginning “for transactions completed in taxable year 2009” through the end of the second sentence in subdivision 4, substituted “2011” for “2010” in subdivision 6, deleted former subdivision 7, which read: “For taxable years beginning on or after January 1, 2010, the deduction for qualified motor vehicle taxes pursuant to § 164(a)(6) of the Internal Revenue Code.” and made related changes.

The 2012 amendments.

The 2012 amendments by c. 2, effective February 7, 2012, and c. 578, effective April 4, 2012, are identical, and, in subsection B, substituted “2011” for “2010” in the introductory paragraph and in subdivision 6 and made a minor stylistic change.

The 2012 amendments by cc. 335 and 480 are identical, and in subdivision B 5, designated the former concluding language as the present second sentence, and added the language following.

The 2013 amendments.

The 2013 amendments by c. 4, effective February 15, 2013, and c. 693, effective March 21, 2013, are identical and substituted “January 2, 2013” for “December 31, 2011” near the end of the introductory paragraph of subsection B, inserted “of the Internal Revenue Code” in the second sentence of subdivision B 4, and substituted “2013” for “2012” in subdivision B 6.

The 2014 amendments.

The 2014 amendments by c. 1, effective February 5, 2014, and c. 2, effective February 20, 2014, in subdivision B 6, substituted “2018” for “2013.”

The 2015 amendments.

The 2015 amendments by c. 1, effective February 16, 2015, and c. 61, effective March 10, 2015, are identical and substituted “December 31, 2014” for “January 2, 2013” in the introductory paragraph of subsection B.

The 2016 amendments.

The 2016 amendments by c. 2, effective February 5, 2016, and c. 19, effective February 24, 2016, are identical and in subsection B, substituted “2015” for “2014”; deleted former subdivision B 6, which read “For taxable years beginning on or after January 1, 2018, the provisions of § 32(b)(3) of the Internal Revenue Code relating to the earned income tax credit”; and made related changes.

The 2017 amendments.

The 2017 amendments c. 1, effective February 3, 2017, and c. 2, effective February 13, 2017, are identical, and substituted “2016” for “2015” in subsection B.

The 2018 amendments.

The 2018 amendments by c. 14, effective February 22, 2018, and c. 15, effective February 23, 2018, are identical and in subsection B, substituted “February 9, 2018” for “December 31, 2016”; added subdivisions B 6 and 7; and made related changes. For applicability, see Editor’s note.

The 2019 amendments.

The 2019 amendments by cc. 17 and 18, effective February 15, 2019, are identical, and in subsection B, substituted “December 31, 2018” for “February 9, 2018” in the introductory paragraph, rewrote subdivision B 5 which formerly read “The amount of the deduction allowed for domestic production activities pursuant to § 199 of the Internal Revenue Code for taxable years beginning on or after January 1, 2010. For Virginia income tax purposes, two-thirds of the amount deducted pursuant to § 199 of the Internal Revenue Code for federal income tax purposes during the taxable year may be deducted for Virginia income tax purposes for taxable years beginning on and after January 1, 2010. For taxable years beginning on and after January 1, 2013, the entire amount of the deduction allowed for domestic production activities pursuant to § 199 of the Internal Revenue Code may be deducted for Virginia income tax purposes;” and deleted subdivisions B 6 and B 7 which read “6. The provisions of the Tax Cuts and Jobs Act (the Act) enacted December 22, 2017, as Public Law 115-97, provided, however, that this exception shall not apply to the following: a. Treatment of certain individuals performing services in the Sinai Peninsula of Egypt pursuant to § 11026 of the Act; b. Relief for 2016 disaster areas pursuant to § 11028 of the Act; c. Any other provision of the Act that affects the computation of federal adjusted gross income of individuals or federal taxable income of corporations for taxable years beginning after December 31, 2016, and before January 1, 2018, other than the temporary reduction in the medical expense deduction floor pursuant to § 11027 of the Act; and 7. The provisions of the Bipartisan Budget Act of 2018 enacted February 9, 2018, as Public Law 115-123, that affect any taxable year other than a taxable year beginning after December 31, 2016, and before January 1, 2018”; and made a stylistic change. For applicability clause, see Editor’s notes.

The 2020 amendments.

The 2020 amendments by c. 1, effective February 17, 2020, and c. 255, effective March 10, 2020, are identical, and in subsection B, substituted “2019” for “2018” in the introductory paragraph, added subdivision 6 and made stylistic changes. For applicability, see Editor’s note.

The 2021 Sp. Sess. I amendments.

The 2021 amendments by Sp. Sess. I, cc. 117 and 118, effective March 15, 2021, and c. 552, cl. 11, effective April 7, 2021, are identical and in subsection B, substituted “December 31, 2020” for “December 31, 2019” in the introductory paragraph, in subdivision B 5, deleted “the provisions of § 11046 of the federal Tax Cuts and Jobs Act, P.L. 115-97 (2017), related to” following “January 1, 2019” and added “under § 68(f) of the Internal Revenue Code” at the end, rewrote subdivision B 6 which read “The provisions of § 103 of Division Q of the federal Further Consolidated Appropriations Act, 2020, P.L. 116-94 (2019), related to the reduction in the medical expense deduction floor,” added subdivisions B 7 through B 10 and made a stylistic change.

The 2022 amendments.

The 2022 amendments, c. 3, effective February 23, 2022, in the introductory paragraph in subsection B, substituted “2021” for “2020” and in subdivision B 10, inserted “For taxable years beginning before January 1, 2021” and “and “§§ 9672(2), 9672(3), 9673(2), and 9673(3) of the federal American Rescue Plan Act, P.L. 117-2 (2021).”

Law Review.

For survey of Virginia law on taxation for the year 1970-1971, see 57 Va. L. Rev. 1618 (1971).

For survey of Virginia law on taxation for the year 1988, see 22 U. Rich. L. Rev. 739 (1988).

For survey article on developments in the law affecting Virginia taxation, see 38 U. Rich. L. Rev. 267 (2003).

For 2003/2004 survey of the law of taxation, see 39 U. Rich. L. Rev. 413 (2004).

For annual survey of Virginia law on taxation, see 40 U. Rich. L. Rev. 291 (2005).

For 2006 survey article, “Taxation,” see 41 U. Rich. L. Rev. 283 (2006).

For 2007 annual survey article, “Taxation,” see 42 U. Rich. L. Rev. 515 (2007).

For article on recent developments in the law affecting Virginia taxation, see 43 U. Rich. L. Rev. 405 (2008).

For annual survey article, “Taxation,” see 44 U. Rich. L. Rev. 599 (2009).

For article, “Medical Malpractice Law,” see 45 U. Rich. L. Rev. 319 (2010).

For article, “Taxation,” see 45 U. Rich. L. Rev. 377 (2010).

For annual survey article, “Local Government Law,” see 46 U. Rich. L. Rev. 175 (2011).

For annual survey article, “Taxation,” see 46 U. Rich. L. Rev. 203 (2011).

For annual survey of Virginia law article, “Taxation,” see 47 U. Rich. L. Rev. 307 (2012).

For annual survey article, “Taxation,” see 48 U. Rich. L. Rev. 169 (2013).

§ 58.1-302. Definitions.

For the purpose of this chapter and unless otherwise required by the context:

“Affiliated” means two or more corporations subject to Virginia income taxes whose relationship to each other is such that (i) one corporation owns at least 80 percent of the voting stock of the other or others or (ii) at least 80 percent of the voting stock of two or more corporations is owned by the same interests.

“Compensation” means wages, salaries, commissions and any other form of remuneration paid or accrued to employees for personal services.

“Corporation” includes associations, joint stock companies and insurance companies.

“Domicile” means the permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere. In determining domicile, consideration may be given to the applicant’s expressed intent, conduct, and all attendant circumstances including, but not limited to, financial independence, business pursuits, employment, income sources, residence for federal income tax purposes, marital status, residence of parents, spouse and children, if any, leasehold, sites of personal and real property owned by the applicant, motor vehicle and other personal property registration, residence for purposes of voting as proven by registration to vote, if any, and such other factors as may reasonably be deemed necessary to determine the person’s domicile.

“Foreign source income” means:

1. Interest, other than interest derived from sources within the United States;
2. Dividends, other than dividends derived from sources within the United States;
3. Rents, royalties, license, and technical fees from property located or services performed without the United States or from any interest in such property, including rents, royalties, or fees for the use of or the privilege of using without the United States any patents, copyrights, secret processes and formulas, good will, trademarks, trade brands, franchises, and other like properties;
4. Gains, profits, or other income from the sale of intangible or real property located without the United States; and
5. The amount of an individual’s share of net income attributable to a foreign source qualified business unit of an electing small business corporation (S corporation). For purposes of this subsection, qualified business unit shall be defined by § 989 of the Internal Revenue Code, and the source of such income shall be determined in accordance with §§ 861, 862 and 987 of the Internal Revenue Code.In determining the source of “foreign source income,” the provisions of §§ 861, 862, and 863 of the Internal Revenue Code shall be applied except as specifically provided in subsection 5 above. “Income and deductions from Virginia sources” includes:
   1. The ownership of any interest in real or tangible personal property in Virginia;
   2. A business, trade, profession or occupation carried on in Virginia; or
   3. Prizes paid by the Virginia Lottery Department, and gambling winnings from wagers placed or paid at a location in Virginia. “Income tax return preparer” means any person who prepares for compensation, or who employs one or more persons to prepare for compensation, any return of tax imposed by this chapter or any claim for refund of tax. For purposes of the preceding sentence, the preparation for compensation of any portion of a return or claim for refund shall be treated as if it were the preparation of the return or claim for refund. A person shall not be an “income tax return preparer” merely because the person: “Individual” means all natural persons whether married or unmarried and fiduciaries acting for natural persons, but not fiduciaries acting for trusts or estates. “Intangible expenses and costs” means: “Intangible property” means patents, patent applications, trade names, trademarks, service marks, copyrights and similar types of intangible assets. “Interest expenses and costs” means amounts directly or indirectly allowed as deductions under § 163 of the Internal Revenue Code for purposes of determining taxable income under the Internal Revenue Code to the extent such expenses and costs are directly or indirectly for, related to, or in connection with the direct or indirect acquisition, use, maintenance, management, ownership, sale, exchange, lease, transfer, or disposition of intangible property. “Nonresident estate or trust” means an estate or trust which is not a resident estate or trust. “Related entity” means: “Related member” means a person that, with respect to the taxpayer during all or any portion of the taxable year, is a related entity, a component member as defined in § 1563(b) of the Internal Revenue Code, or is a person to or from whom there is attribution of stock ownership in accordance with § 1563(e) of the Internal Revenue Code. “Resident” applies only to natural persons and includes, for the purpose of determining liability for the taxes imposed by this chapter upon the income of any taxable year every person domiciled in Virginia at any time during the taxable year and every other person who, for an aggregate of more than 183 days of the taxable year, maintained his place of abode within Virginia, whether domiciled in Virginia or not. The word “resident” shall not include any member of the United States Congress who is domiciled in another state. “Resident estate or trust” means: “Sales” means all gross receipts of the corporation not allocated under § 58.1-407 , except the sale or other disposition of intangible property shall include only the net gain realized from the transaction. “State,” for purposes of Article 10 (§ 58.1-400 et seq.), means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, and any foreign country. “Trust” or “estate” means a trust or estate, or a fiduciary thereof, which is required to file a fiduciary income tax return under the laws of the United States. “Virginia fiduciary adjustment” means the net amount of the applicable modifications described in §§ 58.1-322.01 , 58.1-322.02 , and 58.1-322.04 (including subdivision 1 of § 58.1-322.04 if the estate or trust is a beneficiary of another estate or trust) which relate to items of income, gain, loss or deduction of an estate or trust. The fiduciary adjustment shall not include the modification in § 58.1-322.03 , except that the amount of state income taxes excluded from federal taxable income shall be included. The fiduciary adjustment shall also include the modification in subdivision 7 of § 58.1-322.03 regarding the deduction for the purchase of a prepaid tuition contract or contribution to a savings trust account.

1. Items of income, gain, loss and deduction attributable to:

2. Income from intangible personal property, including annuities, dividends, interest, royalties and gains from the disposition of intangible personal property to the extent that such income is from property employed by the taxpayer in a business, trade, profession, or occupation carried on in Virginia.

1. Furnishes typing, reproducing, or other mechanical assistance;

2. Prepares a return or claim for refund of the employer (or of an officer or employee of the employer) by whom he is regularly and continuously employed;

3. Prepares as a fiduciary a return or claim for refund for any person; or

4. Prepares an application for correction of an erroneous assessment or a protective claim for refund for a taxpayer in response to any assessment pursuant to § 58.1-1812 issued to the taxpayer or in response to any waiver pursuant to § 58.1-101 or 58.1-220 after the commencement of an audit of the taxpayer or another taxpayer if a determination in such audit of such other taxpayer directly or indirectly affects the tax liability of such taxpayer.

1. Expenses, losses and costs for, related to, or in connection directly or indirectly with the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange, lease, transfer, or any other disposition of intangible property to the extent such amounts are allowed as deductions or costs in determining taxable income;

2. Losses related to or incurred in connection directly or indirectly with factoring transactions or discounting transactions;

3. Royalty, patent, technical and copyright fees;

4. Licensing fees; and

5. Other similar expenses and costs.

1. A stockholder who is an individual, or a member of the stockholder’s family enumerated in § 318 of the Internal Revenue Code, if the stockholder and the members of the stockholder’s family own, directly, indirectly, beneficially or constructively, in the aggregate, at least 50 percent of the value of the taxpayer’s outstanding stock;

2. A stockholder, or a stockholder’s partnership, limited liability company, estate, trust or corporation, if the stockholder and the stockholder’s partnerships, limited liability companies, estates, trusts and corporations own directly, indirectly, beneficially or constructively, in the aggregate, at least 50 percent of the value of the taxpayer’s outstanding stock; or

3. A corporation, or a party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of § 318 of the Internal Revenue Code, if the taxpayer owns, directly, indirectly, beneficially or constructively, at least 50 percent of the value of the corporation’s outstanding stock. The attribution rules of § 318 of the Internal Revenue Code shall apply for purposes of determining whether the ownership requirements of this subdivision have been met.

1. The estate of a decedent who at his death was domiciled in the Commonwealth;

2. A trust created by will of a decedent who at his death was domiciled in the Commonwealth; or

3. A trust created by or consisting of property of a person domiciled in the Commonwealth.

History. Code 1950, §§ 58-151.02, 58-151.013, 58-151.023, 58-151.034, 58-151.081; 1971, Ex. Sess., c. 171; 1972, cc. 310, 827; 1973, cc. 198, 345, 458; 1974, c. 682; 1975, c. 46; 1976, cc. 528, 694, 781; 1977, cc. 297, 612; 1978, cc. 67, 158; 1979, cc. 226, 404, 596; 1981, cc. 402, 414; 1982, c. 633; 1983, cc. 452, 472; 1984, cc. 153, 162, 636, 674, 675, 729; 1990, c. 294; 1992, c. 678; 1995, c. 602; 2000, cc. 382, 400; 2004, Sp. Sess. I, c. 3; 2005, c. 48; 2017, c. 444; 2019, cc. 23, 192.

Editor’s note.

Acts 1992, c. 678, which amended this section, in cl. 4 provides: “That the provisions of § 58.1-302 are declarative of existing law and shall be retroactive to all taxable years in which the Department of Lottery has paid any prizes.”

Acts 1995, c. 602, cl. 2, provides: “That any changes in tax liability resulting from the amendment to the definition of foreign source income in § 58.1-302 pursuant to this act for taxable years beginning (i) on and after January 1, 1994, but before January 1, 1995, shall be reflected in returns filed for taxable year 1996 and (ii) on and after January 1, 1995, but before January 1, 1996, shall be reflected in returns filed for taxable year 1997.”

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. I, c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 X 2, effective for the biennium ending June 30, 2022, provides: “Notwithstanding any other provision of law, any income tax return preparer, as defined in § 58.1-302 , who prepares any Virginia individual income tax return during a calendar year for which he has the primary responsibility for the overall substantive accuracy of the preparation thereof shall notify the Department of Taxation without unreasonable delay after the discovery or notification of unauthorized access and acquisition of unencrypted and unredacted return information that compromises the confidentiality of such information and that creates a reasonable belief that an unencrypted and unredacted version of such information was accessed and acquired by an unauthorized person, and causes, or such preparer reasonably believes has caused or will cause, identity theft or other fraud.

“Such income tax return preparer shall provide the Department of Taxation with the name and taxpayer identifying number of any taxpayer that may be affected by the compromise in confidentiality, as well as the name of the income tax return preparer, his preparer tax identification number, and such other information as the Department may prescribe.”

The 2000 amendments.

The 2000 amendments by cc. 382 and 400, effective July 1, 2000, and applicable for all taxable years beginning on or after January 1, 2000, are identical, and added the last sentence to the last paragraph.

The 2004 amendments.

The 2004 amendment by Sp. Sess. I, c. 3, effective September 1, 2004, and applicable for all taxable years beginning on and after January 1, 2004, inserted the definitions of “Intangible expenses and costs,” “Intangible property,” “Interest expenses and costs,” “Related entity” and “Related member”; and made minor stylistic changes. For contingency, see Editor’s note.

The 2005 amendments.

The 2005 amendment by c. 48 inserted the definition of “Income tax return preparer”; and substituted “§” for “Section” throughout.

The 2017 amendments.

The 2017 amendment by c. 444, in the definition of “State,” substituted “ ‘State,’ for purposes of Article 10 (§ 58.1-400 et seq.), means” for “ ‘State,’ means for purposes of Article 10 of this chapter”; and in the definition of “Virginia fiduciary adjustment,” substituted “§§ 58.1-322.01 , 58.1-322.02 , and 58.1-322.04 (including subdivision 1 of § 58.1-322 .04” for “§ 58.1-322 (including subsection E thereof,” “§ 58.1-322.03 ,” for “subsection D of § 58.1-322 ,” and “subdivision 7 of § 58.1-322.03 ” for “subsection D of § 58.1-322.”

The 2019 amendments.

The 2019 amendments by cc. 23 and 192 are identical, and deleted “4. A trust or estate which is being administered in the Commonwealth” in the definition of “Resident estate or trust” and made related stylistic changes.

Law Review.

For survey of Virginia law on taxation for the year 1971-1972, see 58 Va. L. Rev. 1338 (1972).

For article, “The Virginia Land Trust — An Overlooked Title Holding Device for Investment, Business and Estate Planning Purposes,” see 30 Wash. & Lee L. Rev. 73 (1973).

For survey of Virginia taxation law for the year 1975-1976, see 62 Va. L. Rev. 1479 (1976).

For survey of Virginia taxation for the year 1976-1977, see 63 Va. L. Rev. 1486 (1977).

For survey of Virginia taxation for the year 1978-1979, see 66 Va. L. Rev. 367 (1980).

For article, “Recent Changes In Allocation And Apportionment of Corporate Taxable Income under Virginia Law,” see 5 G.M.U. L. Rev. 135 (1982).

For article on federal taxation of reinvested corporate earnings, see 24 Wm. & Mary L. Rev. 1 (1982).

For annual survey of Virginia law on taxation, see 40 U. Rich. L. Rev. 291 (2005).

For article, “Wills, Trusts, and Estates,” see 54 U. Rich. L. Rev. 183 (2019).

§ 58.1-303. Residency for portion of tax year.

1. Any person who, during the taxable year, becomes a resident of Virginia, whether domiciliary or actual, for purposes of income taxation, by moving to the Commonwealth from without during such taxable year, shall be taxable as a resident for only that portion of the taxable year during which he was a resident of the Commonwealth and his personal exemptions shall be reduced to an amount which bears the same ratio to the full exemptions as the number of days during which he was a resident of the Commonwealth bears to 365 days. No person to whom the preceding sentence applies shall be entitled to any credit on his income tax payable to Virginia for any income tax paid to the state or other jurisdiction of his former domicile or actual residence for that part of the taxable year during which he was a domiciliary or actual resident of such other state or jurisdiction, notwithstanding the provisions of § 58.1-332 .
2. Any person who, on or before the last day of the taxable year, changes his place of abode to a place without the Commonwealth with the bona fide intention of continuing actually to abide permanently without Virginia shall be taxable as a resident for only that portion of the taxable year during which he was a resident of Virginia and his personal exemptions shall be reduced to an amount which bears the same ratio to the full exemptions as the number of days during which he was a resident of this Commonwealth bears to 365 days. The fact that a person who has changed his place of abode, within six months from so doing abides again in the Commonwealth, shall be prima facie evidence that he did not intend permanently to have his place of abode without Virginia. The fact that a person has removed his abode to a place without the Commonwealth is not conclusive evidence of a change of domicile.
3. Any person who is taxable as a resident of the Commonwealth for only a portion of a taxable year because he moved to this Commonwealth from without Virginia during the taxable year as set out in subsection A, or because he changed his place of abode during the taxable year to a place without Virginia as set out in subsection B, and who, as a nonresident of Virginia for any other part of the taxable year derived income from any property owned or from any business, trade, profession or occupation carried on in Virginia shall be taxable as a nonresident with respect to such income as provided in § 58.1-325 .

History. Code 1950, § 58-151.02; 1971, Ex. Sess., c. 171; 1972, cc. 310, 827; 1979, c. 404; 1984, c. 675.

§ 58.1-304. Reserved.

§ 58.1-305. Duties of commissioner of the revenue relating to income tax.

Every commissioner of the revenue shall obtain an income tax return from every individual or fiduciary within his jurisdiction who is liable under the law to file such a return with him; provided such individual or fiduciary has not filed such a return with the Department of Taxation. This duty of the commissioner of the revenue to obtain such return shall in no manner diminish any obligation to file a return without being called upon to do so by the commissioner of the revenue or any other officer. Each commissioner of the revenue shall audit returns as soon as practicable after they are made to him and shall assess the amount of taxes, or the amount of additional taxes, as the case may be, which appears to be due. Such auditing shall not be done in a manner or at a time in any case as will result in any delay on the part of the commissioner of the revenue in complying with §§ 58.1-307 and 58.1-350 .

History. Code 1950, § 58-151.068; 1971, Ex. Sess., c. 171; 1984, c. 675; 2004, c. 544.

The 2004 amendments.

The 2004 amendment by c. 544 added the proviso to the end of the first sentence.

Law Review.

For 2003/2004 survey of the law of taxation, see 39 U. Rich. L. Rev. 413 (2004).

§ 58.1-306. Filing of individual, estate or trust income tax returns with the Department.

Every individual and fiduciary responsible for filing income tax returns may file such returns with the Department of Taxation or the appropriate commissioner of the revenue. Whenever an individual or fiduciary files with the Department an income tax return for a current year, the Department may assess the state income tax against such taxpayer instead of transmitting such return to a commissioner of the revenue for assessment. In every such case the Department, however, shall advise the appropriate commissioner of the revenue of such action. The Department may advise taxpayers through its publications and instructions of their right to file state income tax returns with the Department but shall not by any means whatsoever, either directly or indirectly, in its bulletins, instructions, publications or otherwise, request, promote or solicit, in any local jurisdiction, unless requested by the commissioner of the revenue or assessing officer thereof on or before September 1 of each year, the filing of such state income tax return with the Department. Nothing in this chapter shall prohibit the Department from including the mailing addresses of the local commissioners of the revenue as well as the Department within the appropriate income tax forms and filing instructions.

History. Code 1950, § 58-151.065; 1971, Ex. Sess., c. 171; 1974, c. 281; 1984, c. 675; 2004, cc. 521, 544.

Cross references.

As to application of this section to a declaration of estimated tax, see § 58.1-497 .

Editor’s note.

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 N, effective for the biennium ending June 30, 2022, provides: “Notwithstanding the provisions of § 58.1-490 et seq., Code of Virginia,

“1. Effective for taxable years beginning on or after January 1, 2015, a taxpayer shall be permitted to file a declaration of estimated tax with the Department of Taxation instead of with the commissioner of the revenue and notwithstanding the provisions of § 58.1-306 , Code of Virginia, the department may so advise taxpayers.

“2. Effective January 1, 2015, every treasurer who receives an estimated income tax return, declaration or voucher pursuant to § 58.1-495 of the Code of Virginia shall transmit such return, declaration or voucher to the Department of Taxation using an electronic medium in a format prescribed by the Tax Commissioner.”

The 2004 amendments.

The 2004 amendment by c. 521, added the present first sentence; deleted “at the request of the taxpayer, and for reasons sufficient to it” preceding “assess” in the second sentence; and inserted “may advise taxpayers through its publications and instructions of their right to file state income tax returns with the Department but” in the fourth sentence; and added the last sentence.

The 2004 amendment by c. 544 made the same changes noted above for c. 521, with the exception of the addition of the last sentence.

Law Review.

For 2003/2004 survey of the law of taxation, see 39 U. Rich. L. Rev. 413 (2004).

§ 58.1-307. Disposition of returns; handling of state income tax payments; audit.

1. As soon as the individual and fiduciary income tax returns have been received by the commissioner of the revenue and entered upon the assessment sheets or forms, the commissioner of the revenue shall forward such returns to the Department. The Department, however, may authorize the commissioner of the revenue to retain such returns for such length of time as may be necessary to enable him to review them under § 58.1-305 and to use them in ascertaining delinquents. As soon as practicable after each such return is received by the Department, it shall examine and audit it. Except in criminal and internal investigations, the Department shall conduct its audits, inspections of records, and meetings with taxpayers at reasonable times and places. For purposes of informal meetings on appeals under § 58.1-1821 , Richmond shall be a reasonable place to meet.
2. If any income tax return filed with and received by the commissioner of the revenue or director of finance or other assessing officer is accompanied by payment, in whole or in part, of the liability shown on such return, such officer, within two banking days of receipt of such return, shall deliver such payment or payments to the treasurer. The commissioner of the revenue or director of finance or other assessing officer shall maintain a record of the date on which such payments are received and shall also record the date on which such payments are delivered to the treasurer. The Auditor of Public Accounts shall either prescribe or approve the commissioner of the revenue’s or director of finance’s or other assessing officer’s record-keeping system and shall audit such records as provided for in Chapter 14 (§ 30-130 et seq.) of Title 30. The Auditor, in his discretion, upon a showing of hardship making it difficult to comply with these requirements, may prescribe or approve alternative arrangements intended to accomplish the same result. The treasurer shall act in accordance with subsection B of § 2.2-806 and 58.1-3168 in the handling, deposit, and accounting of such payments.

History. Code 1950, § 58-151.070; 1971, Ex. Sess., c. 171; 1984, c. 675; 1991, c. 485; 1996, c. 634.

§ 58.1-308. Assessment and payment of deficiency; fraud; penalties.

If the amount of tax computed by the Department is greater than the amount theretofore assessed, the excess shall be assessed by the Department and a bill for the same shall be mailed to the taxpayer. The taxpayer shall pay such additional tax to the Department within thirty days after the amount of the tax as computed is mailed by the Department. In such case, if the return was made in good faith and the understatement of the amount in the return was not due to any fault of the taxpayer, there shall be no penalty on the additional tax because of such understatement, but interest shall be added to the amount of the deficiency at a rate determined in accordance with § 58.1-15 , from the time the return was required by law to be filed until paid.

If the understatement is false or fraudulent with intent to evade the tax, a penalty of 100 percent shall be added together with interest on the tax at a rate determined in accordance with § 58.1-15 , from the time the return was required by law to be filed until paid.

Nothing contained in this section shall prevent the taxpayer from applying to the circuit court of the county or the city wherein he resides for a correction of the assessment made by the Department, with right of appeal in the manner provided by law.

History. Code 1950, § 58-151.071; 1971, Ex. Sess., c. 171; 1977, c. 396; 1984, c. 675.

§ 58.1-309. Refund of overpayment.

If the amount of taxes as computed is less than the amount theretofore paid, the excess shall be refunded out of the state treasury on the order of the Tax Commissioner upon the Comptroller.

History. Code 1950, § 58-151.072; 1971, Ex. Sess., c. 171; 1974, c. 178; 1984, c. 675.

Editor’s note.

Acts 2019, cc. 17 and 18, cl. 4 provides: “That in addition to any refund due pursuant to § 58.1-309 of the Code of Virginia, and for taxable years beginning on and after January 1, 2018, but before January 1, 2019, an individual filing a final return before July 1, 2019, or married persons filing a final joint return before July 1, 2019, shall be issued a refund out of the Taxpayer Relief Fund (the Fund) established in the fifth enactment of this act in an amount up to $110 for an individual, or $220 for married persons filing a joint return. The Governor, in consultation with the State Comptroller and the Tax Commissioner, shall certify to the General Assembly on or before September 1, 2019, the estimated amount available in the Fund for the issuance of such refunds after taking into account the amounts in the Fund necessary to fund the tax policy changes set forth in the first enactment of this act for taxable years beginning on and after January 1, 2018, but before January 1, 2019. If such estimated amount is insufficient to issue refunds of $110 for an individual, or $220 for married persons filing a joint return, then such refunds shall be reduced and prorated based on the amount of available funds. An individual shall only be allowed a refund pursuant to this enactment up to the amount of such individual’s tax liability after the application of any deductions, subtractions, or credits to which the individual is entitled pursuant to Chapter 3 (§ 58.1-300 et seq.) of Title 58.1 of the Code of Virginia. Married persons filing a joint return shall only be allowed a refund pursuant to this enactment up to the amount of such married persons’ tax liability after the application of any deductions, subtractions, or credits to which the married persons are entitled pursuant to Chapter 3 of Title 58.1 of the Code of Virginia. Any refund issued pursuant to this enactment shall be subject to collection under the provisions of the Setoff Debt Collection Act (§ 58.1-520 et seq. of the Code of Virginia). Refunds due pursuant to this enactment shall be issued on or after October 1, 2019, but before October 15, 2019.”

Acts 2019, cc. 17 and 18, cl. 5 provides: “That there is hereby established a special nonreverting fund to be known as the “Taxpayer Relief Fund” (the Fund). Any revenues generated by the individual reform provisions contained in Subtitle A of Title I and §§ 13611-13613 of the federal Tax Cuts and Jobs Act, P.L. 115-97 (2017), from the collection of taxes during Fiscal Years 2019 through 2025, estimated to be approximately $450 million annually, beyond those revenues reasonably expected to be collected due to general economic growth and absent the federal policy changes, less the estimated reduction in revenues needed to implement the tax policy changes set forth in the first enactment of this act for the relevant fiscal year, shall be transferred to the Fund. The Governor, in consultation with the State Comptroller and the Tax Commissioner, shall certify to the General Assembly on or before September 1 each year the estimated amount to be transferred to the Fund pursuant to this act. The amount certified shall take into account changes in taxpayer behavior and changes in general revenue collections unrelated to federal tax policy changes. The amount certified shall also take into account and be adjusted accordingly for additional tax policy changes adopted by the federal government after January 1, 2019, that may be reasonably expected to positively or negatively impact revenues of the Commonwealth. The General Assembly shall appropriate any revenues in the Fund to effectuate permanent or temporary tax reform measures.”

Law Review.

For survey of Virginia law on taxation for the year 1973-1974, see 60 Va. L. Rev. 1607 (1974).

§ 58.1-310. Examination of federal returns.

Whenever in the opinion of the Department it is necessary to examine the federal income returns or any copy thereof of any individual, estate, trust, partnership or corporation in order properly to audit such returns, the Department or the commissioner of the revenue shall have the right to require such taxpayer to provide such return or a copy thereof and all statements, inventories, and schedules in support thereof.

History. Code 1950, § 58-151.097; 1971, Ex. Sess., c. 171; 1973, c. 198; 1984, c. 675.

§ 58.1-311. Report of change in federal taxable income.

If the amount of any individual, estate, trust or corporate taxpayer’s federal taxable income reported on his federal income tax return for any taxable year is changed or corrected by the United States Internal Revenue Service or other competent authority, or as the result of a renegotiation of a contract or subcontract with the United States, the taxpayer shall file an amended return, or such other form as the Department may prescribe, reporting such change or correction in federal taxable income within one year after the final determination date, as defined in § 58.1-311.2 , for such change, correction, or renegotiation, or as otherwise required by the Department, and shall concede the accuracy of such determination or state wherein it is erroneous. However, if the Department has sufficient information from which to compute the proper additional tax and the taxpayer has paid such tax, then the taxpayer is not required to file an amended individual income tax return. Any taxpayer filing an amended federal income tax return shall also file within one year thereafter an amended return under this chapter and shall give such information as the Department may require. The Department may by regulation prescribe such exceptions to the requirements of this section as it deems appropriate.

History. Code 1950, § 58-151.0103; 1971, Ex. Sess., c. 171; 1984, c. 675; 1992, c. 678; 2006, c. 234; 2020, c. 1030.

Editor’s note.

Acts 1992, c. 678, which amended this section, in cl. 5 provides: “That the provisions of §§ 58.1-311 , 58.1-906 and 58.1-1823 of this act shall be effective for all reports or amended returns filed on and after July 1, 1992.”

Acts 2006, c. 234, cl. 2, provides: “That the provisions of this act shall be effective for examinations concluded by another state or amended returns filed with another state on or after the effective date of this act.”

Acts 2020, c. 1030, cl. 2 provides: “That the Department of Taxation shall develop guidelines implementing the provisions of this act. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).”

Acts 2020, c. 1030, cl. 3 provides: “That the provisions of this act amending §§ 58.1-311 , 58.1-499 , and 58.1-1823 of the Code of Virginia shall be effective for all changes or corrections by the Internal Revenue Service or other competent authority, or as the result of a renegotiation of a contract or subcontract with the United States with a final determination date on or after July 1, 2020. For the purpose of this enactment clause, “final determination date” means the same as that term is defined in § 58.1-311 .2 of the Code of Virginia, as created by this act.”

The 2006 amendments.

The 2006 amendment by c. 234 substituted “one year” for “ninety days” in the first and third sentences and made a minor stylistic change. See Editor’s note for applicability.

The 2020 amendments.

The 2020 amendment by c. 1030, substituted “date, as defined in § 58.1-311.2 , for such change” for “of such change” in the first sentence. For applicability clause, see Editor’s note.

§ 58.1-311.1. Report of change in taxes paid to other states.

If the amount of any individual taxpayer’s income tax reported on a return filed with any other state for any taxable year is changed or corrected by such state as a result of an examination conducted by a competent authority of such state, and the taxpayer previously claimed a credit for such tax pursuant to § 58.1-332 , the taxpayer shall file an amended return, or such other form as the Department may prescribe, reporting the effects of such change or correction on the taxpayer’s Virginia individual income tax within one year after the final determination of such change or correction, or as otherwise required by the Department, and shall concede the accuracy of such determination or declare wherein it is erroneous. However, if the Department has sufficient information from which to compute the proper additional tax and the taxpayer has paid such tax, then the taxpayer is not required to file an amended individual income tax return. Any taxpayer filing an amended income tax return with any other state that results in a change to the taxpayer’s Virginia income tax shall also file an amended return within one year thereafter under this chapter and shall provide such information as the Department may require. The Department may by regulation prescribe such exceptions to the requirements of this section as it deems appropriate.

History. 2006, c. 234.

Editor’s note.

Acts 2006, c. 234, cl. 2 provides: “That the provisions of this act shall be effective for examinations concluded by another state or amended returns filed with another state on or after the effective date of this act.”

Law Review.

For 2006 survey article, “Taxation,” see 41 U. Rich. L. Rev. 283 (2006).

For article, “Medical Malpractice Law,” see 45 U. Rich. L. Rev. 319 (2010).

For article, “Taxation,” see 45 U. Rich. L. Rev. 377 (2010).

§ 58.1-311.2. Final determination date.

As used in § 58.1-311 , “final determination date” means:

1. Except as provided in subdivisions 1 and 2, if the federal adjustment arises from an Internal Revenue Service audit or other action by the Internal Revenue Service, the final determination date is the first day on which no federal adjustments arising from that audit or other action remain to be finally determined, whether by Internal Revenue Service decision with respect to which all rights of appeal have been waived or exhausted, by agreement, or, if appealed or contested, by a final decision with respect to which all rights of appeal have been waived or exhausted. For agreements required to be signed by the Internal Revenue Service and the taxpayer, the final determination date is the date on which the last party signed the agreement.
2. For federal adjustments arising from an Internal Revenue Service audit or other action by the Internal Revenue Service, if the taxpayer filed as a member of a combined or consolidated return under § 58.1-442 , the final determination date means the first day on which no related federal adjustments arising from that audit remain to be finally determined, as described in subdivision 1, for the entire group.
3. If the federal adjustment results from filing an amended federal return, a federal refund claim, or an administrative adjustment request, as that term is used in § 58.1-396 , or if it is a federal adjustment reported on an amended federal return or other similar report filed pursuant to § 6225(c) of the Internal Revenue Code, the final determination date means the day on which the amended return, refund claim, administrative adjustment request, or other similar report was filed.

History. 2020, c. 1030.

Editor’s note.

Acts 2020, c. 1030, cl. 2 provides: “That the Department of Taxation shall develop guidelines implementing the provisions of this act. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).”

Acts 2020, c. 1030, cl. 3 provides: “That the provisions of this act amending §§ 58.1-311 , 58.1-499 , and 58.1-1823 of the Code of Virginia shall be effective for all changes or corrections by the Internal Revenue Service or other competent authority, or as the result of a renegotiation of a contract or subcontract with the United States with a final determination date on or after July 1, 2020. For the purpose of this enactment clause, “final determination date” means the same as that term is defined in § 58.1-311 .2 of the Code of Virginia, as created by this act.”

§ 58.1-312. Limitations on assessment.

1. The tax imposed by this chapter may be assessed at any time if:
   1. No return is filed;
   2. A false or fraudulent return is filed with intent to evade tax;
   3. The taxpayer fails to comply with § 58.1-311 in not reporting a change or correction increasing his federal taxable income as reported on his federal income tax return, or in not reporting a change or correction which is treated in the same manner as if it were a deficiency for federal income tax purposes, or in not filing an amended return; or
   4. The taxpayer fails to comply with § 58.1-311.1 by not reporting a change or correction decreasing the tax paid to another state for which a credit was claimed on his Virginia income tax return as a result of an examination conducted by any other state or an amended income tax return filed with any other state.
2. The tax may be assessed within six years after the return was filed, whether such return was filed on or after the date prescribed, if the taxpayer knowingly failed to disclose on his state income tax return a transaction identified by the Tax Commissioner as an abusive tax avoidance transaction and published as provided in § 58.1-204 . A return of tax filed before the last day prescribed by law for the timely filing thereof shall be considered as filed on the last day. If such return is false or fraudulent, an assessment may be made at any time whether or not the falsity or fraud is related to the abusive tax avoidance transaction.
3. If the taxpayer pursuant to § 58.1-311 or 58.1-311.1 reports a change or correction or files an amended return increasing his federal taxable income, decreasing the tax paid to another state, or reports a change or correction which is treated in the same manner as if it were a deficiency for federal income tax purposes, the assessment (if not deemed to have been made upon the filing of the report or amended return) may be made at any time within one year after such report or amended return was filed. The amount of such assessment of tax shall not exceed the amount of the increase in Virginia tax attributable to such federal change or correction. The provisions of this paragraph shall not affect the time within which or the amount for which an assessment may otherwise be made.
4. If a deficiency is attributable to the application to the taxpayer of a net operating loss carry-back, or to a net capital loss carry-back, it may be assessed at any time that a deficiency for the taxable year of the loss may be assessed.
5. An erroneous refund shall be considered an underpayment of tax on the date made, and an assessment of a deficiency arising out of an erroneous refund may be made at any time within two years from the making of the refund, except that the assessment may be made within five years from the making of the refund if it appears that any part of the refund was induced by fraud or misrepresentation of a material fact.
6. If a return is required for a decedent or for his estate during the period of administration, the tax shall be assessed within eighteen months after written request therefor (made after the return is filed) by the executor, administrator or other person representing the estate of such decedent, but not more than three years after the return was filed, except as otherwise provided in this subsection.

History. Code 1950, § 58-151.0104; 1971, Ex. Sess., c. 171; 1984, c. 675; 2006, c. 234; 2007, c. 524.

Editor’s note.

Acts 2006, c. 234, cl. 2, provides: “That the provisions of this act shall be effective for examinations concluded by another state or amended returns filed with another state on or after the effective date of this act.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item § 3-5.11, as amended by Acts 2021, Sp. Sess. I, c. 552, effective for the biennium ending June 30, 2022, provides:

“A. Effective for taxable years beginning on or after January 1, 2016, an individual shall be allowed a deduction from Virginia adjusted gross income as defined in § 58.1-321 , Code of Virginia, for the amount contributed during the taxable year to an ABLE savings trust account entered into with the Virginia College Savings Plan pursuant to Chapter 7 (§ 23.1-700 et seq.) of Title 23.1, Code of Virginia. The amount deducted on any individual income tax return in any taxable year shall be limited to $2,000 per ABLE savings trust account. No deduction shall be allowed pursuant to this section if such contributions are deducted on the contributor’s federal income tax return. If the contribution to an ABLE savings trust account exceeds $2,000 the remainder may be carried forward and subtracted in future taxable years until the ABLE savings trust contribution has been fully deducted; however, in no event shall the amount deducted in any taxable year exceed $2,000 per ABLE savings trust account.

“B. Notwithstanding the statute of limitations on assessments contained in § 58.1-312 , Code of Virginia, any deduction taken hereunder shall be subject to recapture in the taxable year or years in which distributions or refunds are made for any reason other than (i) to pay qualified disability expenses, as defined in § 529A of the Internal Revenue Code; or (ii) the beneficiary’s death.

“C. A contributor to an ABLE savings trust account who has attained age 70 shall not be subject to the limitation that the amount of the deduction not exceed $2,000 per ABLE savings trust account in any taxable year. Such taxpayer shall be allowed a deduction for the full amount contributed to an ABLE savings trust account, less any amounts previously deducted.

“D. The Tax Commissioner shall develop guidelines implementing the provisions of this section, including but not limited to the computation, carryover, and recapture of the deduction provided under this section. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq., Code of Virginia).”

The 2006 amendments.

The 2006 amendment by c. 234 added subdivision A 4; and in the first sentence in subsection B, inserted “or 58.1-311.1 ” and “decreasing the tax paid to another state.” For applicability, see Editor’s note.

The 2007 amendments.

The 2007 amendment by c. 524 added subsection B; and redesignated former subsections B through E as present subsections C through F.

Law Review.

For 2007 annual survey article, “Taxation,” see 42 U. Rich. L. Rev. 515 (2007).

§ 58.1-313. Immediate assessment where collection jeopardized by delay; notice of assessment; termination of taxable period; memorandum of lien.

1. If the Tax Commissioner determines that the collection of any income tax, penalties or interest required to be paid under this title will be jeopardized by delay, the Tax Commissioner shall immediately assess the actual or estimated amount of tax due, together with all penalties and interest, and demand immediate payment from the taxpayer. A notice of such assessment and demand shall be sent by certified mail, return receipt requested, to the taxpayer’s last known address or personally delivered to the taxpayer. In the case of a tax for a current period, the Tax Commissioner shall declare the taxable period of the taxpayer immediately terminated and shall cause notice of such finding and declaration to be mailed or personally delivered to the taxpayer together with a demand for immediate payment of the tax based on the period declared terminated, and such tax shall be immediately due and payable, whether or not the time otherwise allowed by law for filing a return and paying the tax has expired. Assessments provided for in this section shall become immediately due and payable, and if any such tax, penalty or interest is not paid upon demand of the Tax Commissioner, he shall proceed to collect the same by legal process as otherwise provided by law. A memorandum of lien provided for in § 58.1-1805 may be issued immediately upon assessment and notice thereof, or the Tax Commissioner may require the taxpayer to file a bond sufficient in the Commissioner’s judgment to protect the interest of the Commonwealth. “Jeopardized by delay” for purposes of this section includes a finding by the Tax Commissioner that a taxpayer designs (i) to depart quickly from the Commonwealth, (ii) to remove his property therefrom, (iii) to conceal himself or his property therein, or (iv) to do any other act tending to prejudice or to render wholly or partially ineffectual proceedings to collect the income tax for the period in question.
2. A memorandum of lien may be filed for delinquent income taxes assessed by the Department only within six years after an assessment.
3. The Department shall notify the taxpayer that he shall have the opportunity to appear at a meeting within fourteen days and make an oral or written statement of why he believes no jeopardy to the revenue exists or why a memorandum of lien should be released, if one was recorded. Upon request of the taxpayer, the Department shall meet with the taxpayer at a time set by the Department within fourteen days after the issuance of the jeopardy assessment. The Department shall determine within twenty days after such meeting whether such jeopardy assessment or lien should be withdrawn and shall send written notice of such finding to the taxpayer. If the finding is not in the taxpayer’s favor, he may use the remedies available for corrections of erroneous assessments in Article 2 (§ 58.1-1820 et seq.) of Chapter 18.

History. Code 1950, § 58-151.0105; 1979, c. 639; 1984, c. 675; 1989, c. 263; 1996, c. 634.

Law Review.

For survey of Virginia law on taxation for the year 1978-1979, see 66 Va. L. Rev. 367 (1980).

For survey of Virginia law on taxation for the year 1989, see 23 U. Rich. L. Rev. 839 (1989).

§ 58.1-314. Lien of jeopardy assessment; notice of lien.

Upon the completion of all acts necessary to effect a jeopardy assessment under § 58.1-313 and upon the failure of the taxpayer to make payment in full upon demand of all taxes, penalties and interest immediately due thereunder or post a bond in lieu thereof when applicable, such assessment shall be a lien upon and bind the real and personal property of the delinquent taxpayer against whom it may be issued from the time the taxpayer fails to make full payment thereunder, except as against a bona fide purchaser for a valuable consideration. A notice of such lien, drawn by the Tax Commissioner, shall be sent to the clerk of the circuit court in all jurisdictions wherein the taxpayer is known or believed to own any estate. The clerk to whom any such notice of lien is so sent shall record it, as a judgment is required by law to be recorded, and shall index the same in the name of the Commonwealth as well as of the delinquent taxpayer. Such recordation shall thereupon be constructive notice of the lien created by the assessment as to all estate of the delinquent taxpayer located in such jurisdiction.

History. Code 1950, §§ 58-151.077, 58-151.0106; 1971, Ex. Sess., c. 171; 1977, c. 396; 1979, c. 639; 1984, c. 675.

§ 58.1-315. Transitional modifications to Virginia taxable income.

The modifications of Virginia taxable income to be made in accordance with subdivision 2 of § 58.1-322.04 and subsection D of § 58.1-402 , so long as applicable, are as follows:

1. There shall be subtracted from Virginia taxable income the amount necessary to prevent the taxation under this chapter of any annuity or of any other amount of income or gain which was properly included in income or gain and was taxable under Articles 1, 2, 3, 4, 5, 6, or 7 (§§ 58-77 through 58-151) of Chapter 4 of Title 58 to the taxpayer prior to the repeal thereof, or to a decedent by reason of whose death the taxpayer acquires the right to receive the income or gain, or to a trust or estate from which the taxpayer received the income or gain.
2. The carry-back of net operating losses or net capital losses to reduce taxable income of taxable years beginning prior to January 1, 1972, shall not be permitted. Where a taxpayer would have been allowed to deduct an amount as a net operating loss carry-over or net capital loss carry-over in determining taxable income for a taxable year beginning after December 31, 1971, but for the fact that such loss, or a portion of such loss, had been carried back in determining taxable income for a taxable year beginning prior to January 1, 1972, there shall be added to Virginia taxable income any amount which was actually deducted in determining taxable income as a net operating loss carry-over or net capital loss carry-over and there shall be subtracted from Virginia taxable income the amount which could have been deducted as a net operating loss carry-over or net capital loss carry-over in arriving at taxable income but for the fact that such loss, or a portion of such loss, had been carried back for federal purposes.
3. There shall be added to Virginia taxable income the amount necessary to prevent the deduction under this chapter of any item which was properly deductible by the taxpayer in determining a tax under §§ 58-77 through 58-151 prior to the repeal thereof.
4. There shall be subtracted from Virginia taxable income that portion of any accumulation distribution which is allocable, under the laws of the United States relating to federal income taxes, to undistributed net income of a trust for any taxable year beginning on or before December 31, 1971. The rules prescribed by such laws of the United States with reference to any such accumulation distribution shall be applied, mutatis mutandis, to allow for this limitation; and, without limiting the generality of the foregoing, the credit provided by § 58.1-370 in the case of accumulation distributions shall in no instance encompass any part of any tax paid for a taxable year beginning on or before December 31, 1971.
5. As to gain or loss attributable to the sale or exchange of nondepreciable property, Virginia taxable income shall be adjusted to effect a reduction in such gain or increase in such loss by the amount by which the adjusted basis of such property, determined for Virginia income tax purposes at the close of the taxable period immediately preceding the first taxable period to which Articles 7.1 to 7.6 (§ 58-151.01 et seq.) of Title 58 applied prior to repeal thereof exceeds the adjusted basis of such property for federal income tax purposes determined at the close of the same period.
6. There shall be subtracted from the Virginia taxable income of a shareholder of an electing small business corporation any amount included in his taxable income as his share of the undistributed taxable income of such corporation for any year of the corporation beginning before January 1, 1972.
7. There shall be subtracted from federal taxable income amounts which would have been deductible by the corporation in computing federal taxable income but for the election of such corporation of the additional investment tax credit under § 46(a)(2)(B) of the Internal Revenue Code in effect on January 1, 1978.

History. Code 1950, § 58-151.0111; 1971, Ex. Sess., c. 171; 1972, c. 827; 1973, c. 323; 1974, c. 248; 1981, c. 402; 1984, c. 675; 2017, c. 444.

The 2017 amendments.

The 2017 amendment by c. 444 substituted “subdivision 2 of § 58.1-322.04 ” for “subsection F of § 58.1-322 ” in the introductory paragraph.

Law Review.

For survey of Virginia law on taxation for the year 1970-1971, see 57 Va. L. Rev. 1618 (1971).

For survey of Virginia law on taxation for the year 1971-1972, see 58 Va. L. Rev. 1338 (1972).

§ 58.1-316. Information reporting on rental payments to nonresident payees; penalties.

1. Notwithstanding any other provision of this chapter, every nonresident payee receiving gross payments of $600 or more in any calendar year from the rental of real property in this Commonwealth shall register with the Department of Taxation pursuant to forms and regulations adopted by the Tax Commissioner.
2. Any broker as defined in § 6045(c) of the Internal Revenue Code making payments to a nonresident payee attributable to the rental of real property in this Commonwealth shall obtain from the nonresident payee the registration form required in subsection A of this section or satisfactory evidence of prior registration.  The broker shall retain a copy of the registration form in his files and shall transmit the original copy to the Department of Taxation on or before the fifteenth day of the month following the month in which the form was received from the payee.
3. If a nonresident payee fails to provide a completed registration form to the broker within sixty days after being requested by the broker or if such payee provides the broker with a registration form that is incomplete or false on its face, the broker shall file a registration form on behalf of the payee providing the payee’s name, address, identification number, and such other information as may be required by the Tax Commissioner.  In the case of each failure to file a registration form with the Tax Commissioner on the date prescribed therefor, the broker failing to file such registration form shall pay a $50 penalty for each month that each such failure to file continues, not exceeding six months in the aggregate.
4. Any payee who willfully supplies false or fraudulent information to a broker with the intent to evade the payment of income taxes properly due on the rental of real estate in this Commonwealth and any broker who has actual knowledge that any information supplied by a payee is false or fraudulent and fails to notify the Department of Taxation of such shall be guilty of a Class 1 misdemeanor.
5. For purposes of this section, the term “nonresident payee” means every individual who is not a resident, every nonresident estate or trust, every partnership and S corporation which has nonresident partners or shareholders, or every corporation which is not formed or organized under Virginia law.

History. 1990, c. 910.

Cross references.

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

§ 58.1-317. Filing of estimated tax by nonresidents upon the sale of real property; penalties.

1. Notwithstanding any other provision of this chapter, every nonresident payee receiving payments from the transfer of fee simple title in real property in this Commonwealth shall concurrent with the transfer of title register with the Department of Taxation pursuant to forms and regulations adopted by the Tax Commissioner.
2. The real estate reporting person as defined in § 6045(e) of the Internal Revenue Code and the regulations thereunder shall obtain from the nonresident payee the registration form required in subsection A of this section.  The real estate reporting person shall retain a copy of the registration form in his files and shall transmit the original copy to the Department of Taxation on or before the fifteenth day of the month following the month in which the title was transferred. As prescribed by the Tax Commissioner, a payee may be excused from the filing of a registration form by furnishing the real estate reporting person with a certificate stating that the payment is not subject to the corporation or individual income tax.
3. If a nonresident payee fails to provide a completed registration form to the real estate reporting person or if such payee provides the real estate reporting person with a registration form that is incomplete or false on its face, the real estate reporting person shall file a registration form on behalf of the payee providing the payee’s name, address, taxpayer identification number, and such other information as may be required by the Tax Commissioner.  In the case of each failure to file a registration form with the Tax Commissioner on the date prescribed therefor, the real estate reporting person failing to file such registration form shall pay a $50 penalty for each month that each such failure to file continues, not exceeding six months in the aggregate.
4. Any payee who willfully supplies false or fraudulent information to a real estate reporting person with the intent to evade the payment of income taxes properly due on the transfer of fee simple title to real estate in this Commonwealth and any real estate reporting person who has actual knowledge that any information supplied by a payee is false or fraudulent and fails to notify the Department of Taxation of such shall be guilty of a Class 1 misdemeanor.
5. For purposes of this section, the term “nonresident payee” means every individual who is not a resident, every nonresident estate or trust, every partnership and S corporation which has nonresident partners or shareholders, or every corporation which is not formed or organized under Virginia law.

History. 1990, c. 910.

Cross references.

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

Research References.

Virginia Forms (Matthew Bender). No. 16-6018 Form R-5 — Nonresident Real Property Owner Registration, et seq.

§ 58.1-318. Investments eligible for tax credits.

1. For purposes of this section, “funding portal” means a website that (i) allows accredited investors to participate in general solicitation transactions by an issuer that meet the requirements of § 4(a)(6) of the Securities Act of 1933, P.L. 112-106, or (ii) is an online broker or funding portal registered with the federal Securities Exchange Commission pursuant to § 4A(a) of the Securities Act of 1993, P.L. 112-106.
2. Any investment made by a taxpayer that is transacted via an online general solicitation, an online broker, or a funding portal shall be eligible for any tax credit authorized pursuant to this chapter, so long as the investment itself meets the criteria set forth in the statute specifically authorizing the credit.

History. 2013, c. 289.

Editor’s note.

Acts 2013, c. 289, cl. 2 provides: “That the Department of Taxation shall develop guidelines that will facilitate the submission of electronic documents required to be submitted by a taxpayer to document or verify that an investment eligible for a tax credit has been made.”

Law Review.

For annual survey article, “Taxation,” see 48 U. Rich. L. Rev. 169 (2013).

§ 58.1-319. Unclaimed tax credits; report.

If any tax credit authorized pursuant to this title has not been claimed by any taxpayer during the preceding five calendar years, such credit shall be deemed obsolete, and the Department shall not authorize any taxpayer to claim such credit against any tax levied pursuant to this title in future calendar years except as expressly authorized by the General Assembly. The Department shall report to the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance and Appropriations no later than February 1 of each year as to all credits that are deemed obsolete and shall publish such report on its website.

For purposes of this section, a credit shall be considered claimed in the calendar year when it is claimed by a taxpayer and shall not include the carryover or transfer of a credit in subsequent years as authorized by law, nor shall this section be interpreted to prevent the lawful carryover or transfer of a credit previously authorized by the Department.

History. 2013, c. 657.

The number of this section was assigned by the Virginia Code Commission, the number in the 2013 act having been § 58.1-318 .

Editor’s note.

The Virginia Code Commission authorized the substitution of “Senate Committee on Finance and Appropriations” for “Senate Committee on Finance.” March 10, 2021.

§ 58.1-320. Imposition of tax.

A tax is hereby annually imposed on the Virginia taxable income for each taxable year of every individual as follows:

Two percent on income not exceeding $3,000;

Three percent on income in excess of $3,000, but not in excess of $5,000;

Five percent on income in excess of $5,000, but not in excess of $12,000 for taxable years beginning before January 1, 1987;

Five percent on income in excess of $5,000 but not in excess of $14,000 for taxable years beginning January 1, 1987, through December 31, 1987;

Five percent on income in excess of $5,000 but not in excess of $15,000 for taxable years beginning January 1, 1988, through December 31, 1988;

Five percent on income in excess of $5,000 but not in excess of $16,000 for taxable years beginning January 1, 1989, through December 31, 1989;

Five percent on income in excess of $5,000 but not in excess of $17,000 for taxable years beginning January 1, 1990;

Five and three-quarters percent on income in excess of $12,000 for taxable years beginning before January 1, 1987;

Five and three-quarters percent on income in excess of $14,000 for taxable years beginning January 1, 1987, through December 31, 1987;

Five and three-quarters percent on income in excess of $15,000 for taxable years beginning January 1, 1988, through December 31, 1988;

Five and three-quarters percent on income in excess of $16,000 for taxable years beginning January 1, 1989, through December 31, 1989; and

Five and three-quarters percent on income in excess of $17,000 for taxable years beginning on and after January 1, 1990.

History. Code 1950, §§ 58-151.03, 58-151.011; 1971, Ex. Sess., c. 171; 1972, cc. 310, 563; 1978, cc. 159, 796; 1981, c. 402; 1984, c. 675; 1987, c. 9.

Cross references.

As to biodiesel and green fuels producers tax credits, see § 58.1-439.12:02 .

As to motion picture production tax credit, see § 58.1-439.12:03 .

For the Neighborhood Assistance Act Tax Credit, see § 58.1-439.18 et seq.

Editor’s note.

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 K 1, effective for the biennium ending June 30, 2022, provides: “1. Notwithstanding any provision of the Code of Virginia or this act to the contrary,

“a. Effective January 1, 2013, all corporations are required to file estimated tax payments and their annual income tax return and final payment using an electronic medium in a format prescribed by the Tax Commissioner.

“b. Effective July 1, 2013, every employer shall file the annual report required by § 58.1-478 and all forms required by § 58.1-472 , Code of Virginia, using an electronic medium in a format prescribed by the Tax Commissioner.

“c. Effective July 1, 2014, every employer shall file the annual report required by § 58.1-478 , not later than January 31 of the calendar year succeeding the calendar year in which wages were withheld from employees.

“d. Effective January 1, 2015, for taxable years beginning on and after January 1, 2014, every pass-through entity shall file the annual return required by § 58.1-392 , Code of Virginia, and make related payments using an electronic medium in a format prescribed by the Tax Commissioner.

“e. i. Effective until January 1, 2020, all estates and trusts are required to file estimated tax payments pursuant to § 58.1-490 et seq., Code of Virginia, and their annual income tax return pursuant to § 58.1-381 , Code of Virginia, and final payment using an electronic medium in a format prescribed by the Tax Commissioner.

“ii. Effective January 1, 2020, annual income tax returns of estates and trusts required pursuant to § 58.1-381 , Code of Virginia, that are prepared by an income tax return preparer, as defined in § 58.1-302 , Code of Virginia, must be filed using an electronic medium in a format prescribed by the Tax Commissioner.

“f. Taxpayers subject to the taxes imposed pursuant to § 58.1-320 and required to pay estimated tax pursuant to § 58.1-490 et seq., shall be required to file and remit using an electronic medium in a format prescribed by the Tax Commissioner all installment payments of estimated tax and all payments made with regard to a return or an extension of time to file if (i) any one such payment exceeds or is required to exceed $2,500, or if (ii) the taxpayer’s total tax liability exceeds or can be reasonably expected to exceed $10,000 in any taxable year beginning on or after January 1, 2021. This requirement shall apply to any payments made on and after July 1, 2021. The Department of Taxation shall provide reasonable advanced notice to taxpayers affected by this requirement.”

Law Review.

For survey of Virginia law on taxation for the year 1970-1971, see 57 Va. L. Rev. 1618 (1971).

For survey of Virginia law on taxation for the year 1971-1972, see 58 Va. L. Rev. 1338 (1972).

For survey of Virginia law on taxation for the year 1977-1978, see 64 Va. L. Rev. 1525 (1978).

§ 58.1-321. Exemptions and exclusions.

1. No tax levied pursuant to § 58.1-320 is imposed, nor any return required to be filed, by:
   1. A single individual where the Virginia adjusted gross income plus the modification specified in subdivision 5 of § 58.1-322.03 for such taxable year is less than $11,650 for taxable years beginning on and after January 1, 2010, but before January 1, 2012.A single individual where the Virginia adjusted gross income plus the modification specified in subdivision 5 of § 58.1-322.03 for such taxable year is less than $11,950 for taxable years beginning on and after January 1, 2012.
   2. An individual and spouse if their combined Virginia adjusted gross income plus the modification specified in subdivision 5 of § 58.1-322.03 is less than $23,300 for taxable years beginning on and after January 1, 2010 (or one-half of such amount in the case of a married individual filing a separate return) but before January 1, 2012, and less than $23,900 for taxable years beginning on and after January 1, 2012 (or one-half of such amount in the case of a married individual filing a separate return).For the purposes of this section, “Virginia adjusted gross income” means federal adjusted gross income for the taxable years with the modifications specified in §§ 58.1-322.01 and 58.1-322.02 .
2. Persons in the Armed Forces of the United States stationed on military or naval reservations within Virginia who are not domiciled in Virginia shall not be held liable to income taxation for compensation received from military or naval service.
3. For taxable years beginning on and after January 1, 2020, but before January 1, 2026, any amount that is includible in the federal adjusted gross income of an eligible veteran by reason of the whole or partial discharge of any loan described in § 108(f)(5)(B) of the Internal Revenue Code shall be excluded from Virginia adjusted gross income. This exclusion shall apply only to those discharges that (i) are described in clauses (i), (ii), and (iii) of § 108(f)(5)(A) of the Internal Revenue Code and (ii) occur after December 31, 2017. For the purposes of this subsection, “eligible veteran” means a veteran who has been rated by the U.S. Department of Veterans Affairs, or its successor agency pursuant to federal law, to have a 100 percent service-connected, permanent, and total disability.

History. Code 1950, §§ 58-151.03, 58.1-016; 1971, Ex. Sess., c. 171; 1972, cc. 310, 827; 1978, cc. 159, 796; 1981, c. 402; 1984, c. 675; 1987, c. 9; 1993, c. 803; 2004, Sp. Sess. I, c. 3; 2007, cc. 527, 543; 2017, c. 444; 2020, c. 606.

Editor’s note.

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. I, c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item § 3-5.11, effective for the biennium ending June 30, 2022, provides: “A. Effective for taxable years beginning on or after January 1, 2016, an individual shall be allowed a deduction from Virginia adjusted gross income as defined in § 58.1-321 , Code of Virginia, for the amount contributed during the taxable year to an ABLE savings trust account entered into with the Virginia College Savings Plan pursuant to Chapter 7 (§ 23.1-700 et seq.) of Title 23.1, Code of Virginia. The amount deducted on any individual income tax return in any taxable year shall be limited to $2,000 per ABLE savings trust account. No deduction shall be allowed pursuant to this section if such contributions are deducted on the contributor’s federal income tax return. If the contribution to an ABLE savings trust account exceeds $2,000 the remainder may be carried forward and subtracted in future taxable years until the ABLE savings trust contribution has been fully deducted; however, in no event shall the amount deducted in any taxable year exceed $2,000 per ABLE savings trust account.

“B. Notwithstanding the statute of limitations on assessments contained in § 58.1-312 , Code of Virginia, any deduction taken hereunder shall be subject to recapture in the taxable year or years in which distributions or refunds are made for any reason other than (i) to pay qualified disability expenses, as defined in § 529A of the Internal Revenue Code; or (ii) the beneficiary’s death.

“C. A contributor to an ABLE savings trust account who has attained age 70 shall not be subject to the limitation that the amount of the deduction not exceed $2,000 per ABLE savings trust account in any taxable year. Such taxpayer shall be allowed a deduction for the full amount contributed to an ABLE savings trust account, less any amounts previously deducted.

“D. The Tax Commissioner shall develop guidelines implementing the provisions of this section, including but not limited to the computation, carryover, and recapture of the deduction provided under this section. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq., Code of Virginia).”

The 2004 amendments.

The 2004 amendment by Sp. Sess. I, c. 3, effective September 1, 2004, in subdivision A 1, in the first paragraph, deleted “$3,000 for taxable years beginning before January 1, 1987; and less than” preceding “$5,000” and added “but before January 1, 2004” at the end and added the last two paragraphs; and in subdivision A 2, in the first paragraph, deleted “$3,000 for taxable years beginning before January 1, 1987; and less than” preceding “$8,000” and added “but before January 1, 2004” at the end, inserted the present second paragraph and in the last paragraph, added “for taxable years beginning before January 1, 2004” at the end of the first sentence and added the last sentence.

The 2007 amendments.

The 2007 amendments by cc. 527 and 543 are identical, and in subdivision A 1, added “but before January 1, 2008” at the end of the third paragraph and added the fourth through last paragraphs; and added the language beginning “but before January 1, 2008” at the end of the second paragraph in subdivision A 2.

The 2017 amendments.

The 2017 amendment by c. 444 rewrote the section.

The 2020 amendments.

The 2020 amendment by c. 606 added subsection C.

Law Review.

For 2007 annual survey article, “Taxation,” see 42 U. Rich. L. Rev. 515 (2007).

§ 58.1-322. Virginia taxable income of residents.

The Virginia taxable income of a resident individual means his federal adjusted gross income for the taxable year, which excludes combat pay for certain members of the Armed Forces of the United States as provided in § 112 of the Internal Revenue Code, as amended, and with the modifications specified in §§ 58.1-322.01 through 58.1-322.04 .

History. Code 1950, § 58-151.013; 1971, Ex. Sess., c. 171; 1972, c. 827; 1973, cc. 198, 345, 458; 1974, c. 682; 1975, c. 46; 1976, cc. 528, 694, 781; 1977, cc. 297, 612; 1978, cc. 67, 158; 1979, cc. 226, 596; 1981, cc. 402, 414; 1982, c. 633; 1983, cc. 452, 472; 1984, cc. 153, 162, 636, 674, 675, 729; 1985, cc. 221, 465; 1986, cc. 474, 515; 1987, cc. 9, 484, 531, 615; 1988, cc. 741, 743, 755, 756; 1989, cc. 39, 639, 749; 1989, Sp. Sess., c. 3; 1990, cc. 507, 525, 714; 1991, cc. 346, 361; 1992, cc. 665, 678, 686, 691; 1993, c. 803; 1994, cc. 488, 590; 1994, 1st Sp. Sess., c. 5; 1996, cc. 401, 624; 1997, cc. 106, 785, 861, 909; 1998, cc. 373, 874; 1999, cc. 285, 298, 339, 365, 485, 498, 518, 535, 588; 2000, cc. 382, 387, 394, 400, 419, 1021, 1039; 2001, c. 476; 2003, cc. 3, 58, 181, 209, 807, 980; 2004, Sp. Sess. I, c. 3; 2005, cc. 27, 67; 2006, cc. 214, 570, 599, 617, 939; 2007, cc. 359, 527, 543, 636, 942; 2008, cc. 149, 211; 2009, c. 508; 2010, cc. 802, 830; 2011, c. 851; 2012, cc. 2, 96, 256, 305, 578; 2013, cc. 88, 801; 2014, cc. 225, 729; 2015, cc. 60, 82, 227, 248, 311, 335, 336; 2016, cc. 304, 391; 2017, c. 444.

Editor’s note.

Acts 1990, cc. 507 and 525, cls. 3, as amended by Acts 1992, c. 671, cls. 1 and 2, provide: “That the Virginia Retirement System shall provide on July 1, 1993, to its present and future retirees an additional health care credit benefit pursuant to §§ 2.1-20.1:2, 2.1-20.1:3 and 2.1-20.1:4.”

Acts 1991, cc. 346 and 361, which amended this section, in cl. 2, provide that guidelines and rules issued by the Tax Commissioner for the administration of this act shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.).

Acts 1992, c. 686, which amended this section, in cl. 2, provides that the provisions of the 1992 act shall be applicable for taxable years beginning on and after January 1, 1994, provided the 1992 act is reenacted by the 1993 Session of the General Assembly, and shall expire for taxable years beginning on and after January 1, 1999. The General Assembly in 1993 did not reenact the 1992 act.

Acts 1992, c. 678, which added subdivision B 9, provides in cl. 2, that the amendments to this section shall be effective for taxable years beginning on and after January 1, 1987.

The 1989 amendments by cc. 39 and 639, effective July 1, 1989, and applicable for taxable years beginning on and after January 1, 1989, are identical, and added subdivision C 14. Acts 1989, cc. 39 and 639, cl. 2, as amended by Acts 1993, cc. 28 and 541, cls. 1 and 2, and by Acts 1998, c. 135, cls. 1 and 2, provide that the provisions of the 1989 acts shall expire for taxable years beginning on and after January 1, 2004.

Acts 1998, c. 373, which added subdivisions D 7a and D 7b, provides in cl. 2: “That the provisions of this act amending § 58.1-322 of the Code of Virginia shall be effective for taxable years beginning on and after January 1, 1996.”

Acts 1999, cc. 365, 498 and 588, which added subdivisions C 23, C 24, and C 25, provide in cl. 2: “That the provisions of this act shall be effective for taxable years beginning on and after January 1, 2000, unless one or more of the events listed in subsection C of § 58.1-3524 [relating to actual general fund revenues being less than forecasted general fund revenues] has occurred prior to such date. If any one of these events occurs before January 1, 2000, this act shall not become effective for taxable years beginning on and after January 1, 2000, but shall instead become effective for taxable years beginning on and after January 1 of the first year thereafter during which none of the events listed in subsection C of § 58.1-3524 have occurred during the immediately preceding calendar year.” None of the events listed in § 58.1-3524 C 1 to C 3 occurred prior to January 1, 2000.

Acts 1999, cc. 485 and 518, cl. 2 provides: “That the provisions of this act amending § 58.1-322 of the Code of Virginia that create a deduction and subtraction for savings trust accounts shall be effective for taxable years beginning on and after January 1, 1999. The other provisions of this act amending § 58.1-322 of the Code of Virginia are declaratory of existing law.”

Acts 2003, c. 980, cl. 2 provides: “That the provisions of this act are effective for taxable years beginning on or after January 1, 2003, except that any amount received in 2003 attributable to foreign source dividends which should have been paid in a prior taxable year pursuant to a final court order may be subtracted for taxable years beginning on and after January 1, 2003, but before January 1, 2004.”

Acts 2004, Sp. Sess. I, c. 3, cl. 2 provides: “That the provisions of this act amending §§ 58.1-302 , 58.1-391 , 58.1-392 , 58.1-402 , and 58.1-441 of the Code of Virginia and adding §§ 58.1-390.1 , 58.1-393.1 , 58.1-394.1 , 58.1-394.2 , and 58.1-395 to the Code of Virginia shall apply for taxable years beginning on and after January 1, 2004. The amendments to subdivision D 2 of § 58.1-322 of the Code of Virginia pursuant to the provisions of this act shall apply for taxable years beginning on and after January 1, 2006.”

Acts 2004, Sp. Sess. I, c. 3, cl. 9 provides: “That notwithstanding the effective date for the $100 increase in the personal exemption amount as provided herein in the amendment to subdivision D 2 a of § 58.1-322 of the Code of Virginia, such effective date shall be for taxable years beginning on and after January 1, 2005, provided that the Secretary of Finance certifies in writing by November 1, 2004, to the Governor and the Chairmen of the Senate Committee on Finance and the House Committee on Appropriations that sufficient new revenues as identified by the Secretary of Finance will be available to meet the additional fiscal impact of changing the effective date of the $100 increase in the personal exemption amount.” The Governor announced the certification of sufficient funds on August 23, 2004. Acts 2005, c. 67, made the provisions in subdivision D 2 effective for tax years beginning on and after January 1, 2005.

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. I, c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

Acts 2007, c. 942, which amends subdivision D 7, in cl. 2 provides: “That the provisions of this act shall be effective for taxable years beginning on or after January 1, 2009.”

Acts 2010, cc. 802 and 830, cl. 2 provides: “That no investment shall be qualified for a deduction pursuant to subdivision C 35 of § 58.1-322 or for a deduction pursuant to subdivision C 24 of § 58.1-402 if the investment is in a business that performs research in Virginia on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos. The foregoing provision shall not apply to research performed using stem cells other than human embryonic stem cells.”

Acts 2011, c. 851, cl. 3 provides: “That the provisions of this act are effective for taxable periods on or after January 1, 2011.”

Acts 2015, cc. 335 and 336, cl. 2 provides: “That beginning in 2015 the Department of Taxation shall record on an annual basis using the most recent taxable year data available the fiscal savings from the long-term capital gain and investment services partnership interest income subtraction accruing to (i) individuals pursuant to subdivision C 35 of § 58.1-322 of the Code of Virginia and (ii) corporations pursuant to subdivision C 24 of § 58.1-402 of the Code of Virginia. The Department shall also record the number of individual income tax returns and corporate income tax returns on which the subtraction was claimed. The Department shall report such information to the Governor, any member of the General Assembly, or other person upon request.”

At the direction of the Virginia Code Commission, “Chapter 7 (§ 23.1-700 et seq.) of Title 23.1” was substituted for “Chapter 4.9 (§ 23-38.75 et seq.) of Title 23” in subdivisions C 20 and D 7 a to conform to the recodification of Title 23 by Acts 2016, c. 588, effective October 1, 2016.

Acts 2017, c. 444 rewrote this section and recodified portions of this section as §§ 58.1-322.01 through 58.1-322.04 . Acts 2017, c. 762 amended former subsection C by adding a subdivision C 38. That subdivision has been given effect in § 58.1-322.02 .

The 1999 amendments.

The 1999 amendment by c. 285 inserted subdivision D 9.

The 1999 amendment by c. 298 inserted subdivision D 10.

The 1999 amendment by c. 339 added subdivision C 22 and substituted “deductions” for “deduction” in the third paragraph of subdivision D 5.

The 1999 amendment by c. 365, added subdivision C 23. For effective date, see the Editor’s note.

The 1999 amendment by cc. 485 and 518, are identical, effective for taxable years beginning on or after January 1, 1999, and inserted “or savings trust account” following “tuition contract” in subdivision C 20, and in subdivision D 7 a substituted “or contributor for the amount paid or contributed” for “for the amount paid” and inserted “or savings trust account” following “tuition contract” in the first sentence, added “or savings trust account” at the end of the second sentence, in the third sentence, inserted “or contributions” following “such payments” and inserted “or contributor’s” following “the purchaser’s,” in the fourth sentence, substituted “If the purchase price or annual contribution to a savings trust account” for “The deduction allowed under this section shall not be transferable. If the purchase price,” inserted “or savings trust contribution” preceding “has been fully” and added “or per savings trust account” at the end of the sentence, and added the last two sentences.

The 1999 amendment by c. 498, added present subdivisions C 23 and C 24. For effective date, see the Editor’s note.

The 1999 amendment by c. 535, effective for taxable years beginning on and after January 1, 1998, in subdivision D 7 a, at the beginning of the second sentence and in the third sentence, inserted “except as provided in subdivision 7 c,” added “and the exception set out in subdivision 7 c” at the end of subdivision 7 b, and added subdivision 7 c.

The 1999 amendment by c. 588, added subdivision C 25. For effective date, see the Editor’s note.

The 2000 amendments.

The 2000 amendment by cc. 382 and 400, effective July 1, 2000, and applicable for all taxable years beginning on or after January 1, 2000, are identical, and substituted “College Savings Plan” for “Higher Education Tuition Trust Fund” in subdivision C 20; substituted “College Savings Plan” for “Higher Education Tuition Trust Fund” in the first and next to the last sentences of subdivision D 7 a; and in subdivision D 7 c, in the first sentence, inserted “or contributor to a savings trust account,” inserted “prepaid tuition,” and inserted “or savings trust account,” and inserted “or contributed to a savings trust account” in the second sentence.

The 2000 amendment by c. 387 added subdivision C 26.

The 2000 amendment by c. 394, in subdivision C 4a, substituted “Through December 31, 2000, the same” for “A deduction equal to the” at the beginning, substituted “deduction” for “subtraction” and substituted “subtraction” for “deduction,” and added subdivision C 4b.

The 2000 amendment by c. 419 repealed subdivision C 8 which formerly read: “For taxable years beginning after December 31, 1983, the available portion of total excess cost recovery as defined in former § 58.1-323 B and for taxable years beginning after December 31, 1987, the excess cost recovery amount specified in § 58.1-323.1 B.”

The 2000 amendment by c. 1021, effective April 19, 2000, adds subdivision C 26 (now subdivision C 27).

The 2000 amendment by c. 1039, effective April 19, 2000, added subdivisions C 26 and C 27 (now subdivisions C 27 and C 28).

The 2001 amendments.

The 2001 amendment by c. 476, in subsection D 5, deleted the former first paragraph, concerning deductions for taxpayers age sixty-five or older for all taxable years beginning on and after January 1, 1990 and taxable year 1992 through 1993; deleted the former first and second sentences of the former second paragraph, preceding the single remaining sentence of the subdivision, concerning taxable years beginning January 1, 1994 and 1995, and deleted the former last paragraph, which read: “Beginning in taxable year 1995, the deductions under this subdivision shall not be reduced by any amount received pursuant to the (i) Social Security Act or (ii) Railroad Retirement Act and treated for federal income tax purposes as equivalent to social security.”

The 2003 amendments.

The 2003 amendment by c. 3, effective February 17, 2003, and c. 58, effective March 16, 2003, are nearly identical and substituted “65” for “sixty-five” in subdivision C 4a; substituted “39” for “thirty-nine” in subdivision C 11; substituted “30” for “thirty” in subdivision C 22; substituted “90” for “ninety” in subdivision C 23; added subdivision C 29 (now subdivision C 30); substituted “65” for “sixty-five” and “62 through 64” for “sixty-two through sixty-four” in subdivision D 5; substituted “70” for “seventy” in subdivision D 7c; substituted “20” for “twenty” in subdivision D 9; and substituted “long-term” for “long term” in subdivision D 10. The amendment by c. 3 also substituted “18” for “eighteen” in subdivision D 1a, while the amendment by c. 58 substituted “$.18” for “eighteen cents.”

The 2003 amendment by c. 181 substituted “65” for “sixty-five” in subdivision C 4a; substituted “39” for “thirty-nine” in subdivision C 11; substituted “30” for “thirty” in subdivision C 22; substituted “90” for “ninety” in subdivision C 23; added subdivision C 29 (now subdivision C 31); substituted “18” for “eighteen” in subdivision D 1 a; in subdivision D 5, substituted “65” for “sixty-five,” “62” for “sixty-two,” and “64” for “sixty-four”; substituted “70” for “seventy” in subdivision D 7 c; and substituted “20” for “twenty” in subdivision D 9.

The 2003 amendment by c. 209, effective March 16, 2003, substituted “that” for “which” following “purposes” in subdivision B 4; substituted “65” for “sixty-five” in subdivision C 4a; substituted “39” for “thirty-nine” in subdivision C 11; substituted “30” for “thirty” in subdivision C 22; substituted “90” for “ninety” in subdivision C 23; added subdivision C 29; substituted “$.18” for “eighteen cents” in subdivision D 1 a; in subdivision D 5, substituted “65” for “sixty-five,” “62” for “sixty-two,” and “64” for “sixty-four”; substituted “70” for “seventy” in subdivision D 7 c; substituted “20” for “twenty” in subdivision D 9; and substituted “long-term” for “long term” in subdivision D 10.

The 2003 amendment by c. 807 added “and” at the end of subdivision B 4, repealed former subdivision B 8, substituted “65” for “sixty-five” in subdivisions C 4a and D 5, substituted “39” for “thirty-nine” in subdivision C 11, repealed former subdivision C 16, substituted “30” for “thirty” in subdivision C 22, substituted “90” for “ninety” in subdivision C 23, substituted “$.18” for “eighteen cents” in subdivision D 1 a, substituted “70” for “seventy” in subdivision D 7 c, and substituted “20” for “twenty” in subdivision D 9.

The 2003 amendment by c. 980 substituted “65” for “sixty-five” in subdivision C 4a; deleted former subdivision C 7, which read: “Any amount included therein which is foreign source income as defined in § 58.1-302 ”; substituted “39” for “thirty-nine” in subdivision C 11; substituted “30” for “thirty” in subdivision C 22; substituted “$.18” for “eighteen cents” in subdivision D 1 a; in subdivision D 5, substituted “65” for “sixty-five,” “62” for “sixty-two,” and “64” for “sixty-four”; substituted “70” for “seventy” in subdivision D 7 c; and substituted “20” for “twenty” in subdivision D 9.

The section has been set out above as directed by the Virginia Code Commission.

The 2004 amendments.

The 2004 amendment by Sp. Sess. I, c. 3, effective September 1, 2004, in subsection D, in the introductory paragraph, substituted “Virginia” for “federal” and added “as defined in § 58.1-321 ” at the end; rewrote subdivision D 1 b; redesignated former subdivision D 5 as present subdivision D 5 a and inserted “but before January 1, 2004”; and added subdivisions D 5 b through D 5 f. Subdivision D 2 was rewritten, effective September 1, 2004 and applicable for taxable years beginning on and after January 1, 2006. See Editor’s note.

The 2005 amendments.

The 2005 amendment by c. 27, applicable for taxable years beginning on or after January 1, 2005, substituted “total annual salary from all employment for the taxable year” for “annual salary” in subdivision C 24.

The 2005 amendment by c. 67 substituted “January 1, 2005” for “January 1, 2006” twice in subdivision D 2 a.

The 2006 amendments.

The 2006 amendment by c. 214 added subdivision D 11.

The 2006 amendments by cc. 570 and 599 are identical, and added “or a credit under § 58.1-339.11 ” at the end of subdivision D 10.

The 2006 amendment by c. 617 added subdivision C 32.

The 2006 amendment by c. 939 added subdivision D 12.

The 2007 amendments.

The 2007 amendment by c. 359 added subsection G.

The 2007 amendments by cc. 527 and 543 are identical, and in subdivision D 2 a, inserted “but before January 1, 2008; and $930 for taxable years beginning on and after January 1, 2008” and made a related change.

The 2007 amendment by c. 636 added subdivision D 13.

The 2007 amendment by c. 942, effective for taxable years beginning on or after January 1, 2009, substituted “$4,000” for “$2,000” once in the second sentence, and twice in the third sentence, of subdivision D 7 a, and in the first sentence of subdivision D 7 c.

The 2008 amendments.

The 2008 amendments by cc. 149 and 211 are identical, and added subdivisions C 33 and C 34.

The 2009 amendments.

The 2009 amendment by c. 508 added subsection H.

The 2010 amendments.

The 2010 amendments by c. 802, effective April 21, 2010, and c. 830, effective July 1, 2010, added subdivision C 35. In subdivision C 35, c. 802 reads “investment shall be made between the dates of July 1, 2010,” while c. 830 reads “investment shall be made between the dates of April 1, 2010.” Subdivision C 35 has been set out in the form above at the direction of the Virginia Code Commission. See Editor’s note for applicability provision.

The 2011 amendments.

The 2011 amendment by c. 851, effective for taxable periods on or after January 1, 2011, rewrote subsections C and D eliminating certain obsolete language.

The 2012 amendments.

The 2012 amendments by c. 2, effective February 7, 2012, and c. 578, effective April 4, 2012, are identical, and, in subsection C, substituted “subdivision D 5” for “subdivision 5 of subsection D of this section” in subdivisions 4a and 4b; and in subdivision D 5, added sub-subdivision a and redesignated the existing provisions as sub-subdivision b.

The 2012 amendments by cc. 96 and 256 are identical, and deleted “of subsection D of this section” following “subdivision D 5” in subdivisions C 4a and C 4b.

The 2012 amendment by c. 305, in subsection C, substituted “subdivision D 5” for “subdivision 5 of subsection D of this section” in subdivisions 4a and 4b and in subdivision 32, substituted “provided that (i) the dealth benefit payment is made pursuant to an annuity contract with an insurance company and (ii) the death benefit payment is paid solely by lump sum” for “and are subject to federal income taxation” and added the last sentence.

The 2013 amendments.

The 2013 amendment by c. 88 added subdivision D 14.

The 2013 amendment by c. 801, in subdivision D 10, substituted “beginning on or” for “beginning on and” near the beginning, added “for taxable years beginning before January 1, 2014, a credit under § 58.1-339.11 ” at the end of the first sentence and added the last sentence.

The 2014 amendments.

The 2014 amendment by c. 225, in subdivision C 10, substituted “Virginia Lottery” for “State Lottery Department.”

The 2014 amendment by c. 729 added subdivisions B 10 and C 36 and made related changes.

The 2015 amendments.

The 2015 amendments by cc. 60 and 82 are identical, and added subdivision C 37.

The 2015 amendments by cc. 227 and 311 are identical, and substituted “college savings trust” for “savings trust” wherever it appeared in subdivision D 7.

The 2015 amendment by c. 248 inserted “but before January 1, 2015,” in subdivision C 22.

The 2015 amendments by cc. 335 and 336 are identical, and substituted “June 30, 2020” for “June 30, 2015” in subdivision C 35.

The 2016 amendments.

The 2016 amendments by cc. 304 and 391 are identical, and added subdivision B 11 and made related changes.

The 2017 amendments.

The 2017 amendment by c. 444, substituted “§§ 58.1-322.01 through 58.1-322.04 ” for “this section” in subsection A; and deleted subsections B through H, which were recodified as §§ 58.1-322.01 through 58.1-322.04 . The subsection A designation was subsequently deleted at the direction of the Virginia Code Commission.

Law Review.

For survey of Virginia law on taxation for the year 1971-1972, see 58 Va. L. Rev. 1338 (1972).

For survey of Virginia law on taxation for the year 1975-1976, see 62 Va. L. Rev. 1479 (1976).

For survey of Virginia law on taxation for the year 1976-1977, see 63 Va. L. Rev. 1486 (1977).

For survey of Virginia law on taxation for the year 1978-1979, see 66 Va. L. Rev. 367 (1980).

For survey of Virginia law on taxation for the year 1989, see 23 U. Rich. L. Rev. 839 (1989).

For article on federal taxation of reinvested corporate earnings, see 24 Wm. & Mary L. Rev. 1 (1982).

For survey article on developments in the law affecting Virginia taxation, see 38 U. Rich. L. Rev. 267 (2003).

For annual survey of Virginia law on taxation, see 40 U. Rich. L. Rev. 291 (2005).

For 2006 survey article, “Taxation,” see 41 U. Rich. L. Rev. 283 (2006).

For 2007 annual survey article, “Taxation,” see 42 U. Rich. L. Rev. 515 (2007).

For article on recent developments in the law affecting Virginia taxation, see 43 U. Rich. L. Rev. 405 (2008).

For annual survey article, “Taxation,” see 44 U. Rich. L. Rev. 599 (2009).

For article, “Medical Malpractice Law,” see 45 U. Rich. L. Rev. 319 (2010).

For article, “Taxation,” see 45 U. Rich. L. Rev. 377 (2010).

For annual survey of Virginia law article, “Taxation,” see 47 U. Rich. L. Rev. 307 (2012).

For annual survey article, “Taxation,” see 48 U. Rich. L. Rev. 169 (2013).

Michie’s Jurisprudence.

For related discussion, see 12B M.J. Military, § 18.

§ 58.1-322.01. Virginia taxable income; additions.

In computing Virginia taxable income pursuant to § 58.1-322 , to the extent excluded from federal adjusted gross income, there shall be added:

1. Interest, less related expenses to the extent not deducted in determining federal income, on obligations of any state other than Virginia, or of a political subdivision of any such other state unless created by compact or agreement to which Virginia is a party.
2. Interest or dividends, less related expenses to the extent not deducted in determining federal taxable income, on obligations or securities of any authority, commission, or instrumentality of the United States, which the laws of the United States exempt from federal income tax but not from state income taxes.
3. Unrelated business taxable income as defined by § 512 of the Internal Revenue Code.
4. The amount of a lump sum distribution from a qualified retirement plan, less the minimum distribution allowance and any amount excludable for federal income tax purposes that is excluded from federal adjusted gross income solely by virtue of an individual’s election to use the averaging provisions under § 402 of the Internal Revenue Code.
5. The amount required to be included in income for the purpose of computing the partial tax on an accumulation distribution pursuant to § 667 of the Internal Revenue Code.
6. For taxable years beginning on and after January 1, 2014, any loss for the taxable year that was deducted as a capital loss for federal income tax purposes by an account holder attributable to such person’s first-time home buyer savings account established pursuant to Chapter 12 (§ 36-171 et seq.) of Title 36. For purposes of this subdivision, “account holder” and “first-time home buyer savings account” mean the same as those terms are defined in § 36-171 .
7. For taxable years beginning on and after January 1, 2016, to the extent that tax credit is allowed for the same donation pursuant to § 58.1-439.12:12 , any amount claimed as a federal income tax deduction for such donation under § 170 of the Internal Revenue Code, as amended or renumbered.

History. 2017, c. 444.

Editor’s note.

To conform to the recodification of Title 55 by Acts 2019, c. 712, effective October 1, 2019, the following substitution was made at the direction of the Virginia Code Commission: substituted “Chapter 12 (§ 36-171 et seq.) of Title 36” for “Chapter 32 (§ 55-555 et seq.) of Title 55” and “36-171” for “55-555.”

§ 58.1-322.02. Virginia taxable income; subtractions.

In computing Virginia taxable income pursuant to § 58.1-322 , to the extent included in federal adjusted gross income, there shall be subtracted:

1. Income derived from obligations, or on the sale or exchange of obligations, of the United States and on obligations or securities of any authority, commission, or instrumentality of the United States to the extent exempt from state income taxes under the laws of the United States, including, but not limited to, stocks, bonds, treasury bills, and treasury notes but not including interest on refunds of federal taxes, interest on equipment purchase contracts, or interest on other normal business transactions.
2. Income derived from obligations, or on the sale or exchange of obligations, of the Commonwealth or of any political subdivision or instrumentality of the Commonwealth.
3. Benefits received under Title II of the Social Security Act and other benefits subject to federal income taxation solely pursuant to § 86 of the Internal Revenue Code.
4. Up to $20,000 of disability income, as defined in § 22(c)(2)(B)(iii) of the Internal Revenue Code; however, any person who claims a deduction under subdivision 5 of § 58.1-322.03 may not also claim a subtraction under this subdivision.
5. The amount of any refund or credit for overpayment of income taxes imposed by the Commonwealth or any other taxing jurisdiction.
6. The amount of wages or salaries eligible for the federal Work Opportunity Credit which was not deducted for federal purposes on account of the provisions of § 280C(a) of the Internal Revenue Code.
7. Any amount included therein less than $600 from a prize awarded by the Virginia Lottery.
8. The wages or salaries received by any person for active and inactive service in the National Guard of the Commonwealth of Virginia, not to exceed the amount of income derived from 39 calendar days of such service or $3,000, whichever amount is less; however, only those persons in the ranks of O3 and below shall be entitled to the deductions specified in this subdivision.
9. Amounts received by an individual, not to exceed $1,000 for taxable years beginning on or before December 31, 2019, and $5,000 for taxable years beginning on or after January 1, 2020, as a reward for information provided to a law-enforcement official or agency, or to a nonprofit corporation created exclusively to assist such law-enforcement official or agency, in the apprehension and conviction of perpetrators of crimes. This subdivision shall not apply to the following: an individual who is an employee of, or under contract with, a law-enforcement agency, a victim or the perpetrator of the crime for which the reward was paid, or any person who is compensated for the investigation of crimes or accidents.
10. The amount of “qualified research expenses” or “basic research expenses” eligible for deduction for federal purposes, but which were not deducted, on account of the provisions of § 280C(c) of the Internal Revenue Code and which shall be available to partners, shareholders of S corporations, and members of limited liability companies to the extent and in the same manner as other deductions may pass through to such partners, shareholders, and members.
11. Any income received during the taxable year derived from a qualified pension, profit-sharing, or stock bonus plan as described by § 401 of the Internal Revenue Code, an individual retirement account or annuity established under § 408 of the Internal Revenue Code, a deferred compensation plan as defined by § 457 of the Internal Revenue Code, or any federal government retirement program, the contributions to which were deductible from the taxpayer’s federal adjusted gross income, but only to the extent the contributions to such plan or program were subject to taxation under the income tax in another state.
12. Any income attributable to a distribution of benefits or a refund from a prepaid tuition contract or savings trust account with the Virginia College Savings Plan, created pursuant to Chapter 7 (§ 23.1-700 et seq.) of Title 23.1. The subtraction for any income attributable to a refund shall be limited to income attributable to a refund in the event of a beneficiary’s death, disability, or receipt of a scholarship.
13. All military pay and allowances, to the extent included in federal adjusted gross income and not otherwise subtracted, deducted, or exempted under this section, earned by military personnel while serving by order of the President of the United States with the consent of Congress in a combat zone or qualified hazardous duty area that is treated as a combat zone for federal tax purposes pursuant to § 112 of the Internal Revenue Code.
14. For taxable years beginning before January 1, 2015, the gain derived from the sale or exchange of real property or the sale or exchange of an easement to real property which results in the real property or the easement thereto being devoted to open-space use, as that term is defined in § 58.1-3230 , for a period of time not less than 30 years. To the extent that a subtraction is taken in accordance with this subdivision, no tax credit under this chapter for donating land for its preservation shall be allowed for three years following the year in which the subtraction is taken.
15. Fifteen thousand dollars of military basic pay for military service personnel on extended active duty for periods in excess of 90 days; however, the subtraction amount shall be reduced dollar-for-dollar by the amount by which the taxpayer’s military basic pay exceeds $15,000 and shall be reduced to zero if such military basic pay amount is equal to or exceeds $30,000.
16. The first $15,000 of salary for each federal and state employee whose total annual salary from all employment for the taxable year is $15,000 or less.
17. Unemployment benefits taxable pursuant to § 85 of the Internal Revenue Code.
18. Any amount received as military retirement income by an individual awarded the Congressional Medal of Honor.
19. Items of income attributable to, derived from, or in any way related to (i) assets stolen from, hidden from, or otherwise lost by an individual who was a victim or target of Nazi persecution or (ii) damages, reparations, or other consideration received by a victim or target of Nazi persecution to compensate such individual for performing labor against his will under the threat of death, during World War II and its prelude and direct aftermath. This subtraction shall not apply to assets acquired with such items of income or with the proceeds from the sale of assets stolen from, hidden from, or otherwise lost to, during World War II and its prelude and direct aftermath, a victim or target of Nazi persecution. The provisions of this subdivision shall only apply to an individual who was the first recipient of such items of income and who was a victim or target of Nazi persecution, or a spouse, surviving spouse, or child or stepchild of such victim.

    As used in this subdivision:

    “Nazi regime” means the country of Nazi Germany, areas occupied by Nazi Germany, those European countries allied with Nazi Germany, or any other neutral European country or area in Europe under the influence or threat of Nazi invasion.

    “Victim or target of Nazi persecution” means any individual persecuted or targeted for persecution by the Nazi regime who had assets stolen from, hidden from, or otherwise lost as a result of any act or omission in any way relating to (i) the Holocaust, (ii) World War II and its prelude and direct aftermath, (iii) transactions with or actions of the Nazi regime, (iv) treatment of refugees fleeing Nazi persecution, or (v) the holding of such assets by entities or persons in the Swiss Confederation during World War II and its prelude and aftermath. A “victim or target of Nazi persecution” also includes any individual forced into labor against his will, under the threat of death, during World War II and its prelude and direct aftermath.

20. The military death gratuity payment made after September 11, 2001, to the survivor of deceased military personnel killed in the line of duty, pursuant to 10 U.S.C. Chapter 75; however, the subtraction amount shall be reduced dollar-for-dollar by the amount that the survivor may exclude from his federal gross income in accordance with § 134 of the Internal Revenue Code.
21. The death benefit payments from an annuity contract that are received by a beneficiary of such contract, provided that (i) the death benefit payment is made pursuant to an annuity contract with an insurance company and (ii) the death benefit payment is paid solely by lump sum. The subtraction under this subdivision shall be allowed only for that portion of the death benefit payment that is included in federal adjusted gross income.
22. Any gain recognized from the sale of launch services to space flight participants, as defined in 49 U.S.C. § 70102, or launch services intended to provide individuals with the training or experience of a launch, without performing an actual launch. To qualify for a deduction under this subdivision, launch services must be performed in Virginia or originate from an airport or spaceport in Virginia.
23. Any gain recognized as a result of resupply services contracts for delivering payload, as defined in 49 U.S.C. § 70102, entered into with the Commercial Orbital Transportation Services division of the National Aeronautics and Space Administration or other space flight entity, as defined in § 8.01-227.8 , and launched from an airport or spaceport in Virginia.
24. Any income taxed as a long-term capital gain for federal income tax purposes, or any income taxed as investment services partnership interest income (otherwise known as investment partnership carried interest income) for federal income tax purposes. To qualify for a subtraction under this subdivision, such income shall be attributable to an investment in a “qualified business,” as defined in § 58.1-339.4 , or in any other technology business approved by the Secretary of Administration, provided that the business has its principal office or facility in the Commonwealth and less than $3 million in annual revenues in the fiscal year prior to the investment. To qualify for a subtraction under this subdivision, the investment shall be made between the dates of April 1, 2010, and June 30, 2020. No taxpayer who has claimed a tax credit for an investment in a “qualified business” under § 58.1-339.4 shall be eligible for the subtraction under this subdivision for an investment in the same business.
25. For taxable years beginning on and after January 1, 2014, any income of an account holder for the taxable year taxed as (i) a capital gain for federal income tax purposes attributable to such person’s first-time home buyer savings account established pursuant to Chapter 12 (§ 36-171 et seq.) of Title 36 and (ii) interest income or other income for federal income tax purposes attributable to such person’s first-time home buyer savings account. Notwithstanding the statute of limitations on assessments contained in § 58.1-312 , any subtraction taken under this subdivision shall be subject to recapture in the taxable year or years in which moneys or funds withdrawn from the first-time home buyer savings account were used for any purpose other than the payment of eligible costs by or on behalf of a qualified beneficiary, as provided under § 36-174 . The amount subject to recapture shall be a portion of the amount withdrawn in the taxable year that was used for other than the payment of eligible costs, computed by multiplying the amount withdrawn and used for other than the payment of eligible costs by the ratio of the aggregate earnings in the account at the time of the withdrawal to the total balance in the account at such time. However, recapture shall not apply to the extent of moneys or funds withdrawn that were (i) withdrawn by reason of the qualified beneficiary’s death or disability; (ii) a disbursement of assets of the account pursuant to a filing for protection under the United States Bankruptcy Code, 11 U.S.C. §§ 101 through 1330; or (iii) transferred from an account established pursuant to Chapter 12 (§ 36-171 et seq.) of Title 36 into another account established pursuant to such chapter for the benefit of another qualified beneficiary. For purposes of this subdivision, “account holder,” “eligible costs,” “first-time home buyer savings account,” and “qualified beneficiary” mean the same as those terms are defined in § 36-171.
26. For taxable years beginning on and after January 1, 2015, any income for the taxable year attributable to the discharge of a student loan solely by reason of the student’s death. For purposes of this subdivision, “student loan” means the same as that term is defined under § 108(f) of the Internal Revenue Code.
27. 1. Income, including investment services partnership interest income (otherwise known as investment partnership carried interest income), attributable to an investment in a Virginia venture capital account. To qualify for a subtraction under this subdivision, the investment shall be made on or after January 1, 2018, but before December 31, 2023. No subtraction shall be allowed under this subdivision for an investment in a company that is owned or operated by a family member or an affiliate of the taxpayer. No subtraction shall be allowed under this subdivision for a taxpayer who has claimed a subtraction under subdivision 24 or a tax credit under § 58.1-339.4 for the same investment.
    2. As used in this subdivision 27: “Qualified portfolio company” means a company that (i) has its principal place of business in the Commonwealth; (ii) has a primary purpose of production, sale, research, or development of a product or service other than the management or investment of capital; and (iii) provides equity in the company to the Virginia venture capital account in exchange for a capital investment. “Qualified portfolio company” does not include a company that is an individual or sole proprietorship. “Virginia venture capital account” means an investment fund that has been certified by the Department as a Virginia venture capital account. In order to be certified as a Virginia venture capital account, the operator of the investment fund shall register the investment fund with the Department prior to December 31, 2023, (i) indicating that it intends to invest at least 50 percent of the capital committed to its fund in qualified portfolio companies and (ii) providing documentation that it employs at least one investor who has at least four years of professional experience in venture capital investment or substantially equivalent experience. “Substantially equivalent experience” includes, but is not limited to, an undergraduate degree from an accredited college or university in economics, finance, or a similar field of study. The Department may require an investment fund to provide documentation of the investor’s training, education, or experience as deemed necessary by the Department to determine substantial equivalency. If the Department determines that the investment fund employs at least one investor with the experience set forth herein, the Department shall certify the investment fund as a Virginia venture capital account at such time as the investment fund actually invests at least 50 percent of the capital committed to its fund in qualified portfolio companies.
28. 1. Income attributable to an investment in a Virginia real estate investment trust. To qualify for a subtraction under this subdivision, the investment shall be made on or after January 1, 2019, but before December 31, 2024. No subtraction shall be allowed for an investment in a trust that is managed by a family member or an affiliate of the taxpayer. No subtraction shall be allowed under this subdivision for a taxpayer who has claimed a subtraction under subdivision 24 or 27 or a tax credit under § 58.1-339.4 for the same investment.
    2. As used in this subdivision 28: “Distressed” means satisfying the criteria applicable to a locality described in subdivision E 2 of § 2.2-115 . “Double distressed” means satisfying the criteria applicable to a locality described in subdivision E 3 of § 2.2-115 . “Virginia real estate investment trust” means a real estate investment trust, as defined in 26 U.S.C. § 856, that has been certified by the Department as a Virginia real estate investment trust. In order to be certified as a Virginia real estate investment trust, the trustee shall register the trust with the Department prior to December 31, 2024, indicating that it intends to invest at least 90 percent of trust funds in Virginia and at least 40 percent of trust funds in real estate in localities that are distressed or double distressed. If the Department determines that the trust satisfies the preceding criteria, the Department shall certify the trust as a Virginia real estate investment trust at such time as the trust actually invests at least 90 percent of trust funds in Virginia and at least 40 percent of trust funds in real estate in localities that are distressed or double distressed.
29. For taxable years beginning on and after January 1, 2019, any gain recognized from the taking of real property by condemnation proceedings.
30. For taxable years beginning before January 1, 2021, up to $100,000 of all grant funds received by the taxpayer under the Rebuild Virginia program established by the Governor and administered by the Department of Small Business and Supplier Diversity.

History. 2017, cc. 444, 762; 2018, c. 821; 2019, c. 270; 2020, cc. 324, 375, 738, 900; 2021, Sp. Sess. I, cc. 117, 118, 552; 2022 3, § 1, effective February 23, 2022.

Editor’s note.

Acts 2017, c. 762 amended former § 58.1-322 C, from which this section is derived. Pursuant to § 30-152, the 2017 amendment by c. 762 has been given effect in this section by adding subdivision 27.

Acts 2017, c. 762, cl. 2 provides: “That prior to December 31, 2017, the Department of Taxation shall promulgate regulations in accordance with the Administrative Process Act ( § 2.2-4000 et seq. of the Code of Virginia) establishing procedures implementing the provisions of this act relating to (i) the registration of an investment fund as a Virginia venture capital account; (ii) the provision of documentation regarding an investor’s training, education, or experience as deemed necessary by the Department to meet the requirements of this act; and (iii) the certification of an investment fund as a Virginia venture capital account by the Department of Taxation.”

Acts 2017, c. 762, cl. 3 provides: “That the Department of Taxation shall report annually by November 1 of each year to the Chairmen of the House Committee on Appropriations and the Senate Committee on Finance regarding the number of registrations and certifications of Virginia venture capital accounts.”

Acts 2018, c. 821, cl. 2 provides: “That prior to December 31, 2018, the Department of Taxation shall develop guidelines establishing procedures implementing the provisions of this act relating to the registration and certification of a real estate investment trust as a Virginia real estate investment trust. Such guidelines shall be exempt from the provisions of the Administrative Process Act ( § 2.2-4000 et seq. of the Code of Virginia).”

Acts 2018, c. 821, cl. 3 provides: “That the Department of Taxation shall report annually by November 1 of each year to the Chairmen of the House Committee on Appropriations and the Senate Committee on Finance regarding the number of registrations and certifications of Virginia real estate investment trusts.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 111 C, effective for the biennium ending June 30, 2022, provides: “Notwithstanding any contrary provision of law, the authority and responsibilities of the Secretary of Technology referenced in § 2.2-205 , § 2.2-2221, § 2.2-2221.1, § 2.2-2233.1, § 2.2-2240.1 , § 2.2-2485 , § 2.2-2698 , § 2.2-2699.1 , § 2.2-2738 , § 15.2-2425 , § 23.1-2911.1 , § 23.1-3102 , § 23.1-3132 , § 58.1-322.02 , and § 58.1-402 , Code of Virginia, shall be executed by the Secretary of Commerce and Trade. Notwithstanding any contrary provision of law, the authority and responsibilities of the Secretary of Technology referenced in § 2.2-225 , Code of Virginia, shall be divided between the Secretary of Administration and the Secretary of Commerce and Trade as determined by the Governor.”

To conform to the recodification of Title 55 by Acts 2019, c. 712, effective October 1, 2019, the following substitutions were made at the direction of the Virginia Code Commission: substituted “Chapter 12 ( § 36-171 et seq.) of Title 36” for “Chapter 32 ( § 55-555 et seq.) of Title 55,” “36-174” for “55-558” and “36-171” for “55-555.”

The 2018 amendments.

The 2018 amendment by c. 821 added subdivision 28.

The 2019 amendments.

The 2019 amendment by c. 270 added subdivision 29.

The 2020 amendments.

The 2020 amendments by cc. 324 and 373 are identical, and in subdivision 9, inserted “taxable years beginning on or before December 31, 2019, and $5,000” and substituted “for taxable years beginning on or after January 1, 2020” for “in any taxable year.”

The 2020 amendment by c. 738, substituted “Administration” for “Technology” in the second sentence in subdivision 24.

The 2020 amendment by c. 900 substituted “surviving spouse” for “widow, widower” in the last sentence in the first paragraph in subdivision 19.

The 2021 Sp. Sess. I amendments.

The 2021 amendments by Sp. Sess. I, cc. 117 and 118, effective March 15, 2021, and c. 552, cl. 11, effective April 7, 2021, are identical and added subdivision 30.

The 2022 amendments.

The 2022 amendments, c. 3, effective February 23, 2022, in subdivision 30, deleted “on and after January 1, 2020, but” following “For taxable years beginning.”

OPINIONS OF THE ATTORNEY GENERAL

Calculation of income. —

The Department of Taxation has discretion under current Virginia law to adopt a pro-rata methodology to calculate the amount of a retirement plan distribution that may be subtracted from Virginia taxable income pursuant to subdivision 11 of § 58.1-322.02 . See opinion of Attorney General to The Honorable R. Creigh Deeds, Member, Senate of Virginia, 19-058, (10/2/20).

§ 58.1-322.03. Virginia taxable income; deductions.

In computing Virginia taxable income pursuant to § 58.1-322 , there shall be deducted from Virginia adjusted gross income as defined in § 58.1-321 :

1. 1. The amount allowable for itemized deductions for federal income tax purposes where the taxpayer has elected for the taxable year to itemize deductions on his federal return, but reduced by the amount of income taxes imposed by the Commonwealth or any other taxing jurisdiction and deducted on such federal return and increased by an amount that, when added to the amount deducted under § 170 of the Internal Revenue Code for mileage, results in a mileage deduction at the state level for such purposes at a rate of 18 cents per mile; or
   2. Provided that the taxpayer has not itemized deductions for the taxable year on his federal income tax return: (i) for taxable years beginning before January 1, 2019, and on and after January 1, 2026, $3,000 for single individuals and $6,000 for married persons (one-half of such amounts in the case of a married individual filing a separate return) and (ii) for taxable years beginning on and after January 1, 2019, but before January 1, 2026, $4,500 for single individuals and $9,000 for married persons (one-half of such amounts in the case of a married individual filing a separate return). For purposes of this section, any person who may be claimed as a dependent on another taxpayer’s return for the taxable year may compute the deduction only with respect to earned income.
2. 1. A deduction in the amount of $930 for each personal exemption allowable to the taxpayer for federal income tax purposes.
   2. Each blind or aged taxpayer as defined under § 63(f) of the Internal Revenue Code shall be entitled to an additional personal exemption in the amount of $800.

      The additional deduction for blind or aged taxpayers allowed under this subdivision shall be allowable regardless of whether the taxpayer itemizes deductions for the taxable year for federal income tax purposes.

3. A deduction equal to the amount of employment-related expenses upon which the federal credit is based under § 21 of the Internal Revenue Code for expenses for household and dependent care services necessary for gainful employment.
4. An additional $1,000 deduction for each child residing for the entire taxable year in a home under permanent foster care placement as defined in § 63.2-908 , provided that the taxpayer can also claim the child as a personal exemption under § 151 of the Internal Revenue Code.
5. 1. A deduction in the amount of $12,000 for individuals born on or before January 1, 1939.
   2. A deduction in the amount of $12,000 for individuals born after January 1, 1939, who have attained the age of 65. This deduction shall be reduced by $1 for every $1 that the taxpayer’s adjusted federal adjusted gross income exceeds $50,000 for single taxpayers or $75,000 for married taxpayers. For married taxpayers filing separately, the deduction shall be reduced by $1 for every $1 that the total combined adjusted federal adjusted gross income of both spouses exceeds $75,000.

      For the purposes of this subdivision, “adjusted federal adjusted gross income” means federal adjusted gross income minus any benefits received under Title II of the Social Security Act and other benefits subject to federal income taxation solely pursuant to § 86 of the Internal Revenue Code, as amended.

6. The amount an individual pays as a fee for an initial screening to become a possible bone marrow donor, if (i) the individual is not reimbursed for such fee or (ii) the individual has not claimed a deduction for the payment of such fee on his federal income tax return.
7. 1. A deduction shall be allowed to the purchaser or contributor for the amount paid or contributed during the taxable year for a prepaid tuition contract or college savings trust account entered into with the Virginia College Savings Plan, pursuant to Chapter 7 (§ 23.1-700 et seq.) of Title 23.1. Except as provided in subdivision b, the amount deducted on any individual income tax return in any taxable year shall be limited to $4,000 per prepaid tuition contract or college savings trust account. No deduction shall be allowed pursuant to this subdivision 7 if such payments or contributions are deducted on the purchaser’s or contributor’s federal income tax return. If the purchase price or annual contribution to a college savings trust account exceeds $4,000, the remainder may be carried forward and subtracted in future taxable years until the purchase price or college savings trust contribution has been fully deducted; however, except as provided in subdivision b, in no event shall the amount deducted in any taxable year exceed $4,000 per contract or college savings trust account. Notwithstanding the statute of limitations on assessments contained in § 58.1-312 , any deduction taken hereunder shall be subject to recapture in the taxable year or years in which distributions or refunds are made for any reason other than (i) to pay qualified higher education expenses, as defined in § 529 of the Internal Revenue Code or (ii) the beneficiary’s death, disability, or receipt of a scholarship. For the purposes of this subdivision, “purchaser” or “contributor” means the person shown as such on the records of the Virginia College Savings Plan as of December 31 of the taxable year. In the case of a transfer of ownership of a prepaid tuition contract or college savings trust account, the transferee shall succeed to the transferor’s tax attributes associated with a prepaid tuition contract or college savings trust account, including, but not limited to, carryover and recapture of deductions.
   2. A purchaser of a prepaid tuition contract or contributor to a college savings trust account who has attained age 70 shall not be subject to the limitation that the amount of the deduction not exceed $4,000 per prepaid tuition contract or college savings trust account in any taxable year. Such taxpayer shall be allowed a deduction for the full amount paid for the contract or contributed to a college savings trust account, less any amounts previously deducted.
8. The total amount an individual actually contributed in funds to the Virginia Public School Construction Grants Program and Fund, established in Chapter 11.1 (§ 22.1-175.1 et seq.) of Title 22.1, provided that the individual has not claimed a deduction for such amount on his federal income tax return.
9. An amount equal to 20 percent of the tuition costs incurred by an individual employed as a primary or secondary school teacher licensed pursuant to Chapter 15 (§ 22.1-289.1 et seq.) of Title 22.1 to attend continuing teacher education courses that are required as a condition of employment; however, the deduction provided by this subdivision shall be available only if (i) the individual is not reimbursed for such tuition costs and (ii) the individual has not claimed a deduction for the payment of such tuition costs on his federal income tax return.
10. The amount an individual pays annually in premiums for long-term health care insurance, provided that the individual has not claimed a deduction for federal income tax purposes, or, for taxable years beginning before January 1, 2014, a credit under § 58.1-339.11 . For taxable years beginning on and after January 1, 2014, no such deduction for long-term health care insurance premiums paid by the individual during the taxable year shall be allowed if the individual has claimed a federal income tax deduction for such taxable year for long-term health care insurance premiums paid by him.
11. Contract payments to a producer of quota tobacco or a tobacco quota holder, or their spouses, as provided under the American Jobs Creation Act of 2004 (P.L. 108-357), but only to the extent that such payments have not been subtracted pursuant to subsection D of § 58.1-402 , as follows:
    1. If the payment is received in installment payments, then the recognized gain may be subtracted in the taxable year immediately following the year in which the installment payment is received.
    2. If the payment is received in a single payment, then 10 percent of the recognized gain may be subtracted in the taxable year immediately following the year in which the single payment is received. The taxpayer may then deduct an equal amount in each of the nine succeeding taxable years.
12. An amount equal to 20 percent of the sum paid by an individual pursuant to Chapter 6 (§ 58.1-600 et seq.), not to exceed $500 in each taxable year, in purchasing for his own use the following items of tangible personal property: (i) any clothes washers, room air conditioners, dishwashers, and standard size refrigerators that meet or exceed the applicable energy star efficiency requirements developed by the U.S. Environmental Protection Agency and the U.S. Department of Energy; (ii) any fuel cell that (a) generates electricity using an electrochemical process, (b) has an electricity-only generation efficiency greater than 35 percent, and (c) has a generating capacity of at least two kilowatts; (iii) any gas heat pump that has a coefficient of performance of at least 1.25 for heating and at least 0.70 for cooling; (iv) any electric heat pump hot water heater that yields an energy factor of at least 1.7; (v) any electric heat pump that has a heating system performance factor of at least 8.0 and a cooling seasonal energy efficiency ratio of at least 13.0; (vi) any central air conditioner that has a cooling seasonal energy efficiency ratio of at least 13.5; (vii) any advanced gas or oil water heater that has an energy factor of at least 0.65; (viii) any advanced oil-fired boiler with a minimum annual fuel-utilization rating of 85; (ix) any advanced oil-fired furnace with a minimum annual fuel-utilization rating of 85; and (x) programmable thermostats.
13. The lesser of $5,000 or the amount actually paid by a living donor of an organ or other living tissue for unreimbursed out-of-pocket expenses directly related to the donation that arose within 12 months of such donation, provided that the donor has not taken a medical deduction in accordance with the provisions of § 213 of the Internal Revenue Code for such expenses. The deduction may be taken in the taxable year in which the donation is made or the taxable year in which the 12-month period expires.
14. For taxable years beginning on and after January 1, 2013, the amount an individual age 66 or older with earned income of at least $20,000 for the year and federal adjusted gross income not in excess of $30,000 for the year pays annually in premiums for (i) a prepaid funeral insurance policy covering the individual or (ii) medical or dental insurance for any person for whom individual tax filers may claim a deduction for such premiums under federal income tax laws. As used in this subdivision, “earned income” means the same as that term is defined in § 32(c) of the Internal Revenue Code. The deduction shall not be allowed for any portion of such premiums paid for which the individual has (a) been reimbursed, (b) claimed a deduction for federal income tax purposes, (c) claimed a deduction or subtraction under another provision of this section, or (d) claimed a federal income tax credit or any income tax credit pursuant to this chapter.
15. For taxable years beginning on and after January 1, 2018, 20 percent of business interest disallowed as a deduction pursuant to § 163(j) of the Internal Revenue Code. For purposes of this subdivision, “business interest” means the same as that term is defined under § 163(j) of the Internal Revenue Code.
16. For taxable years beginning on and after January 1, 2019, the actual amount of real and personal property taxes imposed by the Commonwealth or any other taxing jurisdiction not otherwise deducted solely on account of the dollar limitation imposed on individual deductions by § 164(b)(6)(B) of the Internal Revenue Code.
17. For taxable years beginning before January 1, 2021, up to$100,000 of the amount that is not deductible when computing federal adjusted gross income solely on account of the portion of subdivision B 10 of § 58.1-301 related to Paycheck Protection Program loans.

History. 2017, c. 444; 2019, cc. 17, 18; 2021, Sp. Sess. I, cc. 117, 118, 552; 2022 3, § 1, effective February 23, 2022.

Editor’s note.

Acts 2019, cc. 17 and 18, cl. 4 provides: “That in addition to any refund due pursuant to § 58.1-309 of the Code of Virginia, and for taxable years beginning on and after January 1, 2018, but before January 1, 2019, an individual filing a final return before July 1, 2019, or married persons filing a final joint return before July 1, 2019, shall be issued a refund out of the Taxpayer Relief Fund (the Fund) established in the fifth enactment of this act in an amount up to $110 for an individual, or $220 for married persons filing a joint return. The Governor, in consultation with the State Comptroller and the Tax Commissioner, shall certify to the General Assembly on or before September 1, 2019, the estimated amount available in the Fund for the issuance of such refunds after taking into account the amounts in the Fund necessary to fund the tax policy changes set forth in the first enactment of this act for taxable years beginning on and after January 1, 2018, but before January 1, 2019. If such estimated amount is insufficient to issue refunds of $110 for an individual, or $220 for married persons filing a joint return, then such refunds shall be reduced and prorated based on the amount of available funds. An individual shall only be allowed a refund pursuant to this enactment up to the amount of such individual’s tax liability after the application of any deductions, subtractions, or credits to which the individual is entitled pursuant to Chapter 3 ( § 58.1-300 et seq.) of Title 58.1 of the Code of Virginia. Married persons filing a joint return shall only be allowed a refund pursuant to this enactment up to the amount of such married persons’ tax liability after the application of any deductions, subtractions, or credits to which the married persons are entitled pursuant to Chapter 3 of Title 58.1 of the Code of Virginia. Any refund issued pursuant to this enactment shall be subject to collection under the provisions of the Setoff Debt Collection Act ( § 58.1-520 et seq. of the Code of Virginia). Refunds due pursuant to this enactment shall be issued on or after October 1, 2019, but before October 15, 2019.”

Acts 2019, cc. 17 and 18, cl. 5 provides: “That there is hereby established a special nonreverting fund to be known as the “Taxpayer Relief Fund” (the Fund). Any revenues generated by the individual reform provisions contained in Subtitle A of Title I and §§ 13611-13613 of the federal Tax Cuts and Jobs Act, P.L. 115-97 (2017), from the collection of taxes during Fiscal Years 2019 through 2025, estimated to be approximately $450 million annually, beyond those revenues reasonably expected to be collected due to general economic growth and absent the federal policy changes, less the estimated reduction in revenues needed to implement the tax policy changes set forth in the first enactment of this act for the relevant fiscal year, shall be transferred to the Fund. The Governor, in consultation with the State Comptroller and the Tax Commissioner, shall certify to the General Assembly on or before September 1 each year the estimated amount to be transferred to the Fund pursuant to this act. The amount certified shall take into account changes in taxpayer behavior and changes in general revenue collections unrelated to federal tax policy changes. The amount certified shall also take into account and be adjusted accordingly for additional tax policy changes adopted by the federal government after January 1, 2019, that may be reasonably expected to positively or negatively impact revenues of the Commonwealth. The General Assembly shall appropriate any revenues in the Fund to effectuate permanent or temporary tax reform measures.”

The 2019 amendments.

The 2019 amendments by cc. 17 and 18, effective February 15, 2019, are identical, and in subdivision 1 b, in the first sentence, deleted “Three thousand dollars for single individuals and $6,000 for married persons (one-half of such amounts in the case of a married individual filing a separate return)” at the beginning and inserted clauses (i) and (ii); added subdivisions 15 and 16; and made a stylistic change.

The 2021 Sp. Sess. I amendments.

The 2021 amendments by Sp. Sess. I, cc. 117 and 118, effective March 15, 2021, and c. 552, cl. 11, effective April 7, 2021, are identical and added subdivision 17.

The 2022 amendments.

The 2022 amendments, c. 3, effective February 23, 2022, in subdivision 17, deleted “on and after January 1, 2020, but” following “For taxable years beginning.”

§ 58.1-322.04. Virginia taxable income; additional modifications.

In calculating Virginia taxable income pursuant to § 58.1-322 , the following adjustments shall be made:

1. There shall be added to or subtracted from federal adjusted gross income, as the case may be, the individual’s share, as beneficiary of an estate or trust, of the Virginia fiduciary adjustment determined under § 58.1-361 .
2. There shall be added or subtracted, as the case may be, the amounts provided in § 58.1-315 as transitional modifications.
3. To the extent included in federal adjusted gross income, there shall be (i) subtracted from federal adjusted gross income, by a shareholder of an electing small business corporation (S corporation) that is subject to the bank franchise tax imposed under Chapter 12 (§ 58.1-1200 et seq.) for the calendar year in which such taxable year begins, the shareholder’s allocable share of the income or gain of such electing small business corporation (S corporation) and (ii) added back to federal adjusted gross income, such that federal adjusted gross income shall be increased, by a shareholder of an electing small business corporation (S corporation) that is subject to the bank franchise tax imposed under Chapter 12 (§ 58.1-1200 et seq.) for the calendar year in which such taxable year begins, the shareholder’s allocable share of the losses or deductions of such electing small business corporation (S corporation).To the extent excluded from federal adjusted gross income, there shall be added to federal adjusted gross income, by a shareholder of an electing small business corporation (S corporation) that is subject to the bank franchise tax imposed under Chapter 12 (§ 58.1-1200 et seq.) for the calendar year in which such taxable year begins, the value of any distribution paid or distributed to the shareholder by such electing small business corporation (S corporation).
4. Notwithstanding any other provision of law, the income from any disposition of real property that is held by the taxpayer for sale to customers in the ordinary course of the taxpayer’s trade or business, as defined in § 453(l)(1)(B) of the Internal Revenue Code, of property may, at the election of the taxpayer, be recognized under the installment method described under § 453 of the Internal Revenue Code, provided that (i) the election relating to the dealer disposition of the property has been made on or before the due date prescribed by law (including extensions) for filing the taxpayer’s return of the tax imposed under this chapter for the taxable year in which the disposition occurs and (ii) the dealer disposition is in accordance with restrictions or conditions established by the Department, which shall be set forth in guidelines developed by the Department. Along with such restrictions or conditions, the guidelines shall also address the recapture of such income under certain circumstances. The development of the guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.).

History. 2017, c. 444.

§ 58.1-322.1. Expired.

Editor’s note.

This section was enacted by Acts 1985, c. 465, and expired pursuant to Acts 1985, c. 465, cl. 2, which provided that the provisions of the act would be effective for taxable years beginning on and after January 1, 1985, and would not be effective for taxable years beginning on and after January 1, 1988.

§ 58.1-322.2. (Repealed) Expired.

Editor’s note.

Acts 1989, cc. 39 and 639, cl. 2, as amended by Acts 1993, cc. 28 and 541, cls. 1 and 2, and by Acts 1998, c. 135, cls. 1 and 2, provide that this section would be applicable for taxable years beginning on and after January 1, 1989, and would expire for taxable years beginning on and after January 1, 2004.

§ 58.1-323. Repealed by Acts 1987, c. 9, effective for taxable years beginning on and after January 1, 1988.

Editor’s note.

Repealed § 58.1-323 was amended by Acts 1987, c. 484.

§§ 58.1-323.1, 58.1-323.2.

Repealed by Acts 2000, c. 419.

§ 58.1-324. Married individuals.

1. If the federal taxable income of married individuals is determined on separate federal returns, their Virginia taxable incomes shall be separately determined.
2. If the federal taxable income of married individuals is determined on a joint federal return, or if neither files a federal return:
   1. Their tax shall be determined on their joint Virginia taxable income; or
   2. Separate taxes may be determined on their separate Virginia taxable incomes if they so elect.
3. Where married individuals have not separately reported and claimed items of income, exemptions and deductions for federal income tax purposes, and have not elected to file a joint Virginia income tax return, such items allowable for Virginia income tax purposes shall be allocated and adjusted as follows:
   1. Income shall be allocated to the spouse who earned the income or with respect to whose property the income is attributable.
   2. Allowable deductions with respect to trade, business, production of income, or employment shall be allocated to the spouse to whom attributable.
   3. Nonbusiness deductions, where properly taken for federal income tax purposes, shall be allowable for Virginia income tax purposes, but shall be allocable between married individuals as they may mutually agree. For this purpose, “nonbusiness deductions” consist of allowable deductions not described in subdivision 2.
   4. Where the standard deduction or low income allowance is properly taken pursuant to subdivision 1 a of § 58.1-322.03 , such deduction or allowance shall be allocable between married individuals as they may mutually agree.
   5. Personal exemptions properly allowable for federal income tax purposes shall be allocated for Virginia income tax purposes as married individuals may mutually agree; however, exemptions for taxpayer and spouse together with exemptions for old age and blindness must be allocated respectively to the spouse to whom they relate.
4. Where allocations are permitted to be made under subsection C pursuant to agreement between married individuals, and they have failed to agree as to those allocations, such allocations shall be made between them in a manner corresponding to the treatment for federal income tax purposes of the items involved, under regulations prescribed by the Department.

History. Code 1950, §§ 58-151.012, 58-151.013; 1971, Ex. Sess., c. 171; 1972, c. 827; 1973, cc. 198, 345, 458; 1974, c. 682; 1975, c. 46; 1976, cc. 528, 694, 781; 1977, cc. 297, 612; 1978, cc. 67, 158; 1979, cc. 226, 596; 1981, cc. 402, 414; 1982, c. 633; 1983, cc. 452, 472; 1984, cc. 153, 162, 636, 674, 675, 729; 2017, c. 444; 2020, c. 900.

The 2017 amendments.

The 2017 amendment by c. 444, in subdivision C 3, deleted “of this subsection” at the end; in subdivision C 4, substituted “subdivision 1 a of § 58.1-322.03 ” for “subdivision D 1 a of § 58.1-322 ”; and in subsection D, deleted “of Taxation” at the end.

The 2020 amendments.

The 2020 amendment by c. 900 substituted “married individuals” for “husband and wife” or “husband or wife” wherever the language occurs in subsections A through C; in subsection A, substituted “separate federal returns” for “a separate federal return” and in subsection D, substituted “between married individuals, and they” for “between husband and wife, and husband and wife” and “between them” for “between husband and wife.”

Law Review.

For survey of Virginia taxation law for the year 1975-1976, see 62 Va. L. Rev. 1479 (1976).

For survey of Virginia taxation law for the year 1976-1977, see 63 Va. L. Rev. 1486 (1977).

For survey of Virginia taxation law for the year 1978-1979, see 66 Va. L. Rev. 367 (1980).

For article on federal taxation of reinvested corporate earnings, see 24 Wm. & Mary L. Rev. 1 (1982).

OPINIONS OF THE ATTORNEY GENERAL

Joint tax returns. —

A Governor may not direct or require any agency of state government to allow same-sex couples to receive joint marital status for Virginia income tax returns. See opinion of Attorney General to The Honorable Robert G. Marshall, Member, House of Delegates, No. 13-114, (1/1/14).

§ 58.1-325. Virginia taxable income of nonresident individuals, partners, beneficiaries and certain shareholders.

1. The Virginia taxable income of a nonresident individual, partner or beneficiary shall be an amount bearing the same proportion to his Virginia taxable income, computed as though he were a resident, as the net amount of his income, gain, loss and deductions from Virginia sources bears to the net amount of his income, gain, loss and deductions from all sources.
2. For a nonresident individual who is a shareholder in an electing small business corporation (S corporation), there shall be included in his Virginia taxable income his share of the taxable income of such corporation, and his share of any net operating loss of such corporation shall be deductible from his Virginia taxable income.

History. Code 1950, § 58-151.013; 1971, Ex. Sess., c. 171; 1972, c. 827; 1973, cc. 198, 345, 458; 1974, c. 682; 1975, c. 46; 1976, cc. 528, 694, 781; 1977, cc. 297, 612; 1978, cc. 67, 158; 1979, cc. 226, 596; 1981, cc. 402, 414; 1982, c. 633; 1983, cc. 452, 472; 1984, cc. 153, 162, 636, 674, 675, 729.

Law Review.

For survey of Virginia taxation law for the year 1975-1976, see 62 Va. L. Rev. 1479 (1976).

For survey of Virginia taxation law for the year 1976-1977, see 63 Va. L. Rev. 1486 (1977).

For survey of Virginia taxation law for the year 1978-1979, see 66 Va. L. Rev. 367 (1980).

For article on federal taxation of reinvested corporate earnings, see 24 Wm. & Mary L. Rev. 1 (1982).

Michie’s Jurisprudence.

For related discussion, see 18 M.J. Taxation, § 190.

CIRCUIT COURT OPINIONS

Minimum contacts required. —

Although income generated to the nonresidents by a lawsuit settlement was a distribution of income from an intangible asset that was taxable under § 58.1-325 , it could not be assessed against one of the nonresidents as the record was devoid of any contact between that nonresident and Virginia for due process or commerce clause purposes. DiBelardino v. Commonwealth, 2007 Va. Cir. LEXIS 330 (Richmond June 22, 2007).

§ 58.1-326. Married individuals when one nonresident.

If either spouse is a resident and the other spouse is a nonresident, separate taxes shall be determined on their separate Virginia taxable incomes on such single or separate forms as may be required by the Department, unless both elect to determine their joint Virginia taxable income as if both were residents.

History. Code 1950, § 58-151.012; 1971, Ex. Sess., c. 171; 1984, c. 675; 2020, c. 900.

The 2020 amendments.

The 2020 amendment by c. 900 substituted “either spouse” for “husband or wife.”

§ 58.1-330. Repealed by Acts 1990, cc. 507, 525, effective for taxable years beginning on and after January 1, 1990.

§ 58.1-331. Repealed by Acts 2009, c. 34, cl. 2.

§ 58.1-332. Credits for taxes paid other states.

1. Whenever a Virginia resident has become liable to another state for income tax on any earned or business income or any gain on the sale of a capital asset (within the meaning of § 1221 of the Internal Revenue Code), not including an asset used in a trade or business, to the extent that such gain is included in federal adjusted gross income, for the taxable year, derived from sources outside the Commonwealth and subject to taxation under this chapter, the amount of such tax payable by him shall, upon proof of such payment, be credited on the taxpayer’s return with the income tax so paid to the other state.However, no franchise tax, license tax, excise tax, unincorporated business tax, occupation tax or any tax characterized as such by the taxing jurisdiction, although applied to earned or business income, shall qualify for a credit under this section, nor shall any tax which, if characterized as an income tax or a commuter tax, would be illegal and unauthorized under such other state’s controlling or enabling legislation qualify for a credit under this section.The credit allowable under this section shall not exceed: (i) such proportion of the income tax otherwise payable by him under this chapter as his income upon which the tax imposed by the other state was computed bears to his Virginia taxable income upon which the tax imposed by this Commonwealth was computed or (ii) the income tax otherwise payable under this chapter in the event that the income upon which the tax imposed by the other state is computed is less than the Virginia taxable income upon which the tax imposed by this Commonwealth is computed and all income derived from sources outside the Commonwealth and subject to taxation under this chapter is earned income or business income reported on federal form Schedule C from a single state contiguous to Virginia. The credit provided for by this section shall not be granted to a resident individual when the laws of another state, under which the income in question is subject to tax assessment, provide a credit to such resident individual substantially similar to that granted by subsection B of this section.
2. Whenever a nonresident individual of this Commonwealth has become liable to the state where he resides for income tax upon his Virginia taxable income for the taxable year, derived from Virginia sources and subject to taxation under this chapter, the amount of such tax payable under this chapter shall be credited with such proportion of the tax so payable by him to the state where he resides, upon proof of such payment, as his income subject to taxation under this chapter bears to his entire income upon which the tax so payable to such other state was imposed. The credit, however, shall be allowed only if the laws of such state: (i) grant a substantially similar credit to residents of Virginia subject to income tax under such laws or (ii) impose a tax upon the income of its residents derived from Virginia sources and exempt from taxation the income of residents of this Commonwealth. No credit shall be allowed against the amount of the tax on any income taxable under this chapter which is exempt from taxation under the laws of such other state.
3. For purposes of this section, the amount of any state income tax paid by an electing small business corporation (S corporation) shall be deemed to have been paid by its individual shareholders in proportion to their ownership of the stock of such corporation.

History. Code 1950, § 58-151.015; 1971, Ex. Sess., c. 171; 1972, c. 827; 1984, c. 675; 1985, c. 466; 1991, cc. 362, 456; 1992, c. 317; 1994, c. 195; 1998, c. 291; 1999, c. 317.

Cross references.

As to the Virginia Health Savings Account Plan, and the role therein by the Department of Taxation in developing a plan for related tax credits, see § 38.2-5601 et seq.

Editor’s note.

Acts 1991, cc. 362 and 456, which amended this section, in cl. 2 provides: “That the provisions of § 58.1-332 shall be effective for taxable years beginning on or after January 1, 1987.”

Acts 1991, cc. 362 and 456, which amended this section, in cl. 3 provides: “That no protective claim for refund filed with the Department of Taxation pursuant to § 58.1-1824 prior to the date of the introduction of this bill [January 22, 1991] shall be affected by the passage thereof.”

Acts 1998, c. 291, cl. 2 provides: “That the provisions of this act shall be effective for taxable years beginning on and after January 1, 1998.”

Acts 1999, c. 317, cl. 2 provides: “That the provisions of this act shall be effective for taxable years beginning on and after January 1, 2000, unless one or more of the events listed in subsection C of § 58.1-3524 [relating to actual general fund revenues being less than forecasted general fund revenues] has occurred prior to such date. If any one of these events occurs before January 1, 2000, this act shall not become effective for taxable years beginning on and after January 1, 2000, but shall instead become effective for taxable years beginning on and after January 1 of the first year thereafter when none of the events listed in subsection C of § 58.1-3524 have occurred during the immediately preceding calendar year.” None of the events listed in subdivisions C 1 to C 3 of § 58.1-3524 occurred prior to January 1, 2000. Therefore, Acts 1999, c. 317 is in effect.

The 1999 amendment, substituted “capital asset (within the meaning of § 1221 of the Internal Revenue Code), not including an asset used in a trade or business” for “principal residence (within the meaning of § 1034 of the Internal Revenue Code)” in the first paragraph in subsection A. For effective date, see the Editor’s note.

Law Review.

For 1987 survey of Virginia taxation law, see 21 U. Rich. L. Rev. 837 (1987).

For 2000 survey of Virginia tax law, see 34 U. Rich. L. Rev. 1019 (2000).

§ 58.1-332.1. Credit for taxes paid to a foreign country on retirement income.

1. Whenever a Virginia resident has become liable to a foreign country for income tax paid on any pension or retirement income to the extent that such income is included in federal adjusted gross income for the taxable year, derived from foreign sources as a result of past employment in a foreign country and subject to taxation under this chapter, the amount of such tax payable by him shall, upon proof of such payment, be credited on the taxpayer’s return with the income tax so paid to the foreign country. The credit allowable under this section shall not exceed: (i) such proportion of the income tax otherwise payable by him under this chapter as his income upon which the tax imposed by the foreign country was computed bears to his Virginia taxable income upon which the tax imposed by this Commonwealth was computed or (ii) the income tax otherwise payable under this chapter, in the event that the income upon which the tax imposed by the foreign country is computed is less than the Virginia taxable income upon which the tax imposed by this Commonwealth is computed.
2. For purposes of determining this credit, the foreign currency must be translated into United States dollars using the prevailing rate of exchange which most nearly reflects the value of the foreign currency at the time the taxes were actually paid to the foreign country.
3. As used in this section, a foreign country shall include all possessions of the United States. Any foreign country which does not qualify for the federal foreign tax credit under § 901(j) of the Internal Revenue Code will also be disqualified for the credit allowed under this section.

History. 1998, c. 292.

Editor’s note.

Acts 1998, c. 292, cl. 2, provides: “That the provisions of this act shall be effective for taxable years beginning on and after January 1, 1998.”

§ 58.1-332.2. (Applicable for taxable years beginning on or after January 1, 2007) Definition of income tax.

1. For purposes of the credits in §§ 58.1-332 and 58.1-332.1 , the term “income tax” is a term of art that refers to a specific type of tax levied on earned and unearned income and shall not include any other type of tax merely because it may be measured by or referenced to gross or net income. An income tax includes, but is not limited to, a tax imposed on all income of an individual if a resident, or all income of an individual from the jurisdiction’s sources if a nonresident; however, an income tax so imposed may incorporate other provisions that grant exemptions, exclusions, deductions, subtractions, credits, or other preferences for specific types of income, expenses, individuals, or other criteria.
2. An income tax shall not include:
   1. A tax conditioned upon the exercise of any franchise, privilege, or business within the jurisdiction even though the tax is measured or based upon gross or net income derived therefrom, but such measure does not include income that the person exercising such franchise, privilege, or business may receive from other sources within the jurisdiction.
   2. License and occupation taxes, which are payable in respect to the privilege of engaging in or carrying on a particular business or vocation, even though the amount of tax payable by an individual may be measured by the amount of business which he transacts or his earnings therefrom, but such measure does not include income that the person engaging in or carrying on a particular business or vocation may receive from other sources within the jurisdiction.
3. The credits in §§ 58.1-332 and 58.1-332.1 shall apply only when the tax imposed in the other state or foreign country is substantially similar to the tax imposed by Article 2 (§ 58.1-320 et seq.), as defined by this section. The nomenclature used to describe the tax of the other jurisdiction shall not be binding on Virginia for this purpose whether such nomenclature is that of the other jurisdiction’s legislature or courts or the United States Congress or courts.

History. 2012, c. 292.

Editor’s note.

Acts 2012, c. 292, cl. 2 provides: “That this act is effective for taxable years beginning on and after January 1, 2007.”

Acts 2012, c. 292, cl. 3 provides: “That the provisions of this act are declaratory of existing law.”

Acts 2012, c. 292, cl. 4 provides: “That an emergency exists and this act is in force from its passage [March 20, 2012].”

§ 58.1-333. Repealed by Acts 2001, cc. 292, 300.

Cross references.

For current provisions as to the Neighborhood Assistance Act Tax Credit, see § 58.1-439.18 et seq.

§ 58.1-334. Tax credit for purchase of conservation tillage equipment.

1. For taxable years beginning before January 1, 2021, any individual shall be allowed a credit against the tax imposed by § 58.1-320 of an amount equaling 25 percent of all expenditures made for the purchase and installation of conservation tillage equipment used in agricultural production by the purchaser. As used in this section the term “conservation tillage equipment” means a planter, drill, or other equipment used to reduce soil compaction commonly known as a “no-till” planter, drill, or other equipment used to reduce soil compaction including guidance systems to control traffic patterns that are designed to minimize disturbance of the soil in planting crops, including such planters, drills, or other equipment designed to reduce soil compaction which may be attached to equipment already owned by the taxpayer.
2. The amount of such credit shall not exceed $4,000 or the total amount of tax imposed by this chapter, whichever is less, in the year of purchase. If the amount of such credit exceeds the taxpayer’s tax liability for such tax year, the amount which exceeds the tax liability may be carried over for credit against the income taxes of such individual in the next five taxable years until the total amount of the tax credit has been taken.
3. For purposes of this section, the amount of any credit attributable to the purchase and installation of conservation tillage equipment by a partnership or electing small business corporation (S corporation) shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S corporation.

History. 1985, c. 560; 1990, c. 416; 2005, c. 58; 2021, Sp. Sess. I, c. 272.

Editor’s note.

Acts 2021, Sp. Sess. I, c. 272, cl. 2 provides: “That the provisions of this act shall become effective only for taxable years beginning on and after January 1, 2021.”

The 2005 amendments.

The 2005 amendment by c. 58, for taxable years beginning on or after January 1, 2005, in subsection A, substituted “25” for “twenty-five” in the first sentence and rewrote the last sentence; and substituted “$4,000” for “$2,500” in the introductory language of subsection B.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 272, effective July 1, 2021, inserted “For taxable years beginning before January 1, 2021,” at the beginning of subsection A. For applicability, see Editor’s note.

Law Review.

For annual survey of Virginia law on taxation, see 40 U. Rich. L. Rev. 291 (2005).

§ 58.1-335. Repealed by Acts 1990, c. 875, effective for taxable years beginning on and after January 1, 1990.

Editor’s note.

The repealed section was derived from Acts 1989, c. 590, and amended by Acts 1990, c. 830.

§ 58.1-336. Repealed by Acts 2001, cc. 293 and 299.

§ 58.1-337. Tax credit for purchase of conservation tillage and precision agriculture equipment.

1. 1. For taxable years beginning on or after January 1, 2021, but before January 1, 2026, any individual engaged in agricultural production for market who has in place a soil conservation plan approved by the local soil and water conservation district and is implementing a nutrient management plan developed by a certified nutrient management planner in accordance with § 10.1-104.2 by the required tax return filing date of the individual shall be allowed a refundable credit against the tax imposed by § 58.1-320 of an amount equaling 25 percent of all expenditures made by such individual for the purchase of equipment certified by the Virginia Soil and Water Conservation Board as reducing soil compaction such as a “no-till” planter, drill, or other equipment or equipment that provides more precise pesticide and fertilizer application or injection. For purposes of this section, equipment that reduces soil compaction includes equipment utilizing guidance systems to control traffic patterns that are designed to minimize the disturbance of soil in planting crops, including such planters, drills, or other equipment that may be attached to equipment already owned by the taxpayer. A. 1. For taxable years beginning on or after January 1, 2021, but before January 1, 2026, any individual engaged in agricultural production for market who has in place a soil conservation plan approved by the local soil and water conservation district and is implementing a nutrient management plan developed by a certified nutrient management planner in accordance with § 10.1-104.2 by the required tax return filing date of the individual shall be allowed a refundable credit against the tax imposed by § 58.1-320 of an amount equaling 25 percent of all expenditures made by such individual for the purchase of equipment certified by the Virginia Soil and Water Conservation Board as reducing soil compaction such as a “no-till” planter, drill, or other equipment or equipment that provides more precise pesticide and fertilizer application or injection. For purposes of this section, equipment that reduces soil compaction includes equipment utilizing guidance systems to control traffic patterns that are designed to minimize the disturbance of soil in planting crops, including such planters, drills, or other equipment that may be attached to equipment already owned by the taxpayer.
   2. Virginia Polytechnic Institute and State University and Virginia State University shall provide at the request of the Virginia Soil and Water Conservation Board technical assistance in determining appropriate specifications for certified equipment which would provide for more precise pesticide and fertilizer application to reduce the potential for adverse environmental impacts. The equipment shall be divided into the following categories:
      1. Sprayers for pesticides and liquid fertilizers;
      2. Pneumatic fertilizer applicators;
      3. Monitors, computer regulators, and height-adjustable booms for sprayers and liquid fertilizer applicators;
      4. Manure applicators;
      5. Tramline adapters; and
      6. Starter fertilizer banding attachments for planters.
   3. The amount of such credit under this subsection shall not exceed $17,500 in the year of purchase. If the amount of the credit exceeds the taxpayer’s liability for such taxable year, the excess may be refunded by the Tax Commissioner. Tax credits shall be refunded by the Tax Commissioner on behalf of the Commonwealth for 100 percent of face value. Tax credits shall be refunded within 90 days after the filing date of the income tax return on which the individual applies for the refund.
   4. For purposes of this subsection, the amount of any credit attributable to the purchase of equipment certified by the Virginia Soil and Water Conservation Board as reducing soil compaction or providing more precise pesticide and fertilizer application or injection by a partnership or electing small business corporation (S corporation) shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S corporation.
2. 1. For taxable years beginning before January 1, 2021, any individual engaged in agricultural production for market who has in place a nutrient management plan approved by the local soil and water conservation district by the required tax return filing date of the individual shall be allowed a credit against the tax imposed by § 58.1-320 of an amount equaling 25 percent of all expenditures made by such individual for the purchase of equipment certified by the Virginia Soil and Water Conservation Board as providing more precise pesticide and fertilizer application. Virginia Polytechnic Institute and State University and Virginia State University shall provide at the request of the Virginia Soil and Water Conservation Board technical assistance in determining appropriate specifications for certified equipment which would provide for more precise pesticide and fertilizer application to reduce the potential for adverse environmental impacts. The equipment shall be divided into the following categories: B. 1. For taxable years beginning before January 1, 2021, any individual engaged in agricultural production for market who has in place a nutrient management plan approved by the local soil and water conservation district by the required tax return filing date of the individual shall be allowed a credit against the tax imposed by § 58.1-320 of an amount equaling 25 percent of all expenditures made by such individual for the purchase of equipment certified by the Virginia Soil and Water Conservation Board as providing more precise pesticide and fertilizer application. Virginia Polytechnic Institute and State University and Virginia State University shall provide at the request of the Virginia Soil and Water Conservation Board technical assistance in determining appropriate specifications for certified equipment which would provide for more precise pesticide and fertilizer application to reduce the potential for adverse environmental impacts. The equipment shall be divided into the following categories:
      1. Sprayers for pesticides and liquid fertilizers;
      2. Pneumatic fertilizer applicators;
      3. Monitors, computer regulators, and height-adjustable booms for sprayers and liquid fertilizer applicators;
      4. Manure applicators;
      5. Tramline adapters; and
      6. Starter fertilizer banding attachments for planters.
   2. The amount of such credit under subdivision 1 shall not exceed $3,750 or the total amount of the tax imposed by this chapter, whichever is less, in the year of purchase. If the amount of such credit exceeds the taxpayer’s tax liability for such taxable year, the amount which exceeds the tax liability may be carried over for credit against the income taxes of such individual in the next five taxable years until the total amount of the tax credit has been taken.
   3. For purposes of this subsection, the amount of any credit attributable to the purchase of equipment certified by the Virginia Soil and Water Conservation Board as providing more precise pesticide and fertilizer application by a partnership or electing small business corporation (S corporation) shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S corporation.

History. 1990, c. 416; 1996, c. 739; 2021, Sp. Sess. I, c. 272.

Editor’s note.

Acts 2021, Sp. Sess. I, c. 272, cl. 2 provides: “That the provisions of this act shall become effective only for taxable years beginning on and after January 1, 2021.”

Effective date.

This section became effective July 1, 1990, and is applicable for taxable years beginning on or after January 1, 1990.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 272, effective July 1, 2021, added subsection A and redesignated remaining subsections accordingly; and rewrote subsection B. For applicability, see Editor’s note.

§ 58.1-338. Expired.

Editor’s note.

Acts 1990, c. 709, as amended by Acts 1992, c. 313, Acts 1993, c. 585, Acts 1995, c. 202, Acts 1996, c. 837, and Acts 2001, c. 91, cl. 2, provides that the provisions of the 1990 act shall be applicable for all taxable years beginning on and after January 1, 1993, but before January 1, 2004; however, the expiration of the 1990 act shall not affect unused credits which may be carried over by the taxpayer in succeeding taxable years.

§ 58.1-339. Repealed by Acts 2011, c. 851, cl. 2, effective for taxable periods on or after January 1, 2011.

Editor’s note.

Former § 58.1-339 , pertaining to tax credit for rent reductions, was derived from Acts 1990, c. 953; 1992, c. 369; 1993, c. 37; 1996, c. 521; 1997, c. 184.

§ 58.1-339.1. Repealed by Acts 1992, c. 394, effective July 1, 1992, and applicable to taxable years beginning on and after January 1, 1992.

§ 58.1-339.2. Historic rehabilitation tax credit.

1. Effective for taxable years beginning on and after January 1, 1997, any individual, trust or estate, or corporation incurring eligible expenses in the rehabilitation of a certified historic structure shall be entitled to a credit against the tax imposed by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.) and 10 (§ 58.1-400 et seq.) of Chapter 3; Chapter 12 (§ 58.1-1200 et seq.); Article 1 (§ 58.1-2500 et seq.) of Chapter 25; and Article 2 (§ 58.1-2620 et seq.) of Chapter 26, in accordance with the following schedule:    Year               % of Eligible Expenses    1997               10%    1998               15%    1999               20%    2000 and thereafter               25%If the amount of such credit exceeds the taxpayer’s tax liability for such taxable year, the amount that exceeds the tax liability may be carried over for credit against the taxes of such taxpayer in the next ten taxable years or until the full credit is used, whichever occurs first. Credits granted to a partnership or electing small business corporation (S corporation) shall be passed through to the partners or shareholders, respectively. Credits granted to a partnership or electing small business corporation (S corporation) shall be allocated among all partners or shareholders, respectively, either in proportion to their ownership interest in such entity or as the partners or shareholders mutually agree as provided in an executed document, the form of which shall be prescribed by the Director of the Department of Historic Resources.
2. Effective for taxable years beginning on and after January 1, 2000, any individual, trust, estate, or corporation resident in Virginia that incurs eligible expenses in the rehabilitation of a certified historic structure in any other state that has in effect a reciprocal historic structure rehabilitation tax credit program and agreement for residents of that state who rehabilitate historic structures in Virginia shall be entitled to a credit to the same extent as provided in subsection A and other applicable provisions of law; however, no eligible party shall receive any credit authorized under this subsection prior to taxable years beginning on and after January 1, 2002.
3. 1. To claim the credit authorized under this section, the taxpayer shall apply to the Virginia Department of Historic Resources, which shall determine the amount of eligible rehabilitation expenses and issue a certificate thereof to the taxpayer. The taxpayer shall attach the certificate to the Virginia tax return on which the credit is claimed. C. 1. To claim the credit authorized under this section, the taxpayer shall apply to the Virginia Department of Historic Resources, which shall determine the amount of eligible rehabilitation expenses and issue a certificate thereof to the taxpayer. The taxpayer shall attach the certificate to the Virginia tax return on which the credit is claimed.
   2. For taxable years beginning on and after January 1, 2017, the amount of the credit that may be claimed by each taxpayer, including amounts carried over from prior taxable years, shall not exceed $5 million in any taxable year.
4. When used in this section:“Certified historic structure” means a property listed individually on the Virginia Landmarks Register, or certified by the Director of the Virginia Department of Historic Resources as contributing to the historic significance of a historic district that is listed on the Virginia Landmarks Register or certified by the Director of the Virginia Department of Historic Resources as meeting the criteria for listing on the Virginia Landmarks Register.“Eligible rehabilitation expenses” means expenses incurred in the material rehabilitation of a certified historic structure and added to the property’s capital account.“Material rehabilitation” means improvements or reconstruction consistent with “The Secretary of the Interior’s Standards for Rehabilitation,” the cost of which amounts to at least fifty percent of the assessed value of such building for local real estate tax purposes for the year prior to the initial expenditure of any rehabilitation expenses, unless the building is an owner-occupied building, in which case the cost shall amount to at least twenty-five percent of the assessed value of such building for local real estate tax purposes for the year prior to the initial expenditure of any rehabilitation expenses.“Owner-occupied building” means any building that is used as a personal residence by the owner.
5. The Director of the Department of Historic Resources shall establish by regulation the requirements needed for this program, including the fees to defray necessary expenses thereof, and, except as otherwise prohibited by this section, the extent to which the availability of the credit provided by this section is coextensive with the availability of the federal tax credit for the rehabilitation of certified historic resources.
6. Any gain or income under federal law from the allocation or application of a tax credit under this section shall not be (i) taxable gain or income for purposes of the tax imposed pursuant to Article 2 (§ 58.1-320 et seq.), (ii) taxable gain or income for purposes of the tax imposed pursuant to Article 6 (§ 58.1-360 et seq.), or (iii) taxable gain or income for purposes of the tax imposed pursuant to Article 10 (§ 58.1-400 et seq.). However, nothing in this subsection shall be construed or interpreted as allowing a subtraction or deduction for such gain or income under federal law if the gain or income is otherwise excluded, deducted, or subtracted in computing the respective tax set forth under clauses (i) through (iii).

History. 1996, c. 520; 1998, cc. 371, 372; 1999, cc. 152, 183, 213; 2000, cc. 356, 367, 429; 2012, cc. 92, 639; 2017, cc. 717, 721; 2019, c. 25.

Editor’s note.

Acts 1999, cc. 152 and 183, cl. 2 provides: “That the provisions of this act amending subsection A of § 58.1-339.2 of the Code of Virginia shall be effective for taxable years beginning on or after January 1, 1997.”

Acts 1999, cc. 152 and 183, cl. 3 provides: “That the provisions of this act amending subsection D of § 58.1-339.2 of the Code of Virginia are declaratory of existing law.”

Acts 2012, cc. 92 and 639, cl. 2 provides: “That the provisions of this act are declaratory of existing law.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 385 H, effective for the biennium ending June 30, 2022, provides: “The Department of Historic Resources is authorized to require applicants for tax credits for historic rehabilitation projects under § 58.1-339.2 , Code of Virginia, to provide an audit by a certified public accountant licensed in Virginia, in accordance with guidelines developed by the department in consultation with the Auditor of Public Accounts. The department is also authorized to contract with tax, financial, and other professionals to assist the department with the oversight of historic rehabilitation projects for which tax credits are anticipated.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item § 3-5.18, effective for the biennium ending June 30, 2022, provides: “Notwithstanding § 58.1-339.2 or any other provision of law, effective for taxable years beginning on and after January 1, 2017, the amount of the Historic Rehabilitation Tax Credit that may be claimed by each taxpayer, including amounts carried over from prior taxable years, shall not exceed $5 million for any taxable year.”

The 1999 amendments.

The 1999 amendments by cc. 152 and 183, are identical, effective for taxable years beginning on or after January 1, 1997, and added the last sentence in the second paragraph in subsection A, and added “and, except as otherwise prohibited by this section, the extent to which the availability of the credit provided by this section is co-extensive with the availability of the federal tax credit for the rehabilitation of certified historic resources” in subsection E.

The 1999 amendment by c. 213 inserted present subsection B and redesignated former subsections B through D as subsections C through E.

The 2000 amendments.

The 2000 amendment by c. 356, in subsection B, substituted “2000” for “2002,” and added the language beginning “however, no eligible party.”

The 2000 amendment by c. 367, effective July 1, 2000, and applicable for taxable years beginning on or after January 1, 2000, substituted “ten taxable years” for “five taxable years” in the first sentence of the second paragraph of subsection A.

The 2000 amendment by c. 429, effective July 1, 2000, and applicable for taxable years beginning on or after January 1, 2001, in subsection D, added “unless the building is an owner-occupied building, in which case the cost shall amount to at least twenty-five percent of the assessed value of such building for local real estate tax purposes for the year prior to the initial expenditure of any rehabilitation expenses” at the end of the paragraph defining “Material rehabilitation,” and added the paragraph defining “Owner-occupied building.”

The 2012 amendments.

The 2012 amendments by cc. 92 and 639 are identical, and deleted “of this title” following “Chapter 26” in the introductory paragraph of subsection A; and added subsection F.

The 2017 amendments.

The 2017 amendments by cc. 717 and 721 are identical, and redesignated subsection C as subdivision C 1, and added subdivision C 2.

The 2019 amendments.

The 2019 amendment by c. 25 deleted “but before January 1, 2019,” following “January 1, 2017,” in subdivision C 2.

Law Review.

For 2000 survey of Virginia tax law, see 34 U. Rich. L. Rev. 1019 (2000).

§ 58.1-339.3. Agricultural best management practices tax credit.

1. 1. As used in this section, “agricultural best management practice” means a practice approved by the Virginia Soil and Water Conservation Board that will provide a significant improvement to water quality in the state’s streams and rivers and the Chesapeake Bay and is consistent with other state and federal programs that address agricultural, nonpoint source pollution management. A detailed list of the standards and criteria for agricultural best management practices eligible for credit shall be found in the most recently approved “Virginia Agricultural BMP Manual” published annually prior to July 1 by the Department of Conservation and Recreation. A. 1. As used in this section, “agricultural best management practice” means a practice approved by the Virginia Soil and Water Conservation Board that will provide a significant improvement to water quality in the state’s streams and rivers and the Chesapeake Bay and is consistent with other state and federal programs that address agricultural, nonpoint source pollution management. A detailed list of the standards and criteria for agricultural best management practices eligible for credit shall be found in the most recently approved “Virginia Agricultural BMP Manual” published annually prior to July 1 by the Department of Conservation and Recreation.
   2. For all taxable years beginning on and after January 1, 1998, but before January 1, 2025, any individual who is engaged in agricultural production for market, or has equines that create needs for agricultural best management practices to reduce nonpoint source pollutants, and has in place a soil conservation plan approved by the local Soil And Water Conservation District (SWCD), shall be allowed a refundable credit against the tax imposed by § 58.1-320 in an amount equaling 25 percent of the first $100,000 expended for agricultural best management practices by the individual.
   3. For all taxable years beginning on and after January 1, 2021, but before January 1, 2025, any individual who is engaged in agricultural production for market, or who has equines that create needs for agricultural best management practices to reduce nonpoint source pollutants, and has in place a resource management plan approved by the local SWCD shall be allowed a refundable credit against the tax imposed by § 58.1-320 in an amount equaling 50 percent of the first $100,000 expended for agricultural best management practices implemented by the individual on the acreage included in the resource management plan.
2. 1. Any eligible practice approved by the local Soil and Water Conservation District Board shall be completed within the taxable year in which the credit is claimed. After the practice installation has been completed, the local SWCD Board shall certify the practice as approved and completed, and eligible for credit. The applicant shall forward the certification to the Department of Taxation on forms provided by the Department. The credit shall be allowed only for expenditures made by the taxpayer from funds of his own sources. B. 1. Any eligible practice approved by the local Soil and Water Conservation District Board shall be completed within the taxable year in which the credit is claimed. After the practice installation has been completed, the local SWCD Board shall certify the practice as approved and completed, and eligible for credit. The applicant shall forward the certification to the Department of Taxation on forms provided by the Department. The credit shall be allowed only for expenditures made by the taxpayer from funds of his own sources.
   2. To the extent that a taxpayer participates in the Virginia Agricultural Best Management Practices Cost-Share Program, the taxpayer may claim the credit under subdivision A 2 for any remaining liability after such cost-share, but may not claim the credit under subdivision A 3 for any such remaining liability, subject to the other provisions of this section. For purposes of this subdivision, “liability after such cost-share” means the limitation of the tax credits to the total costs incurred by the taxpayer for agricultural best management practices reduced by any funding received by participation in the Virginia Agricultural Best Management Practices Cost-Share Program.
3. 1. The aggregate amount of such credit claimed under subdivisions A 2 and 3 shall not exceed $75,000 or the total amount of the tax imposed by this chapter, whichever is less, in the year the project was completed, as certified by the Board. Any taxpayer claiming a tax credit under this section shall not claim a credit under any similar Virginia law for costs related to the same eligible practices. A taxpayer may not claim credit for the same practice in the same management area under both subdivisions A 2 and A 3. C. 1. The aggregate amount of such credit claimed under subdivisions A 2 and 3 shall not exceed $75,000 or the total amount of the tax imposed by this chapter, whichever is less, in the year the project was completed, as certified by the Board. Any taxpayer claiming a tax credit under this section shall not claim a credit under any similar Virginia law for costs related to the same eligible practices. A taxpayer may not claim credit for the same practice in the same management area under both subdivisions A 2 and A 3.
   2. If the amount of the credit exceeds the taxpayer’s liability for such taxable year, the excess may be refunded by the Tax Commissioner. Tax credits shall be refunded by the Tax Commissioner on behalf of the Commonwealth for 100 percent of face value. Tax credits shall be refunded within 90 days after the filing date of the income tax return on which the individual applies for the refund.
4. For purposes of this section, the amount of any credit attributable to agricultural best management practices by a pass-through entity such as a partnership, limited liability company, or electing small business corporation (S Corporation) shall be allocated to the individual partners, members, or shareholders in proportion to their ownership or interest in such entity.
5. A pass-through tax entity, such as a partnership, limited liability company or electing small business corporation (S corporation), may appoint a tax matters representative, who shall be a general partner, member-manager or shareholder, and register that representative with the Tax Commissioner. The Tax Commissioner shall be entitled to deal with the tax matters representative as representative of the taxpayers to whom credits have been allocated by the entity under this article with respect to those credits. In the event a pass-through tax entity allocates tax credits arising under this article to its partners, members or shareholders and the allocated credits shall be disallowed, in whole or in part, such that an assessment of additional tax against a taxpayer shall be made, the Tax Commissioner shall first make written demand for payment of any additional tax, together with interest and penalties, from the tax matters representative. In the event such payment demand is not satisfied, the Tax Commissioner shall proceed to collection against the taxpayers in accordance with the provisions of Chapter 18 (§ 58.1-1800 et seq.).

History. 1996, c. 629; 2006, c. 440; 2011, c. 352; 2021, Sp. Sess. I, cc. 39, 40.

The number of this section was assigned by the Virginia Code Commission, the number in the 1996 act having been 58.1-339.2 .

Editor’s note.

Acts 2021, Sp. Sess. I, cc. 39 and 40, cl. 2 provides: “That the provisions of the first enactment of this act shall apply only to taxable years beginning on and after January 1, 2021, and shall not modify any other provisions for prior taxable years.”

Acts 2021, Sp. Sess. I, cc. 39 and 40, cl. 3 provides: “That the total combined amount of credits available pursuant to §§ 58.1-339.3 and 58.1-439.5 of the Code of Virginia, as amended by this act, for fiscal years beginning on and after January 1, 2021, shall not exceed an aggregate of $2 million annually.”

The 2006 amendments.

The 2006 amendment by c. 440, effective for taxable years beginning on or after January 1, 2007, in the first paragraph of subsection A, inserted “who is” before “engaged in agricultural production,” inserted “or has equines that create needs for agricultural best management practices to reduce nonpoint source pollutants, and,” deleted “who” before “has in place,” and deleted “twenty-five percent” before “25%”; in the last paragraph of subsection A deleted “Implementation” before “Manual” and inserted “annually prior to July 1” after “published.”

The 2011 amendments.

The 2011 amendment by c. 352, in subsection C, inserted the subdivision 1 and 2 designations, added the last sentence of subdivision 1, and substituted “refunded by the Tax Commissioner” for “carried over for credit against income taxes in the next five taxable years until the total amount of the tax credit has been taken” in the first sentence, and added the second and third sentences; substituted “a pass-through entity such as a partnership, limited liability company,” for “a partnership,” inserted “members” and substituted “such entity” for “the partnership or S Corporation” in subsection D; and added subsection E.

The 2021 Sp. Sess. I amendments.

The 2021 amendments by Sp. Sess. I, cc. 39 and 40, effective July 1, 2021, are identical, and rewrote subsection A; redesignated former subsection B as subdivision B 1 and inserted “eligible” near the beginning of the subdivision; added subdivision B 2; and in subdivision C 1, inserted “aggregate,” and “claimed under subdivisions A 2 and 3,” and substituted “$75,000 or the total amount” for “$17,500 or the total amount” in the first sentence, and added the last sentence. For applicability, see Editor’s notes.

Law Review.

For annual survey article, “Taxation,” see 46 U. Rich. L. Rev. 203 (2011).

§ 58.1-339.4. Qualified equity and subordinated debt investments tax credit.

1. As used in this section:“Commercialization investment” means a qualified investment in a qualified business that was created to commercialize research developed at or in partnership with an institution of higher education.“Equity” means common stock or preferred stock, regardless of class or series, of a corporation; a partnership interest in a limited partnership; or a membership interest in a limited liability company, which is not required or subject to an option on the part of the taxpayer to be redeemed by the issuer within three years from the date of issuance.“Qualified business” means a business which (i) has annual gross revenues of no more than $3 million in its most recent fiscal year, (ii) has its principal office or facility in the Commonwealth, (iii) is engaged in business primarily in or does substantially all of its production in the Commonwealth, (iv) has not obtained during its existence more than $3 million in aggregate gross cash proceeds from the issuance of its equity or debt investments (not including commercial loans from chartered banking or savings and loan institutions), and (v) is primarily engaged, or is primarily organized to engage, in the fields of advanced computing, advanced materials, advanced manufacturing, agricultural technologies, biotechnology, electronic device technology, energy, environmental technology, information technology, medical device technology, nanotechnology, or any similar technology-related field determined by regulation by the Department of Taxation to fall under the purview of this section.“Qualified investment” means a cash investment in a qualified business in the form of equity or subordinated debt; however, an investment shall not be qualified if the taxpayer who holds such investment, or any of such taxpayer’s family members, or any entity affiliated with such taxpayer, receives or has received compensation from the qualified business in exchange for services provided to such business as an employee, officer, director, manager, independent contractor or otherwise in connection with or within one year before or after the date of such investment. For the purposes hereof, reimbursement of reasonable expenses incurred shall not be deemed to be compensation.“Subordinated debt” means indebtedness of a corporation, general or limited partnership, or limited liability company that (i) by its terms required no repayment of principal for the first three years after issuance; (ii) is not guaranteed by any other person or secured by any assets of the issuer or any other person; and (iii) is subordinated to all indebtedness and obligations of the issuer to national or state-chartered banking or savings and loan institutions.
2. For taxable years beginning on or after January 1, 1999, a taxpayer shall be allowed a credit against the tax levied pursuant to §§ 58.1-320 and 58.1-360 in an amount equal to 50 percent of such taxpayer’s qualified investments during such taxable year. No credit shall be allowed to any taxpayer that has committed capital under management in excess of $10 million and engages in the business of making debt or equity investments in private businesses, or to any taxpayer that is allocated a credit as a partner, shareholder, member or owner of an entity that engages in such business.
3. The amount of any credit attributable to a qualified investment by a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, as the case may be, as they may determine.
4. The aggregate amount of the credit for each taxpayer shall not exceed the lesser of (i) the tax imposed for such taxable year or (ii) $50,000. Any credit not usable for the taxable year in which the credit was allowed may be, to the extent usable, carried over for the next 15 succeeding taxable years or until the total amount of the tax credit has been taken, whichever occurs first.
5. The amount of tax credits available under this section for a calendar year shall be $5 million. Of the amount of available credits, one-half of the amount shall be allocated exclusively for credits for commercialization investments. Such allocation of tax credits shall constitute the minimum amount of tax credits to be allocated for commercialization investments. However, if the amount of tax credits requested for commercialization investments is less than one-half of the total amount of credits available under this section, the balance of such credits shall be allocated for qualified investments in any qualified business under this section.
6. Unless the taxpayer transfers the equity received in connection with a qualified investment as a result of (i) the liquidation of the qualified business issuing such equity, (ii) the merger, consolidation or other acquisition of such business with or by a party not affiliated with such business, or (iii) the death of the taxpayer, any taxpayer that fails to hold such equity for at least three full calendar years following the calendar year for which a tax credit for a qualified investment is allocated pursuant to this section shall forfeit both used and unused tax credits and in addition shall pay the Department of Taxation interest on the total allowed credits at the rate of one percent per month, compounded monthly, from the date the tax credits were allocated to the taxpayer. The Department of Taxation shall deposit any amounts received under this subsection into the general fund of the Commonwealth.
7. Prior to December 31, 1998, the Department of Taxation shall promulgate regulations in accordance with the Administrative Process Act (§ 2.2-4000 et seq.) (i) establishing procedures for claiming the tax credit provided by this section and (ii) providing for the allocation of tax credits among taxpayers requesting credits in the event the amount of credits for which requests are made exceeds the available amount of credits in any one calendar year. Notwithstanding the foregoing, the Department of Taxation shall permit an application for certification as a qualified business to be filed at any time during the calendar year regardless of when the investment was made during the calendar year.

History. 1998, c. 491; 2004, c. 614; 2009, c. 853.

Editor’s note.

Acts 2004, c. 614, cl. 2 provides: “That the provisions of this act shall be effective for taxable years beginning on or after January 1, 2005, except as otherwise provided in this act.”

Acts 2009, c. 853, cl. 2 provides: “That the provisions of this act relating to the qualified equity and subordinated debt investment tax credit shall apply to applications for credits made for taxable years beginning on or after January 1, 2009. Nothing in this act shall be construed or interpreted to affect any credits awarded to a taxpayer for taxable years prior to January 1, 2009.”

Acts 2009, c. 853, cl. 4 provides: “That no investment shall be qualified pursuant to § 58.1-339.4 of the Code of Virginia if the otherwise qualified business performs research in Virginia on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos. The foregoing provision shall not apply to research conducted using stem cells other than embryonic stem cells.”

The 2004 amendments.

The 2004 amendment by c. 614, effective for taxable years beginning on or after January 1, 2005, substituted “three” for “five” in the second paragraph of subsection A; in the third paragraph, substituted “$3” for “five” and “has its principal office or facility” for “is domiciled” and inserted clause (iv) and redesignated former clause (iv) as clause (v); in subsection B, in subsection F, substituted “three” for “five” preceding “full calendar years,” inserted “in addition” following “unused tax credits,” substituted “shall pay the Department of Taxation interest on the total allowed credits” for “shall pay the Department of Taxation a penalty equal to all of the tax credits allowed to such taxpayer pursuant to this section with interest” and deleted the former next-to-last sentence, which read: “The Department of Taxation may abate such penalty upon written request if the taxpayer establishes reasonable cause for the failure to hold such equity for at least five years”; added the last sentence in subsection G; and made minor stylistic changes.

The 2009 amendments.

The 2009 amendment by c. 853, in subsection A, added the definition of “Commercialization investment” and rewrote clause (v) in the definition of “Qualified business”; and added the last three sentences in subsection E. For applicability, see Editor’s note.

Law Review.

For 2003/2004 survey of the law of taxation, see 39 U. Rich. L. Rev. 413 (2004).

For article, “Taxation,” see 45 U. Rich. L. Rev. 377 (2010).

§ 58.1-339.5. Repealed by Acts 2016, c. 305, cl. 2.

Editor’s note.

Acts 1998, c. 855, which amended § 58.1-3 and enacted this section, provides in cl. 2: “That the provisions of this act shall become effective upon written notice from the U.S. Department of Health and Human Services that (i) the income tax credit provided by this act qualifies as a portion of the Commonwealth’s maintenance of effort under its Temporary Assistance to Needy Families (TANF) plan; (ii) the Commonwealth is exempt from the reporting requirements found in § 275.3 of Title 45 of the Code of Federal Regulations for families receiving the tax credit; and (iii) the exemption above will not disqualify the Commonwealth from receiving a work participation rate reduction based on a reduction in the TANF caseload, from receiving a high performance bonus, or from being considered for a reduction in penalties for failing to meet the work participation requirements.” Virginia has received notice that § 58.1-339.5 and the earned income tax program for low income families does not qualify under federal guidelines for federal funds. Hence, the amendment to § 58.1-3 and the enactment of § 58.1-339.5 by Acts 1998, c. 855, did not take effect.

Acts 2016, c. 305, cl. 3 provides: “That this act shall in no way alter or affect any (i) tax credit or tax benefit or other tax attribute allowed or earned under any section repealed by this act or (ii) tax liability or obligation pursuant to any such section.”

§ 58.1-339.6. Political candidate contribution tax credit.

For taxable years beginning on and after January 1, 2000, but before January 1, 2017, any individual shall be entitled to a credit against the tax levied pursuant to § 58.1-320 of an amount equal to 50 percent of the amount contributed by the taxpayer to a candidate, as defined in § 24.2-101 , in one or more primary, special, or general elections for local or state office held in the Commonwealth in the taxable year in which the contributions are made. The amount of the credit shall not exceed $25 for an individual taxpayer or $50 for taxpayers filing a joint return.

History. 1999, c. 464; 2016, cc. 50, 348.

The 2016 amendments.

The 2016 amendments by cc. 50 and 348 are identical, and inserted “but before January 1, 2017,” substituted “50” for “fifty,” “$25” for “twenty-five dollars” and “$50” for “fifty dollars.”

§ 58.1-339.7. Livable Home Tax Credit.

1. For taxable years beginning on and after January 1, 2000, any taxpayer who purchases a new residence or retrofits or hires someone to retrofit an existing residence, provided that such new residence or the retrofitting of such existing residence is designed to improve accessibility, provide universal visitability, and meets the eligibility requirements established by guidelines developed by the Department of Housing and Community Development, shall be allowed a credit against the tax imposed pursuant to § 58.1-320 of an amount equal to $500, or $2,000 for taxable years beginning on or after January 1, 2010, for such new residence or 25 percent of the total amount spent for the retrofitting of such existing residence. For taxable years beginning on or after January 1, 2010, the 25 percent shall increase to 50 percent. The amount of the credit allowed for the retrofitting of an existing residence shall not exceed $500, or $2,000 for taxable years beginning on or after January 1, 2010. Such a credit shall require application by the taxpayer as provided in subsection C. For purposes of this section, the purchase of a new residence means a transaction involving the first sale of a residence or dwelling. The provisions of this subsection shall not be applicable for taxable years beginning on or after January 1, 2011.
2. For taxable years beginning on or after January 1, 2011, an individual shall be allowed a credit against the tax imposed by § 58.1-320 for a portion of the total purchase price paid by him for a new residence or the total amount expended by him to retrofit an existing residence, provided that the new residence or the retrofitting of the existing residence is designed to improve accessibility, to provide universal visitability, and it meets the eligibility requirements established by guidelines developed by the Department of Housing and Community Development. In addition, a licensed contractor, as defined in § 54.1-1100 , shall be allowed a credit against the tax imposed by § 58.1-320 or 58.1-400 for a portion of the total amount it expended in constructing a new residential structure or unit or retrofitting or renovating an existing residential structure or unit, provided that the new residential structure or unit or the retrofitting or renovating of the existing residential structure or unit is designed to improve accessibility, to provide universal visitability, and it meets the eligibility requirements established by guidelines developed by the Department of Housing and Community Development.The credit shall be allowed for the taxable year in which the residence has been purchased or construction, retrofitting, or renovation of the residence or residential structure or unit has been completed. The credit allowed under this section shall not exceed (i) $5,000 for the purchase of each new residence or the construction of each new residential structure or unit or (ii) 50 percent of the total amount expended, but not to exceed $5,000, for the retrofitting or renovation of each existing residence or residential structure or unit.No credit shall be allowed under this section for the purchase, construction, retrofitting, or renovation of residential rental property.
3. Eligible taxpayers shall apply for the credit by making application to the Department of Housing and Community Development. The Department of Housing and Community Development shall issue a certification for an approved application to the taxpayer. The taxpayer shall attach the certification to the applicable income tax return. The total amount of tax credits granted under this section for any fiscal year shall not exceed $1 million. In each year, the Department of Housing and Community Development shall allocate $500,000 in tax credits for the purchase or construction of new residences and $500,000 in tax credits for the retrofitting or renovation of existing residences or residential structures or units. If the amount of tax credits approved in a fiscal year for the purchase or construction of new residences is less than $500,000, the Director of the Department of Housing and Community Development shall allocate the remaining balance of such tax credits for the retrofitting or renovation of existing residences or residential structures or units. If the amount of tax credits approved in a fiscal year for the retrofitting or renovation of existing residences or residential structures or units is less than $500,000, the Director of the Department of Housing and Community Development shall allocate the remaining balance of such tax credits for the purchase or construction of new residences. In the event applications for the tax credit exceed the amount allocated by the Director for the fiscal year, the Department of Housing and Community Development shall issue the tax credits pro rata based upon the amount of tax credit approved for each taxpayer and the amount of tax credits allocated by the Director.In no case shall the Director issue any tax credit relating to transactions or dealings between affiliated entities. In no case shall the Director issue any tax credit more than once to the same or different persons relating to the same retrofitting, renovation, or construction project.
4. In no case shall the amount of credit taken by a taxpayer pursuant to this section exceed the taxpayer’s income tax liability for the taxable year. If the amount of credit allowed for the taxable year in which the residence has been purchased or construction, retrofitting, or renovation of the residence or residential structure or unit has been completed exceeds the taxpayer’s income tax liability imposed for such taxable year, then the amount that exceeds the tax liability may be carried over for credit against the income taxes of such taxpayer in the next seven taxable years or until the total amount of the tax credit issued has been taken, whichever is sooner. Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership or interest in such business entities.

History. 1999, c. 404; 2007, cc. 68, 765; 2009, cc. 15, 496; 2011, c. 365.

The number of this section was assigned by the Virginia Code Commission, the number in the 1999 act having been 58.1-339.6 .

Editor’s note.

Acts 1999, c. 404, cl. 2 provides: “That the provisions of this act shall be effective for taxable years beginning on and after January 1, 2000, unless one or more of the events listed in subsection C of § 58.1-3524 [relating to actual general fund revenues being less than forecasted general fund revenues] has occurred prior to such date. If any one of these events occurs before January 1, 2000, this act shall not become effective for taxable years beginning on and after January 1, 2000, but shall instead become effective for taxable years beginning on and after January 1 of the first year thereafter when none of the events listed in subsection C of § 58.1-3524 have occurred during the immediately preceding calendar year.” None of the events listed in subsection C of § 58.1-3524 occurred. Therefore, Acts 1999, c. 404 is in effect.

Acts 2007, cc. 68 and 765, cl. 2 provides: “That the Department of Housing and Community Development shall develop guidelines establishing the eligibility requirements for the credit under § 58.1-339.7 of the Code of Virginia by September 30, 2007.”

Acts 2007, cc. 68 and 765, cl. 3 provides: “That the provisions of this act shall be applicable to new residences purchased or existing residences retrofitted in taxable years beginning on or after January 1, 2008.”

The 2007 amendments.

The 2007 amendments by cc. 68 and 765, effective July 1, 2007, and applicable to new residences purchased or existing residences retrofitted in taxable years beginning on or after January 1, 2008, are identical, and rewrote the section.

The 2009 amendments.

The 2009 amendments by cc. 15 and 496 are identical, and in subsection A, in the first sentence, inserted “or $2,000 for taxable years beginning on or after January 1, 2010” and made a minor stylistic change, added the second sentence, and added “or $2,000 for taxable years beginning on or after January 1, 2010” at the end of the third sentence.

The 2011 amendments.

The 2011 amendment by c. 365 rewrote the section.

Law Review.

For 2007 annual survey article, “Taxation,” see 42 U. Rich. L. Rev. 515 (2007).

§ 58.1-339.8. Income tax credit for low-income taxpayers.

1. As used in this section, unless the context requires otherwise:“Family Virginia adjusted gross income” means the combined Virginia adjusted gross income of an individual, the individual’s spouse, and any person claimed as a dependent on the individual’s or his spouse’s income tax return for the taxable year.“Poverty guidelines” means the poverty guidelines for the 48 contiguous states and the District of Columbia updated annually in the Federal Register by the U.S. Department of Health and Human Services under the authority of § 673(2) of the Omnibus Budget Reconciliation Act of 1981.“Virginia adjusted gross income” has the same meaning as the term is defined in § 58.1-321 .
2. 1. For taxable years beginning on and after January 1, 2000, any individual or persons filing a joint return whose family Virginia adjusted gross income does not exceed 100 percent of the poverty guideline amount corresponding to a household of an equal number of persons as listed in the poverty guidelines published during such taxable year, shall be allowed a credit against the tax levied pursuant to § 58.1-320 in an amount equal to $300 each for the individual, the individual’s spouse, and any person claimed as a dependent on the individual’s or married individuals’ income tax return for the taxable year. For any taxable year in which married individuals file separate Virginia income tax returns, the credit provided under this section shall be allowed against the tax for only one of such two tax returns. Additionally, the credit provided under this section shall not be allowed against such tax of a dependent of the individual or of married individuals. B. 1. For taxable years beginning on and after January 1, 2000, any individual or persons filing a joint return whose family Virginia adjusted gross income does not exceed 100 percent of the poverty guideline amount corresponding to a household of an equal number of persons as listed in the poverty guidelines published during such taxable year, shall be allowed a credit against the tax levied pursuant to § 58.1-320 in an amount equal to $300 each for the individual, the individual’s spouse, and any person claimed as a dependent on the individual’s or married individuals’ income tax return for the taxable year. For any taxable year in which married individuals file separate Virginia income tax returns, the credit provided under this section shall be allowed against the tax for only one of such two tax returns. Additionally, the credit provided under this section shall not be allowed against such tax of a dependent of the individual or of married individuals.
   2. For taxable years beginning on and after January 1, 2006, any individual or married individuals, eligible for a tax credit pursuant to § 32 of the Internal Revenue Code, may for the taxable year, in lieu of the credit authorized under subdivision B 1, claim a credit against the tax imposed pursuant to § 58.1-320 in an amount equal to 20 percent of the credit claimed by the individual or married individuals for federal individual income taxes pursuant to § 32 of the Internal Revenue Code for the taxable year. In no case shall a household be allowed a credit pursuant to this subdivision and subdivision B 1 for the same taxable year.For the purpose of this subdivision, “household” means an individual and, in the case of married individuals, the individual and his spouse regardless of whether or not the individual and his spouse file combined or separate Virginia individual income tax returns.
3. The amount of the credit provided pursuant to subsection B for any taxable year shall not exceed the individual’s or married individuals’ Virginia income tax liability.
4. Notwithstanding any other provision of this section, no credit shall be allowed pursuant to subsection B in any taxable year in which the individual, the individual’s spouse, or both, or any person claimed as a dependent on such individual’s or married individuals’ income tax return, claims one or any combination of the following on his or their income tax return for such taxable year:
   1. The subtraction under subdivision 8 of § 58.1-322.02 ;
   2. The subtraction under subdivision 15 of § 58.1-322.02 ;
   3. The subtraction under subdivision 16 of § 58.1-322.02;
   4. The deduction for the additional personal exemption for blind or aged taxpayers under subdivision 2 b of § 58.1-322.03 ; or
   5. The deduction under subdivision 5 of § 58.1-322.03 .

History. 2000, c. 397; 2004, Sp. Sess. I, c. 3; 2017, c. 444; 2020, c. 900.

Editor’s note.

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. I, c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

The 2004 amendments.

The 2004 amendment by Sp. Sess. I, c. 3, effective September 1, 2004, redesignated former subsection B as present subdivision B 1; added subdivision B 2; substituted “subsection B” for “this section” in subsection C; in subsection D, substituted “no credit shall be allowed pursuant to subsection B” for “such credit shall not be allowed” in the introductory paragraph and “subdivision D 2 b” for “subdivision D 2 a” in subdivision D 4; and made minor stylistic changes.

The 2017 amendments.

The 2017 amendment by c. 444, in subdivision D 1, substituted “subdivision 8 of § 58.1-322.02 ” for “subdivision C 11 of § 58.1-322 ”; in subdivision D 2, substituted “subdivision 15 of § 58.1-322.02 ” for “subdivision C 23 of § 58.1-322 ”; in subdivision D 3, substituted “subdivision 16 of § 58.1-322.02” for “subdivision C 16 of § 58.1-322”; in subdivision D 4, substituted “subdivision 2 b of § 58.1-322.03 ” for “subdivision D 2 b of § 58.1-322”; and in subdivision D 5, substituted “subdivision 5 of § 58.1-322.03 ” for “subdivision D 5 of § 58.1-322.”

The 2020 amendments.

The 2020 amendment by c. 900, substituted “individuals’ ” for “persons’ ” “individuals” for “persons” wherever they occur except in the first two instances in subdivision B 1, first sentence; and in subdivision B 1, substituted “married individuals” for “husband and wife” in the penultimate sentence

§ 58.1-339.9. Repealed by Acts 2016, c. 305, cl. 2.

Editor’s note.

Acts 2016, c. 305, cl. 3 provides: “That this act shall in no way alter or affect any (i) tax credit or tax benefit or other tax attribute allowed or earned under any section repealed by this act or (ii) tax liability or obligation pursuant to any such section.”

Former § 58.1-339.9 , Rent reductions tax credit, derived from Acts 2000, c. 428; 2005, c. 414; 2011, c. 851.

§ 58.1-339.10. Riparian forest buffer protection for waterways tax credit.

1. For all taxable years beginning on or after January 1, 2000, any individual who owns land abutting a waterway on which timber is harvested, and who forbears harvesting timber on certain portions of the land near the waterway, shall be allowed a credit against the tax imposed by § 58.1-320 as set forth in this section. For purposes of this section, “waterway” means any perennial or intermittent stream of water depicted on the then most current United States Geological Survey topographical map. For purposes of this section and for taxable years beginning on and after January 1, 2008, “individual” means an individual person and an individual’s grantor trust.
2. The State Forester shall develop guidelines setting forth the general requirements of qualifying for the credit, including the land for which credit is eligible. To qualify for the credit, the individual must comply with an individualized Forest Stewardship Plan to be certified by the State Forester. In no event shall the distance from such waterway to the far end of the timber buffer, on which the tax credit is based, be less than thirty-five feet or more than three hundred feet. The minimum duration for the buffer shall be fifteen years. The State Forester shall check each certified buffer annually to verify its continued compliance with the individual’s Forest Stewardship Plan. If the State Forester discovers that the timber in that portion of the land retained as a buffer has been harvested prior to the end of the required term, written notification of such violation shall be delivered to the individual by the State Forester.
3. The tax credit shall be an amount equal to twenty-five percent of the value of timber in that portion of the land retained as a buffer. The amount of such credit shall not exceed $17,500 or the total amount of the tax imposed by this chapter, whichever is less, in the year that the timber outside the buffer was harvested. If the amount of the credit exceeds the individual’s liability for such taxable year, the excess may be carried over for credit against income taxes in the next five taxable years until the total amount of the tax credit has been taken. For purposes of this section, the amount of any credit attributable to qualified buffer protection by a partnership or electing small business corporation (S Corporation) shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S Corporation. The land which is the subject of a tax credit under this section cannot again be the subject of a tax credit under this section for at least fifteen years. The State Forester shall check each certified buffer annually to verify its continued compliance with the individual’s Forest Stewardship Plan. If the State Forester discovers that the timber in that portion of the land retained as a buffer has been harvested prior to the end of the required term, written notification of such noncompliance shall be delivered to the individual by the State Forester.
4. To claim the credit authorized under this section, the individual shall apply to the State Forester, who shall determine the amount of credit, using the assessed value of the timber in that portion of land retained as a buffer, and issue a certificate thereof to the individual. The individual shall attach the certificate to the Virginia tax return on which the credit is claimed. In the event the timber in that portion of land retained as a buffer is harvested by the individual or any other person prior to the end of the term originally established in the individual’s Forest Stewardship Plan, the individual shall repay the tax credit claimed. Within sixty days after receiving written notification from the State Forester that the individual’s plan no longer qualifies for the credit, repayment shall be made to the Department of Taxation. If repayment is not made within the sixty-day period, the State Forester shall notify the locality’s Commonwealth Attorney for assistance in collecting the funds from the individual.

History. 2000, cc. 568, 607; 2008, c. 449.

The number of this section was assigned by the Virginia Code Commission, the number in the 2000 act having been 58.1-339.8 .

The 2008 amendments.

The 2008 amendment by c. 449 added the last sentence in subsection A; substituted “individual’s” for “taxpayer’s” and “individual” for “taxpayer” thoroughout this section; and deleted “individualized” preceding “Forest Stewardship Plan” in the third sentence in subsection D.

§ 58.1-339.11. Repealed by Acts 2013, c. 801, cl. 2, effective for taxable years beginning on or after January 1, 2014.

Editor’s note.

Former § 58.1-339.11 , pertaining to Long-term care insurance tax credit, was derived from Acts 2006, cc. 570, 599.

This section is repealed by Acts 2013, c. 801, cl. 2, which provides: “That § 58.1-339.11 of the Code of Virginia is repealed for taxable years beginning on or after January 1, 2014. Such repeal shall in no way affect any tax credits earned under § 58.1-339.11 prior to the repeal, or the administration of the same.”

§ 58.1-339.12. Farm wineries and vineyards tax credit.

1. As used in this section, unless the context requires a different meaning:“Qualified capital expenditures” means all expenditures made by the taxpayer for the purchase and installation of barrels, bins, bottling equipment, capsuling equipment, chemicals, corkers, crushers and destemmers, dirt, fermenters, or other recognized fermentation devices, fertilizer and soil amendments, filters, grape harvesters, grape plants, hoses, irrigation equipment, labeling equipment, poles, posts, presses, pumps, refractometers, refrigeration equipment, seeders, tanks, tractors, vats, weeding and spraying equipment, wine tanks, and wire.“Virginia vineyard” means agricultural lands located in the Commonwealth consisting of at least one contiguous acre dedicated to the growing of grapes that are used or are intended to be used in the production of wine by a Virginia farm winery as well as any plants or other improvements located thereon.“Virginia farm winery” means an establishment located in the Commonwealth that is licensed as a Virginia farm winery pursuant to § 4.1-206.1 .
2. For taxable years beginning on and after January 1, 2011, any Virginia farm winery or vineyard shall be entitled to a credit against the tax levied pursuant to §§ 58.1-320 and 58.1-400 for qualified capital expenditures made in connection with the establishment of new Virginia farm wineries or vineyards and capital improvements made to existing Virginia farm wineries or vineyards. The amount of the credit shall be equal to 25 percent of all qualified capital expenditures.
3. The total amount of tax credits available under this section for a calendar year shall not exceed $250,000. In the event that applications for such credit exceed $250,000 for any calendar, the Department of Taxation shall allocate the credits on a pro rata basis.
4. If the amount of the credit exceeds the taxpayer’s tax liability for the taxable year, the excess may be carried over for credit against the income taxes of the taxpayer in the next 10 taxable years, or until the total credit amount has been taken, whichever occurs first.
5. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
6. The credit allowed in this section shall not be claimed to the extent the taxpayer has claimed a deduction for the same expenses for federal income tax purposes under § 179 of the Internal Revenue Code, as amended.

History. 2011, cc. 214, 226; 2020, cc. 1113, 1114.

Editor’s note.

Acts 2020, cc. 1113 and 1114, cl. 3, as amended by Acts 2021, Sp. Sess. I, c. 82, cls. 2 and 3, provides: “That the provisions of the first, second, and fourth enactments of this act shall become effective on January 1, 2022, except for the provisions of the first enactment that amend the definition of low alcohol beverage cooler set forth in § 4.1-100 of the Code of Virginia, as amended by this act, which shall become effective July 1, 2020.”

The 2020 amendments.

The 2020 amendments by cc. 1113 and 1114, effective January 1, 2022, are identical, and substituted “§ 4.1-206.1 ” for “§ 4.1-207 ” in the definition of “Virginia farm winery” in subsection A.

§ 58.1-340. Accounting.

1. An individual taxpayer’s taxable year under this chapter shall be the same as his taxable year for federal income tax purposes.
2. If a taxpayer’s taxable year is changed for federal income tax purposes, his taxable year for purposes of this chapter shall be similarly changed. If a taxable year of less than twelve months results from a change of taxable year, the Virginia taxable income shall be prorated under regulations of the Department.
3. A taxpayer’s method of accounting under this chapter shall be the same as his method of accounting for federal income tax purposes. In the absence of any method of accounting for federal income tax purposes, Virginia taxable income shall be computed under such method as in the opinion of the Tax Commissioner clearly reflects income.
4. If a taxpayer’s method of accounting is changed for federal income tax purposes, his method of accounting for purposes of this chapter shall be similarly changed. If a taxpayer’s method of accounting is changed, other than from an accrual to an installment method, any additional tax which results from adjustments determined to be necessary solely by reason of the change shall not be greater than if such adjustments were ratably allocated and included for the taxable year of the change and the preceding taxable years, not in excess of two, during which the taxpayer used the method of accounting from which the change is made. If a taxpayer’s method of accounting is changed from an accrual to an installment method, any additional tax for the year of such change of method and for any subsequent year which is attributable to the receipt of installment payments properly accrued in a prior year, shall be reduced by the portion of tax for any prior taxable year attributable to the accrual of such installment payments, in accordance with regulations of the Department.
5. In computing a taxpayer’s Virginia taxable income for any taxable year under a method of accounting different from the method under which the taxpayer’s Virginia taxable income was computed, there shall be taken into account those adjustments which are determined, under regulations prescribed by the Department, to be necessary solely by reason of change in order to prevent amounts from being duplicated or omitted.
6. Notwithstanding any of the other provisions of this section, any accounting adjustments made for federal income tax purposes for any taxable year shall be applied in computing the taxpayer’s taxable income for such year.

History. Code 1950, § 58-151.061; 1971, Ex. Sess., c. 171; 1984, c. 675.

Law Review.

For survey of Virginia law on taxation for the year 1970-1971, see 57 Va. L. Rev. 1618 (1971).

§ 58.1-341. Returns of individuals.

1. On or before May 1 of each year if an individual’s taxable year is the calendar year, or on or before the fifteenth day of the fourth month following the close of a taxable year other than the calendar year, an income tax return under this chapter shall be made and filed by or for:
   1. Every resident individual, except as provided in § 58.1-321 , required to file a federal income tax return for the taxable year, or having Virginia taxable income for the taxable year;
   2. Every nonresident individual having Virginia taxable income for the taxable year, except as provided in § 58.1-321 .Notwithstanding the foregoing, every member of the armed services of the United States deployed outside of the United States shall be allowed an automatic extension to file an income tax return. Such extension shall expire 90 days following the completion of such member’s deployment. For purposes of this section, “the armed services of the United States” includes active duty service with the regular Armed Forces of the United States or the National Guard or other reserve component.
2. If the federal income tax liability of either spouse is determined on a separate federal return, their Virginia income tax liabilities and returns shall be separate. If the federal income tax liabilities of married individuals (other than married individuals described in subdivision A 2 ) are determined on a joint federal return, or if neither files a federal return:
   1. They shall file a joint Virginia income tax return, and their tax liabilities shall be joint and several; or
   2. They may elect to file separate Virginia income tax returns if they comply with the requirements of the Department in setting forth information (whether or not on a single form), in which event their tax liabilities shall be separate unless such married individuals file separately on a combined return. The election permitted under this subsection may be made or changed at any time within three years from the last day prescribed by law for the timely filing of the return.
3. If either spouse is a resident and the other is a nonresident, they shall file separate Virginia income tax returns on such single or separate forms as may be required by the Department, in which event their tax liabilities shall be separate except as provided in subsection D, unless both elect to determine their joint Virginia taxable income as if both were residents, in which event their tax liabilities shall be joint and several.
4. If married individuals file separate Virginia income tax returns on a single form pursuant to subsection B or C, and:
   1. If the sum of the payments by either spouse, including withheld and estimated taxes, exceeds the amount of the tax for which such spouse is separately liable, the excess may be applied by the Department to the credit of the other spouse if the sum of the payments by such other spouse, including withheld and estimated taxes, is less than the amount of the tax for which such other spouse is separately liable;
   2. If the sum of the payments made by both spouses with respect to the taxes for which they are separately liable, including withheld and estimated taxes, exceeds the total of the taxes due, refund of the excess may be made payable to both spouses.The provisions of this subsection shall not apply if the return of either spouse includes a demand that any overpayment made by him shall be applied only on account of his separate liability.
5. The return for any deceased individual shall be made and filed by his executor, administrator, or other person charged with his property.
6. The return for an individual who is unable to make a return by reason of minority or other disability shall be made and filed by his guardian, committee, fiduciary or other person charged with the care of his person or property (other than a receiver in possession of only a part of his property), or by his duly authorized agent.

History. Code 1950, § 58-151.062; 1971, Ex. Sess., c. 171; 1972, c. 827; 1978, c. 796; 1984, c. 675; 2008, c. 591; 2020, c. 900.

Editor’s note.

Acts 2010, c. 535, provides: Ҥ 1. That no later than December 31, 2010, the Tax Commissioner shall establish a Virginia Free File program based on the Internal Revenue Service (IRS) Free File program, as established by the IRS under public rulemaking and set forth in the Federal Register, Vol. 67, No. 213, Monday, November 4, 2002, pages 67247-67251, as other states have done. Such program shall be effective for the filing period for the 2010 calendar year individual income tax returns and every calendar year thereafter.

“To implement the Virginia Free File program, the Commonwealth shall enter into a non-monetary agreement with companies in the electronic tax preparation and filing industry (the Consortium for Virginia) to work together to offer free, online tax return preparation and filing services to 70 percent of Virginia taxpayers with the lowest incomes, the same as the IRS Free File program for federal taxpayers. The Consortium for Virginia shall offer these free tax services to certain Virginia taxpayers at no cost to the Commonwealth. The Commonwealth shall provide eligible taxpayers with links through the Department of Taxation’s website to the free services offered by the Consortium for Virginia participants.

“The Virginia Free File agreement to be established between the Commonwealth and the Consortium of Virginia shall be based upon the agreement between the IRS and the Consortium of Virginia that was signed by the IRS Commissioner on October 30, 2002, and that was most recently modified and extended on November 5, 2009, and the bilateral commitments, rules, and requirements contained therein, and shall be consistent with IRS Publications 1345 and 3112.

“The Commonwealth shall, using available resources, coordinate efforts with the IRS Free File program, the Free File Alliance, and the Internal Revenue Service to maximize among eligible Virginia taxpayers (a) awareness of the Virginia Free File program and (b) the claiming of the federal earned income tax credit.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item § 3-5.22 A, effective for the biennium ending June 30, 2022, provides: “Any income tax payments originally due during the period from April 1, 2020 to June 1, 2020 may be submitted to the Department of Taxation without the accrual of interest as would otherwise be required for late payments pursuant to Chapter 3 of Title 58.1, provided that full payment is made on or before June 1, 2020. For purposes of this section, ‘income tax payment’ means any payment required to be made with a return filed pursuant to §§ 58.1-341 , 58.1-381 , and 58.1-441 ; any payment required to be made with respect to an election to file an extension of time within which to file such a return; any payment of estimated tax required pursuant to Article 19 and Article 20 of Chapter 3 of Title 58.1; and any payment of consumer use tax made with a return filed pursuant to § 58.1-341 .”

The 2008 amendments.

The 2008 amendment by c. 591 inserted the second paragraph of subdivision A 2.

The 2020 amendments.

The 2020 amendment by c. 900 substituted “married individuals” for “husband and wife” wherever it occurs; in subsection B in the introductory language, substituted “either spouse” for “husband or wife” in the first sentence and “subdivision A 2” for “subdivision 2 of subsection A)” in the second sentence; in subsection C, substituted “spouse” for “husband or wife” and in subdivision D 2, second paragraph, substituted “him” for “him or her” and “his” for “his or her.”

Law Review.

For survey of Virginia law on taxation for the year 1971-1972, see 58 Va. L. Rev. 1338 (1972).

For article on recent developments in the law affecting Virginia taxation, see 43 U. Rich. L. Rev. 405 (2008).

§ 58.1-341.1. Returns of individuals; required information.

1. For all taxable years beginning on and after January 1, 1995, the Department of Taxation shall include in any packet of instructions and forms for individual income tax returns an application to register to vote by mail and appropriate instructions for the completion and mailing of the application to register to vote. The form of the application shall be prescribed and the instructions shall be provided by the State Board of Elections.
2. 1. For taxable years beginning on and after January 1, 2021, the Department of Taxation shall include on the appropriate individual income tax return forms the following: B. 1. For taxable years beginning on and after January 1, 2021, the Department of Taxation shall include on the appropriate individual income tax return forms the following:
      1. A checkoff box or similar mechanism for indicating whether the individual, or spouse in the case of a married taxpayer filing jointly, or any dependent of the individual (i) is an uninsured individual at the time the return is filed (ii) voluntarily consents to the Department of Taxation providing the individual’s tax information, as provided in clause (xxii) of subsection C of § 58.1-3 , to the Department of Medical Assistance Services for purposes of affirming that the individual, the individual’s spouse, or any dependent of the individual meets the income eligibility for medical assistance. Such information shall not be used to determine an individual is ineligible for medical assistance; and
      2. Space for an individual to voluntarily include a preferred method for the Department of Medical Assistance Services to contact the individual for purposes of an eligibility determination.
   2. For taxable years beginning on and after January 1, 2022, the Department of Taxation shall include on the appropriate individual income tax return forms the following:
      1. A checkoff box or similar mechanism for indicating whether the individual, or spouse in the case of a married taxpayer filing jointly, or any dependent of the individual voluntarily consents to the Department of Taxation providing the individual’s tax information to the Department of Social Services and the Department of Medical Assistance Services as provided in clause (xxii) of subsection C of § 58.1-3 ; and
      2. Space for an individual to voluntarily include the following information: date of birth; email address; dependent’s name and date of birth, and preferred method for the Department of Social Services and the Department of Medical Assistance Services to contact the individual for purposes of an eligibility determination.
   3. For taxable years beginning on and after January 1, 2023, the Department of Taxation shall include on the appropriate individual income tax return forms the following:
      1. A checkoff box or similar mechanism for indicating whether the individual, or spouse in the case of a married taxpayer filing jointly, or any dependent of the individual voluntarily consents to the Department of Taxation providing the individual’s tax information to the Virginia Health Benefit Exchange pursuant to clause (xxiv) of subsection C of § 58.1-3; and
      2. Space for an individual to voluntarily include a preferred method for the Virginia Health Benefit Exchange to contact the individual for purposes of an eligibility determination.
   4. Information obtained pursuant to this subsection shall not be used to determine an individual is ineligible for medical assistance.

History. 1994, c. 632; 2020, cc. 916, 917; 2021, Sp. Sess. I, c. 162.

Editor’s note.

Acts 1994, c. 632, which enacted this section, provided that the 1994 enactment would become effective “contingent upon the approval of the people at the November 1994 election of the amendment to, Article II, § 2 of the Constitution of Virginia proposed in chapter 891 of the 1993 Acts of Assembly.” The people ratified the amendment at the 1994 general election held Nov. 8, 1994.

Acts 2020, cc. 916 and 917, cl. 5 provides: “That the State Corporation Commission shall implement the provisions of this act as it receives notice of approval by the Centers for Medicare and Medicaid Services and to the extent of such approval.”

Acts 2021, Sp. Sess. I, c. 162, cl. 2 provides: “That for taxable years beginning on and after January 1, 2021, upon entering into a written agreement, the Department of Taxation shall provide to the Department of Medical Assistance Services the following information authorized for disclosure pursuant to clause (xxii) of subsection C of § 58.1-3 of the Code of Virginia, as amended by this act: the name, address, social security number, number and type of personal exemptions, tax-filing status, and adjusted gross income of an individual, or spouse in the case of a married taxpayer filing jointly, who has voluntarily consented to such disclosure for purposes of identifying persons who would like to newly enroll in medical assistance.”

Acts 2021, Sp. Sess. I, c. 162, cl. 3 provides: “That for taxable years beginning on and after January 1, 2022, upon entering into a written agreement, the Department of Taxation shall provide to the Department of Medical Assistance Services and the Department of Social Services all information authorized for disclosure pursuant to clause (xxii) of subsection C of § 58.1-3 of the Code of Virginia, as amended by this act.”

Acts 2021, Sp. Sess. I, c. 162, cl. 4 provides: “That all information authorized for disclosure pursuant to clause (xxiv) of subsection C of § 58.1-3 of the Code of Virginia, as amended by this act, shall be provided to the Virginia Health Benefit Exchange beginning with the first taxable year after completion of the establishment of the American Health Benefit Exchange or as soon thereafter as practicable as determined by the Virginia Health Benefit Exchange.”

The 2020 amendments.

The 2020 amendments by cc. 916 and 917 are identical, and added subsection B.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 162, effective July 1, 2021, inserted the subdivision B 1 and B 1 a. designations and added subdivisions B 1 b, B 2 and B 3; in the introductory language of B 1, deleted “all” preceding “taxable years” and added “the following”; and made stylistic changes.

§ 58.1-341.2. Returns of individuals; notification of tax return data breach.

1. As used in this section:“Income tax return preparer” has the same meaning as in § 58.1-302 .“Return information” means a taxpayer’s identity and the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, assessments, or tax payments. “Return information” does not include information that is lawfully obtained from publicly available information or from federal, state, or local government records lawfully made available to the general public.“Signing income tax return preparer” means an income tax return preparer who has the primary responsibility for the overall substantive accuracy of the preparation of a return or claim for refund.“Taxpayer identity” means the name of a person with respect to whom a return is to be filed and his taxpayer identification number as defined in 26 U.S.C. § 6109.
2. 1. Any signing income tax return preparer who prepares Virginia individual income tax returns during a calendar year shall notify the Department without unreasonable delay after the discovery or notification of unauthorized access and acquisition of unencrypted and unredacted return information that compromises the confidentiality of such information maintained by such signing income tax return preparer and that creates a reasonable belief that an unencrypted and unredacted version of such information was accessed and acquired by an unauthorized person and that causes, or such preparer reasonably believes has caused or will cause, identity theft or other fraud. B. 1. Any signing income tax return preparer who prepares Virginia individual income tax returns during a calendar year shall notify the Department without unreasonable delay after the discovery or notification of unauthorized access and acquisition of unencrypted and unredacted return information that compromises the confidentiality of such information maintained by such signing income tax return preparer and that creates a reasonable belief that an unencrypted and unredacted version of such information was accessed and acquired by an unauthorized person and that causes, or such preparer reasonably believes has caused or will cause, identity theft or other fraud.
   2. Such signing income tax return preparer shall provide the Department with the name and taxpayer identification number of any taxpayer that may be affected by a compromise in confidentiality that requires notification pursuant to subdivision 1, as well as the name of the signing income tax return preparer, his preparer tax identification number, and such other information as the Department may prescribe.
3. An income tax return preparer shall complete the notice required by this section on behalf of any of its employees who are signing income tax preparers and who would otherwise be required to notify the Department pursuant to subsection B.

History. 2018, cc. 283, 360.

§ 58.1-342. Special cases in which nonresident need not file Virginia return.

1. A nonresident of Virginia who had no actual place of abode in this Commonwealth at any time during the taxable year and commuted on a daily basis from his place of residence in another state to his place of employment in Virginia is hereby relieved of filing an income tax return with this Commonwealth for that taxable year provided:
   1. His only income from Virginia sources was from salaries and wages;
   2. Such salaries and wages were subject to income taxation by the state of his residence under an income tax law substantially similar in principle to this chapter;
   3. The laws of such other state contain a provision substantially similar in effect to that contained in § 58.1-332 and applicable to residents of Virginia; and
   4. The laws of such other state accord like treatment to a resident of this Commonwealth who commuted on a daily basis from his place of residence in Virginia to his place of employment in such other state.
2. The Department may enter into reciprocal agreements with other states to exempt nonresidents from the Virginia income tax if such other states similarly exempt Virginia residents. Under such reciprocal agreements nonresidents are not required to pay tax or file a return with, nor be subject to withholding by, the reciprocating state on compensation paid in that state or on income distributed by a trust domiciled in that state.

History. Code 1950, § 58-151.063; 1971, Ex. Sess., c. 171; 1982, c. 528; 1984, c. 675; 1998, c. 352.

§ 58.1-343. Place of filing.

1. Every resident who is required by this chapter to file a return shall file his return with the commissioner of the revenue for the county or city in which he resides, and every nonresident who is required by this chapter to file a return shall file his return with the commissioner of the revenue for the county or city in which all or a part of his income from Virginia sources was derived.
2. Every fiduciary required to file a return on behalf of an individual shall file such return with the commissioner of the revenue having jurisdiction in the county or city in which the fiduciary qualified or, if there has been no qualification in this Commonwealth, in the county or city in which such fiduciary resides, does business or has an office or wherein the beneficiary or any of them may reside, or with the Department if provided by regulation thereof.

History. Code 1950, § 58-151.064; 1971, Ex. Sess., c. 171; 1984, c. 675.

§ 58.1-344. Extension of time for filing returns.

1. In accordance with procedures established by the Tax Commissioner, any individual or fiduciary may elect an extension of time within which to file the income tax return required under this chapter to the date six months after such due date, provided that the estimated tax due is paid in accordance with the provisions of subsection B.
2. Any taxpayer desiring an extension of time in accordance with the provisions of subsection A shall, on or before the original due date for the filing of such return, in accordance with procedures established by the Tax Commissioner pay the full amount properly estimated as the balance of the tax due for the taxable year after giving effect to any estimated tax payments under § 58.1-491 and any tax credit under § 58.1-499 . If any amount of the balance of the tax due is underestimated, interest at the rate prescribed in § 58.1-15 will be assessed on such amount from the original due date for filing of the income tax return to the date of payment. In addition to interest, if the underestimation of the balance of tax due exceeds 10 percent of the actual tax liability, there shall be added to the tax as a penalty an amount equal to two percent per month for each month or fraction thereof from the original due date for the filing of the income tax return to the date of payment.
3. If the return is not filed, or the full amount of the tax due is not paid, on or before the extended due date elected under subsection A, the penalty imposed by § 58.1-347 shall apply as if no extension had been granted.
4. An extension of time for filing returns of income is hereby granted to and including the first day of the seventh month following the close of the taxable year in the case of United States citizens residing or traveling outside the United States and Puerto Rico, including persons in the military or naval service on duty outside the United States and Puerto Rico.In all such cases a statement must be attached to the return certifying that the taxpayer is the person for whom the return is made and that the taxpayer was outside the United States or Puerto Rico on the due date of the return.
5. Notwithstanding any other provisions of law, any taxpayer who qualifies for an automatic extension under subsection D of this section, and who expects to qualify for foreign income exclusion may, on or before the expiration of the first day of the seventh month, apply for an additional extension of time for filing returns of income for a period of 30 days after the date such taxpayer reasonably expects to qualify for such exclusion. Such extension may not be granted unless a similar request for extension has been made for filing the federal return. An approved copy of the federal extension must be attached to the return when filed.
6. 1. Notwithstanding any other provision of this section, the date for filing income tax returns and paying the tax due for the taxable year beginning on or after January 1, 1990, and before January 1, 1991, for members of the reserve components of the armed forces, as defined in 10 U.S.C. § 261, as amended, who on the original due date of such return were on active duty status, is hereby extended for a period of one year from the original due date of the return. F. 1. Notwithstanding any other provision of this section, the date for filing income tax returns and paying the tax due for the taxable year beginning on or after January 1, 1990, and before January 1, 1991, for members of the reserve components of the armed forces, as defined in 10 U.S.C. § 261, as amended, who on the original due date of such return were on active duty status, is hereby extended for a period of one year from the original due date of the return.
   2. However, in the case of an individual who qualifies for a period of postponement under § 7508 of the Internal Revenue Code or an act of Congress relating to and defining “Desert Shield service” for purposes of the federal income tax, the deadline for filing income tax returns and paying the tax due shall be the date 15 days after the date on which the federal period of postponement terminates, if such date is greater than one year from the original due date of the return.
   3. In all cases, an individual qualifying for an extension under either subdivision 1 or 2 of this subsection shall attach a statement to the return containing such information as may be prescribed by the Tax Commissioner.
7. 1. Notwithstanding any other provision of this section, the date for filing income tax returns and paying the tax due for the taxable years beginning on or after January 1, 1995, and before January 1, 1997, for members of the Armed Forces of the United States, who on the original due date of such return were on active duty status serving in any part of the former Yugoslavia, including the air space above such location or any waters subject to related naval operations in support of Operation JOINT ENDEAVOR as part of the NATO Peace Keeping Force, is hereby extended for a period of one year from the original due date of the return. G. 1. Notwithstanding any other provision of this section, the date for filing income tax returns and paying the tax due for the taxable years beginning on or after January 1, 1995, and before January 1, 1997, for members of the Armed Forces of the United States, who on the original due date of such return were on active duty status serving in any part of the former Yugoslavia, including the air space above such location or any waters subject to related naval operations in support of Operation JOINT ENDEAVOR as part of the NATO Peace Keeping Force, is hereby extended for a period of one year from the original due date of the return.
   2. However, in the case of an individual who qualifies for a period of postponement under § 7508 of the Internal Revenue Code for purposes of the federal income tax, the deadline for filing income tax returns and paying the tax due shall be the date 15 days after the date on which the federal period of postponement terminates, if such date is greater than one year from the original due date of the return.
   3. In all cases, an individual qualifying for an extension under either subdivision 1 or 2 of this subsection shall attach a statement to the return containing such information as may be prescribed by the Tax Commissioner.
8. Any individual who receives an extension for filing an individual income tax return for taxable year 1990 pursuant to subsection F or for taxable year 1995 pursuant to subsection G of this section shall be paid interest on any overpayment of individual income tax for taxable year 1990 or 1995, respectively, beginning from the date the return was originally required to be filed prior to the extension.

History. Code 1950, § 58-151.067; 1971, Ex. Sess., c. 171; 1972, c. 827; 1976, c. 720; 1977, c. 244; 1978, c. 166; 1984, c. 675; 1991, cc. 346, 361, 362, 456; 1996, c. 401; 2005, c. 100.

Editor’s note.

Acts 1991, cc. 346 and 361, which amended this section, in cl. 2, provide that guidelines and rules issued by the Tax Commissioner for the administration of this act shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.).

The 2005 amendments.

The 2005 amendment by c. 100, effective July 1, 2005, and applicable for taxable years beginning on and after January 1, 2005, in subsection A, substituted “In accordance with procedures established by the Tax Commissioner” for “Whenever,” “may elect an extension” for “has been allowed or granted an extension or extensions,” and “subsection B” for “subsection C,” and deleted “any federal income tax return for any taxable year, the due date for the filing of” following “which to file,” “shall be extended” following “this chapter,” and “or fifteen days after the extended date for filing the federal income tax return, whichever is earlier” following “such due date”; deleted former subsection B, relating to extensions of time for filing income tax returns, redesignated the remaining subsections accordingly, and made related changes; substituted “two percent” for “one and a half” in subsection B; added subsection C; and made minor stylistic changes.

Law Review.

For survey of Virginia taxation law for the year 1975-1976, see 62 Va. L. Rev. 1479 (1976).

For annual survey of Virginia law on taxation, see 40 U. Rich. L. Rev. 291 (2005).

§ 58.1-344.1. Postponement of time for performing certain acts.

Penalty, interest, and addition to tax shall not apply or be computed with respect to the tax imposed in Article 2 of this chapter during the period of time that an individual enjoys the extension under subdivision 2 of subsections F and G of § 58.1-344 . The periods of limitation prescribed in Chapter 18 (§ 58.1-1800 et seq.) of this title shall also be extended by the number of days to which an individual is entitled to an extension under subdivision 2 of subsections F and G of § 58.1-344 .

History. 1991, cc. 346, 361; 1996, c. 401.

Editor’s note.

Acts 1991, cc. 346 and 361, which enacted this section, in cl. 2, provide that guidelines and rules issued by the Tax Commissioner for the administration of this act shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.).

§ 58.1-344.2. Voluntary contributions; cost of administration.

For all voluntary contributions made on individual income tax returns for taxable years beginning on or after January 1, 2003, except those made pursuant to § 58.1-344.4 , the Department of Taxation may retain up to five percent of all voluntary contributions made for the taxable year, but not to exceed $50,000 for any taxable year, for its costs in administering voluntary contributions. The amount otherwise payable to each organization for which a voluntary contribution has been designated shall be reduced on a pro rata basis in accordance with the amount of voluntary contributions designated to the specific organization in the previous taxable year as compared to the total of all voluntary contributions designated to organizations in the previous taxable year.

History. 2002, cc. 395, 413; 2013, cc. 28, 402.

Editor’s note.

Acts 2013, cc. 28 and 402, cl. 2 provides: “That the Department of Taxation and the Virginia College Savings Plan shall enter into a memorandum of understanding to establish how any reasonable and necessary costs incurred by the Department of Taxation as a result of this act may be recovered from the Virginia College Savings Plan.”

Acts 2013, cc. 28 and 402, cl. 3 provides: “That the provisions of this act shall be effective for taxable years beginning on or after January 1, 2014.”

The 2013 amendments.

The 2013 amendments by cc. 28 and 402, effective for taxable years beginning on or after January 1, 2014, are identical and inserted “except those made pursuant to § 58.1-344.4 ,” in the first sentence.

§ 58.1-344.3. Voluntary contributions of refunds requirements.

1. 1. For taxable years beginning on and after January 1, 2005, all entities entitled to voluntary contributions of tax refunds listed in subsections B and C must have received at least $10,000 in contributions in each of the three previous taxable years for which there is complete data and in which such entity was listed on the individual income tax return. A. 1. For taxable years beginning on and after January 1, 2005, all entities entitled to voluntary contributions of tax refunds listed in subsections B and C must have received at least $10,000 in contributions in each of the three previous taxable years for which there is complete data and in which such entity was listed on the individual income tax return.
   2. In the event that an entity listed in subsections B and C does not satisfy the requirement in subdivision 1, such entity shall no longer be listed on the individual income tax return.
   3. 1. The entities listed in subdivisions B 21 and B 22 as well as any other entities in subsections B and C added subsequent to the 2004 Session of the General Assembly shall not appear on the individual income tax return until their addition to the individual income tax return results in a maximum of 25 contributions listed on the return. Such contributions shall be added in the order that they are listed in subsections B and C.
      2. Each entity added to the income tax return shall appear on the return for at least three consecutive taxable years before the requirement in subdivision 1 is applied to such entity.
   4. The Department of Taxation shall report annually by the first day of each General Assembly Regular Session to the Chairmen of the House Committee on Finance and Senate Committee on Finance and Appropriations the amounts collected for each entity listed under subsections B and C for the three most recent taxable years for which there is complete data. Such report shall also identify the entities, if any, that will be removed from the individual income tax return because they have failed the requirements in subdivision 1, the entities that will remain on the individual income tax return, and the entities, if any, that will be added to the individual income tax return.
2. Subject to the provisions of subsection A, the following entities entitled to voluntary contributions shall appear on the individual income tax return and are eligible to receive tax refund contributions of not less than $1:
   1. Nongame wildlife voluntary contribution.
      1. All moneys contributed shall be used for the conservation and management of endangered species and other nongame wildlife. “Nongame wildlife” includes protected wildlife, endangered and threatened wildlife, aquatic wildlife, specialized habitat wildlife both terrestrial and aquatic, and mollusks, crustaceans, and other invertebrates under the jurisdiction of the Board of Wildlife Resources.
      2. All moneys shall be deposited into a special fund known as the Game Protection Fund and which shall be accounted for as a separate part thereof to be designated as the Nongame Cash Fund. All moneys so deposited in the Nongame Cash Fund shall be used by the Board of Wildlife Resources for the purposes set forth herein.
   2. Open space recreation and conservation voluntary contribution.
      1. All moneys contributed shall be used by the Department of Conservation and Recreation to acquire land for recreational purposes and preserve natural areas; to develop, maintain, and improve state park sites and facilities; and to provide funds to local public bodies pursuant to the Virginia Outdoor Fund Grants Program.
      2. All moneys shall be deposited into a special fund known as the Open Space Recreation and Conservation Fund. The moneys in the fund shall be allocated one-half to the Department of Conservation and Recreation for the purposes stated in subdivision 2 a and one-half to local public bodies pursuant to the Virginia Outdoor Fund Grants Program.
   3. Voluntary contribution to political party.All moneys contributed shall be paid to the State Central Committee of any party that meets the definition of a political party under § 24.2-101 as of July 1 of the previous taxable year. The maximum contribution allowable under this subdivision shall be $25. In the case of a joint return of married individuals, each spouse may designate that the maximum contribution allowable be paid.
   4. United States Olympic Committee voluntary contribution.All moneys contributed shall be paid to the United States Olympic Committee.
   5. Housing program voluntary contribution.
      1. All moneys contributed shall be used by the Department of Housing and Community Development to provide assistance for emergency, transitional, and permanent housing for the homeless; and to provide assistance to housing for the low-income elderly for the physically or mentally disabled.
      2. All moneys shall be deposited into a special fund known as the Virginia Tax Check-off for Housing Fund. All moneys deposited in the fund shall be used by the Department of Housing and Community Development for the purposes set forth in this subdivision. Funds made available to the Virginia Tax Check-off for Housing Fund may supplement but shall not supplant activities of the Virginia Housing Trust Fund established pursuant to Chapter 9 (§ 36-141 et seq.) of Title 36 or those of the Virginia Housing Development Authority.
   6. Voluntary contributions to the Department for Aging and Rehabilitative Services.
      1. All moneys contributed shall be used by the Department for Aging and Rehabilitative Services for the enhancement of transportation services for the elderly and disabled.
      2. All moneys shall be deposited into a special fund known as the Transportation Services for the Elderly and Disabled Fund. All moneys so deposited in the fund shall be used by the Department for Aging and Rehabilitative Services for the enhancement of transportation services for the elderly and disabled. The Department for Aging and Rehabilitative Services shall conduct an annual audit of the moneys received pursuant to this subdivision and shall provide an evaluation of all programs funded pursuant to this subdivision annually to the Secretary of Health and Human Resources.
   7. Voluntary contribution to the Community Policing Fund.
      1. All moneys contributed shall be used to provide grants to local law-enforcement agencies for the purchase of equipment or the support of services, as approved by the Criminal Justice Services Board, relating to community policing.
      2. All moneys shall be deposited into a special fund known as the Community Policing Fund. All moneys deposited in such fund shall be used by the Department of Criminal Justices Services for the purposes set forth herein.
   8. Voluntary contribution to promote the arts.All moneys contributed shall be used by the Virginia Arts Foundation to assist the Virginia Commission for the Arts in its statutory responsibility of promoting the arts in the Commonwealth. All moneys shall be deposited into a special fund known as the Virginia Arts Foundation Fund.
   9. Voluntary contribution to the Historic Resources Fund.All moneys contributed shall be deposited in the Historic Resources Fund established pursuant to § 10.1-2202.1 .
   10. Voluntary contribution to the Virginia Foundation for the Humanities and Public Policy.All moneys contributed shall be paid to the Virginia Foundation for the Humanities and Public Policy. All moneys shall be deposited into a special fund known as the Virginia Humanities Fund.
   11. Voluntary contribution to the Center for Governmental Studies.All moneys contributed shall be paid to the Center for Governmental Studies, a public service and research center of the University of Virginia. All moneys shall be deposited into a special fund known as the Governmental Studies Fund.
   12. Voluntary contribution to the Law and Economics Center.All moneys contributed shall be paid to the Law and Economics Center, a public service and research center of George Mason University. All moneys shall be deposited into a special fund known as the Law and Economics Fund.
   13. Voluntary contribution to Children of America Finding Hope.All moneys contributed shall be used by Children of America Finding Hope (CAFH) in its programs which are designed to reach children with emotional and physical needs.
   14. Voluntary contribution to 4-H Educational Centers.All moneys contributed shall be used by the 4-H Educational Centers throughout the Commonwealth for their (i) educational, leadership, and camping programs and (ii) operational and capital costs. The State Treasurer shall pay the moneys to the Virginia 4-H Foundation in Blacksburg, Virginia.
   15. Voluntary contribution to promote organ and tissue donation.
       1. All moneys contributed shall be used by the Virginia Transplant Council to assist in its statutory responsibility of promoting and coordinating educational and informational activities as related to the organ, tissue, and eye donation process and transplantation in the Commonwealth of Virginia.
       2. All moneys shall be deposited into a special fund known as the Virginia Donor Registry and Public Awareness Fund. All moneys deposited in such fund shall be used by the Virginia Transplant Council for the purposes set forth herein.
   16. Voluntary contributions to the Virginia War Memorial division of the Department of Veterans Services and the National D-Day Memorial Foundation.All moneys contributed shall be used by the Virginia War Memorial division of the Department of Veterans Services and the National D-Day Memorial Foundation in their work through each of their respective memorials. The State Treasurer shall divide the moneys into two equal portions and pay one portion to the Virginia War Memorial division of the Department of Veterans Services and the other portion to the National D-Day Memorial Foundation.
   17. Voluntary contribution to the Virginia Federation of Humane Societies.All moneys contributed shall be paid to the Virginia Federation of Humane Societies to assist in its mission of saving, caring for, and finding homes for homeless animals.
   18. Voluntary contribution to the Tuition Assistance Grant Fund.
       1. All moneys contributed shall be paid to the Tuition Assistance Grant Fund for use in providing monetary assistance to residents of the Commonwealth who are enrolled in undergraduate or graduate programs in private Virginia colleges.
       2. All moneys shall be deposited into a special fund known as the Tuition Assistance Grant Fund. All moneys so deposited in the Fund shall be administered by the State Council of Higher Education for Virginia in accordance with and for the purposes provided under the Tuition Assistance Grant Act (§ 23.1-628 et seq.).
   19. Voluntary contribution to the Spay and Neuter Fund.All moneys contributed shall be paid to the Spay and Neuter Fund for use by localities in the Commonwealth for providing low-cost spay and neuter surgeries through direct provision or contract or each locality may make the funds available to any private, nonprofit sterilization program for dogs and cats in such locality. The Tax Commissioner shall determine annually the total amounts designated on all returns from each locality in the Commonwealth, based upon the locality that each filer who makes a voluntary contribution to the Fund lists as his permanent address. The State Treasurer shall pay the appropriate amount to each respective locality.
   20. Voluntary contribution to the Virginia Commission for the Arts.All moneys contributed shall be paid to the Virginia Commission for the Arts.
   21. Voluntary contribution for the Department of Emergency Management.All moneys contributed shall be paid to the Department of Emergency Management.
   22. Voluntary contribution for the cancer centers in the Commonwealth.All moneys contributed shall be paid equally to all entities in the Commonwealth that officially have been designated as cancer centers by the National Cancer Institute.
   23. Voluntary contribution to the Brown v. Board of Education Scholarship Program Fund.
       1. All moneys contributed shall be paid to the Brown v. Board of Education Scholarship Program Fund to support the work of and generate nonstate funds to maintain the Brown v. Board of Education Scholarship Program.
       2. All moneys shall be deposited into the Brown v. Board of Education Scholarship Program Fund as established in § 30-231.4.
       3. All moneys so deposited in the Fund shall be administered by the State Council of Higher Education in accordance with and for the purposes provided in Chapter 34.1 (§ 30-231.01 et seq.) of Title 30.
   24. Voluntary contribution to the Martin Luther King, Jr. Living History and Public Policy Center.All moneys contributed shall be paid to the Board of Trustees of the Martin Luther King, Jr. Living History and Public Policy Center.
   25. Voluntary contribution to the Virginia Caregivers Grant Fund.All moneys contributed shall be paid to the Virginia Caregivers Grant Fund established pursuant to § 63.2-2202 .
   26. Voluntary contribution to public library foundations.All moneys contributed pursuant to this subdivision shall be deposited into the state treasury. The Tax Commissioner shall determine annually the total amounts designated on all returns for each public library foundation and shall report the same to the State Treasurer. The State Treasurer shall pay the appropriate amount to the respective public library foundation.
   27. Voluntary contribution to Celebrating Special Children, Inc.All moneys contributed shall be paid to Celebrating Special Children, Inc. and shall be deposited into a special fund known as the Celebrating Special Children, Inc. Fund.
   28. Voluntary contributions to the Department for Aging and Rehabilitative Services.
       1. All moneys contributed shall be used by the Department for Aging and Rehabilitative Services for providing Medicare Part D counseling to the elderly and disabled.
       2. All moneys shall be deposited into a special fund known as the Medicare Part D Counseling Fund. All moneys so deposited shall be used by the Department for Aging and Rehabilitative Services to provide counseling for the elderly and disabled concerning Medicare Part D. The Department for Aging and Rehabilitative Services shall conduct an annual audit of the moneys received pursuant to this subdivision and shall provide an evaluation of all programs funded pursuant to the subdivision to the Secretary of Health and Human Resources.
   29. Voluntary contribution to community foundations.All moneys contributed pursuant to this subdivision shall be deposited into the state treasury. The Tax Commissioner shall determine annually the total amounts designated on all returns for each community foundation and shall report the same to the State Treasurer. The State Treasurer shall pay the appropriate amount to the respective community foundation. A “community foundation” shall be defined as any institution that meets the membership requirements for a community foundation established by the Council on Foundations.
   30. Voluntary contribution to the Virginia Foundation for Community College Education.
       1. All moneys contributed shall be paid to the Virginia Foundation for Community College Education for use in providing monetary assistance to Virginia residents who are enrolled in comprehensive community colleges in Virginia.
       2. All moneys shall be deposited into a special fund known as the Virginia Foundation for Community College Education Fund. All moneys so deposited in the Fund shall be administered by the Virginia Foundation for Community College Education in accordance with and for the purposes provided under the Community College Incentive Scholarship Program (former § 23-220.2 et seq.).
   31. Voluntary contribution to the Middle Peninsula Chesapeake Bay Public Access Authority.All moneys contributed shall be paid to the Middle Peninsula Chesapeake Bay Public Access Authority to be used for the purposes described in § 15.2-6601 .
   32. Voluntary contribution to the Breast and Cervical Cancer Prevention and Treatment Fund.All moneys contributed shall be paid to the Breast and Cervical Cancer Prevention and Treatment Fund established pursuant to § 32.1-368 .
   33. Voluntary contribution to the Virginia Aquarium and Marine Science Center.All moneys contributed shall be paid to the Virginia Aquarium and Marine Science Center for use in its mission to increase the public’s knowledge and appreciation of Virginia’s marine environment and inspire commitment to preserve its existence.
   34. Voluntary contribution to the Virginia Capitol Preservation Foundation.All moneys contributed shall be paid to the Virginia Capitol Preservation Foundation for use in its mission in supporting the ongoing restoration, preservation, and interpretation of the Virginia Capitol and Capitol Square.
   35. Voluntary contribution for the Secretary of Veterans and Defense Affairs.All moneys contributed shall be paid to the Office of the Secretary of Veterans and Defense Affairs for related programs and services.
3. Subject to the provisions of subsection A, the following voluntary contributions shall appear on the individual income tax return and are eligible to receive tax refund contributions or by making payment to the Department if the individual is not eligible to receive a tax refund pursuant to § 58.1-309 or if the amount of such tax refund is less than the amount of the voluntary contribution:
   1. Voluntary contribution to the Family and Children’s Trust Fund of Virginia.All moneys contributed shall be paid to the Family and Children’s Trust Fund of Virginia.
   2. Voluntary Chesapeake Bay restoration contribution.
      1. All moneys contributed shall be used to help fund Chesapeake Bay and its tributaries restoration activities in accordance with tributary plans developed pursuant to Article 7 (§ 2.2-215 et seq.) of Chapter 2 of Title 2.2 or the Chesapeake Bay Watershed Implementation Plan submitted by the Commonwealth of Virginia to the U.S. Environmental Protection Agency on November 29, 2010, and any subsequent revisions thereof.
      2. The Tax Commissioner shall annually determine the total amount of voluntary contributions and shall report the same to the State Treasurer, who shall credit that amount to a special nonreverting fund to be administered by the Office of the Secretary of Natural and Historic Resources. All moneys so deposited shall be used for the purposes of providing grants for the implementation of tributary plans developed pursuant to Article 7 (§ 2.2-215 et seq.) of Chapter 2 of Title 2.2 or the Chesapeake Bay Watershed Implementation Plan submitted by the Commonwealth of Virginia to the U.S. Environmental Protection Agency on November 29, 2010, and any subsequent revisions thereof.
      3. No later than November 1 of each year, the Secretary of Natural and Historic Resources shall submit a report to the House Committee on Agriculture, Chesapeake and Natural Resources; the Senate Committee on Agriculture, Conservation and Natural Resources; the House Committee on Appropriations; the Senate Committee on Finance and Appropriations; and the Virginia delegation to the Chesapeake Bay Commission, describing the grants awarded from moneys deposited in the fund. The report shall include a list of grant recipients, a description of the purpose of each grant, the amount received by each grant recipient, and an assessment of activities or initiatives supported by each grant. The report shall be posted on a website maintained by the Secretary of Natural and Historic Resources, along with a cumulative listing of previous grant awards beginning with awards granted on or after July 1, 2014.
   3. Voluntary Jamestown-Yorktown Foundation Contribution.All moneys contributed shall be used by the Jamestown-Yorktown Foundation for the Jamestown 2007 quadricentennial celebration. All moneys shall be deposited into a special fund known as the Jamestown Quadricentennial Fund. This subdivision shall be effective for taxable years beginning before January 1, 2008.
   4. State forests voluntary contribution.
      1. All moneys contributed shall be used for the development and implementation of conservation and education initiatives in the state forests system.
      2. All moneys shall be deposited into a special fund known as the State Forests System Fund, established pursuant to § 10.1-1119.1 . All moneys so deposited in such fund shall be used by the State Forester for the purposes set forth herein.
   5. Voluntary contributions to Uninsured Medical Catastrophe Fund.All moneys contributed shall be paid to the Uninsured Medical Catastrophe Fund established pursuant to § 32.1-324.2 , such funds to be used for the treatment of Virginians sustaining uninsured medical catastrophes.
   6. Voluntary contribution to local school divisions.
      1. All moneys contributed shall be used by a specified local public school foundation as created by and for the purposes stated in § 22.1-212.2:2.
      2. All moneys collected pursuant to subdivision 6 a or through voluntary payments by taxpayers designated for a local public school foundation over refundable amounts shall be deposited into the state treasury. The Tax Commissioner shall determine annually the total amounts designated on all returns for each public school foundation and shall report the same to the State Treasurer. The State Treasurer shall pay the appropriate amount to the respective public school foundation.
      3. In order for a public school foundation to be eligible to receive contributions under this section, school boards must notify the Department during the taxable year in which they want to participate prior to the deadlines and according to procedures established by the Tax Commissioner.
   7. Voluntary contribution to Home Energy Assistance Fund.All moneys contributed shall be paid to the Home Energy Assistance Fund established pursuant to § 63.2-805 , such funds to be used to assist low-income Virginians in meeting seasonal residential energy needs.
   8. Voluntary contribution to the Virginia Military Family Relief Fund.
      1. All moneys contributed shall be paid to the Virginia Military Family Relief Fund for use in providing assistance to military service personnel on active duty and their families for living expenses including, but not limited to, food, housing, utilities, and medical services.
      2. All moneys shall be deposited into a special fund known as the Virginia Military Family Relief Fund, established and administered pursuant to § 44-102.2.
   9. Voluntary contribution to the Federation of Virginia Food Banks.All moneys contributed shall be paid to the Federation of Virginia Food Banks, a Partner State Association of Feeding America. The Federation of Virginia Food Banks shall as soon as practicable make an equitable distribution of all such moneys to the Blue Ridge Area Food Bank, Capital Area Food Bank, Feeding America Southwest Virginia, FeedMore, Inc., Foodbank of Southeastern Virginia and the Eastern Shore, Fredericksburg Area Food Bank, or Virginia Peninsula Foodbank.The Secretary of Finance may request records or receipts of all distributions by the Federation of Virginia Food Banks of such moneys contributed for purposes of ensuring compliance with the requirements of this subdivision.
4. Unless otherwise specified and subject to the requirements in § 58.1-344.2 , all moneys collected for each entity in subsections B and C shall be deposited into the state treasury. The Tax Commissioner shall determine annually the total amount designated for each entity in subsections B and C on all individual income tax returns and shall report the same to the State Treasurer, who shall credit that amount to each entity’s respective special fund.

History. 2004, c. 649; 2005, cc. 860, 889; 2006, cc. 103, 479; 2007, cc. 69, 70, 601; 2008, cc. 97, 313, 461; 2009, cc. 4, 26, 41, 521, 834; 2010, c. 690; 2011, cc. 780, 858; 2012, cc. 803, 835; 2013, cc. 22, 234, 631, 754; 2014, cc. 18, 115, 182, 490; 2015, c. 70; 2020, cc. 900, 958; 2021, Sp. Sess. I, c. 401.

Editor’s note.

Acts 2004, c. 649, cl. 2 provides: “That if an organization or entity that is a recipient of voluntary contributions at the time this act becomes effective is removed from the list of such organizations in accordance with this act, the following shall be the first two new organizations added to such list in the order in which they appear herein: (i) the Department of Emergency Management for the Office of Commonwealth Preparedness and (ii) all entities in the Commonwealth that officially have been designated as cancer centers by the National Cancer Institute.”

Acts 2004, c. 649, cl. 3 provides: “That the Tax Commissioner shall provide descriptions, including their purpose, of (i) the Office of Commonwealth Preparedness and (ii) all entities in the Commonwealth officially designated as cancer centers by the National Cancer Institute in the instructions that accompany the annual Virginia income tax return package.”

At the direction of the Virginia Code Commission, “23.1-628” was substituted for “23-38.11” in subdivision B 18 b; and “(former § 23-220.2 et seq.)” was substituted for “(§ 23-220.2 et seq.)” in subdivision B 30 b to conform to the recodification of Title 23 by Acts 2016, c. 588, effective October 1, 2016.

Acts 2018, c. 621, cl. 1 provides: “§ 1. For taxable years beginning on and after January 1, 2018, but before January 1, 2021, notwithstanding the provisions of subdivision A 2 of § 58.1-344.3 of the Code of Virginia, the entity listed in subdivision B 13 of § 58.1-344.3 shall be listed on the individual income tax return regardless of whether it meets the requirements of subdivision A 1 of § 58.1-344.3.

“§ 2. For taxable years beginning on and after January 1, 2021, the entity listed in subdivision B 13 of § 58.1-344.3 of the Code of Virginia shall be listed on the individual income tax return only if it meets the requirements of subdivision A 1 of § 58.1-344.3 ; however, it shall not be removed from the individual income tax return for failure to meet such requirements in any taxable year prior to January 1, 2018.

“§ 3. The entity listed in subdivision B 13 of § 58.1-344.3 of the Code of Virginia shall count as one of the maximum of 25 contributions listed on the individual income tax return pursuant to subdivision A 3 a of § 58.1-344.3 unless it is removed for a taxable year beginning on and after January 1, 2021.”

The Virginia Code Commission authorized the substitution of “House Committee on Finance and Senate Committee on Finance and Appropriations” for “the House and Senate Committees on Finance” in subdivision A 4. March 10, 2021.

The 2005 amendments.

The 2005 amendments by cc. 860 and 889 rewrote the section.

The 2006 amendments.

The 2006 amendments by cc. 103 and 479 are identical, and added subdivision C 8.

The 2007 amendments.

The 2007 amendment by c. 69 rewrote the second paragraph of subdivision B 19, which read: “All moneys contributed shall be paid to the Spay and Neuter Fund for use by the Virginia Federation of Humane Societies in its mission of providing low-cost spay and neuter surgeries through direct provision or contract throughout the Commonwealth.”

The 2007 amendment by c. 70 added subdivisions B 26 and B 27.

The 2007 amendment by c. 601 added subdivision B 26 [now B 28].

The 2008 amendments.

The 2008 amendment by c. 97 rewrote subdivision B 24.

The 2008 amendment by c. 313 added subdivisions B 29 and B 30.

The 2008 amendment by c. 461 added subdivision B 29, which was identical to the subdivision B 29 added by c. 313.

The 2009 amendments.

The 2009 amendment by c. 4 added subdivision B 31.

The 2009 amendments by cc. 26 and 521 are identical, and added subdivision B 32.

The 2009 amendment by c. 41 added subdivision B 33.

The 2009 amendment by c. 834 substituted “Virginia Donor Registry and Public Awareness Fund” for “Virginia Transplant Council Education Fund” in subdivision B 15 b.

The 2010 amendments.

The 2010 amendment by c. 690 inserted subdivision B 34.

The 2011 amendments.

The 2011 amendments by cc. 780 and 858, effective April 6, 2011, are identical, and added subdivision B 35.

The 2012 amendments.

The 2012 amendments by cc. 803 and 835, cl. 59, are identical, and throughout subsection A, deleted “of this subsection” following “subdivision 1”; in subdivision B 2 b, deleted “of this subsection” following “subdivision 2 a”; and throughout subdivision B 6, substituted “Department for Aging and Rehabilitative Services” for “Department for the Aging.” Clause 111 also amended this section by deleting “of this subsection” following “subdivision 1” throughout subsection A; deleting “of this subsection” following “subdivision 2 a” in subdivision B 2 b; substituting “Virginia War Memorial Board” for “Virginia War Memorial Foundation” throughout subdivision B 16; and deleting “of this subsection” following “subdivision 6 a” in subdivision C 6 b.

The 2013 amendments.

The 2013 amendments by cc. 22 and 631 are identical, and added “or the Chesapeake Bay Watershed Implementation Plan submitted by the Commonwealth of Virginia to the U.S. Environmental Protection Agency on November 29, 2010, and any subsequent revisions thereof” at the end of subdivisions C 2 a and C 2 b.

The 2013 amendment by c. 234 substituted “War Memorial division of the Department of Veterans Services” for “War Memorial Board” three times in subdivision B 16.

The 2013 amendment by c. 754 substituted “Virginia Housing Trust Fund” for “Virginia Housing Partnership Revolving Fund” in the second sentence of subdivision B 5 b.

The 2014 amendments.

The 2014 amendments by cc. 18 and 182 are identical, and in subdivision C 2, substituted “restoration contribution” for “Restoration Contribution” and added subdivision C 2 c.

The 2014 amendments by c. 115, effective March 3, 2014, and c. 490, effective April 2, 2014, in subdivision B 21, substituted “Department of Emergency Management” for “Office of Commonwealth Preparedness” in the first paragraph and deleted “for the Office of Commonwealth Preparedness” from the end of the second paragraph; in subdivision B 35, substituted “Secretary of Veterans and Defense Affairs” for “Secretary of Veterans Affairs and Homeland Security” in both paragraphs.

The 2015 amendments.

The 2015 amendment by c. 70 added subdivision C 9.

The 2020 amendments.

The 2020 amendment by c. 900, in subdivision A 4, substituted “Chairmen of the House and Senate Committees on Finance” for “chairmen of the House and Senate Finance Committees” in the first sentence; and in subdivision B 3, substituted “married individuals” for “husband and wife” in the second paragraph, last sentence.

The 2020 amendment by c. 958, in subdivision B 1 a, substituted “Board of Wildlife Resources” for “Board of Game and Inland Fisheries” in the last sentence; and in subdivision B 1 b, substituted “Board of Wildlife Resources” for “Commission of Game and Inland Fisheries” in the last sentence.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 401, effective July 1, 2021, substituted “Secretary of Natural and Historic Resources” for “Secretary of Natural Resources” once in subdivision C 2 b and twice in subdivision C 2 c and substituted “Senate Committee on Finance and Appropriations” for “Senate Committee on Finance” in subdivision C 2 c.

§ 58.1-344.4. Voluntary contributions of refunds into Virginia College Savings Plan accounts.

1. If an individual is entitled to an income tax refund for the taxable year, that individual may designate on his Virginia individual income tax return a contribution to one or more Virginia College Savings Plan accounts established under Chapter 7 (§ 23.1-700 et seq.) of Title 23.1, in the amount of the entire individual income tax refund or a portion thereof.
2. 1. The Department of Taxation shall send each contribution made pursuant to subsection A to the Virginia College Savings Plan with the following information: B. 1. The Department of Taxation shall send each contribution made pursuant to subsection A to the Virginia College Savings Plan with the following information:
      1. The amount of the individual income tax refund or that portion of the refund that the individual has chosen to contribute;
      2. The taxpayer’s name, Social Security number or taxpayer identification number, address, and telephone number; and
      3. The Virginia College Savings Plan account number or numbers into which the contributions will be deposited.
   2. If a contribution to a Virginia College Savings Plan account is designated in an individual income tax return filed jointly by married individuals, the Department of Taxation shall send the information described in subdivision 1 for both spouses to the Virginia College Savings Plan.
3. 1. If the taxpayer owns a single Virginia College Savings Plan account, the Virginia College Savings Plan shall deposit the contribution made pursuant to subsection A into that account. C. 1. If the taxpayer owns a single Virginia College Savings Plan account, the Virginia College Savings Plan shall deposit the contribution made pursuant to subsection A into that account.
   2. If the taxpayer owns more than one Virginia College Savings Plan account, the Virginia College Savings Plan shall allocate the contribution made pursuant to subsection A between or among the accounts in equal amounts, or as otherwise designated by the taxpayer.
   3. If the taxpayer does not own an existing Virginia College Savings Plan account and does not wish to open an account, contributions made pursuant to subsection A shall be returned to the taxpayer by the Virginia College Savings Plan.
4. For the purpose of determining interest on an overpayment or refund under § 58.1-1833 , no interest shall accrue after the Department of Taxation sends the contribution to the Virginia College Savings Plan.
5. Any taxpayer designating that a refund be contributed to a Virginia College Savings Plan account shall, by making such designation, be deemed to authorize the Department of Taxation to provide all necessary information, including the information specified in subdivision B 1, to the Virginia College Savings Plan.

History. 2013, cc. 28, 402; 2020, c. 900.

Editor’s note.

Acts 2013, cc. 28 and 402, cl. 2 provides: “That the Department of Taxation and the Virginia College Savings Plan shall enter into a memorandum of understanding to establish how any reasonable and necessary costs incurred by the Department of Taxation as a result of this act may be recovered from the Virginia College Savings Plan.”

Acts 2013, cc. 28 and 402, cl. 3 provides: “That the provisions of this act shall be effective for taxable years beginning on or after January 1, 2014.”

At the direction of the Virginia Code Commission, “Chapter 7 (§ 23.1-700 et seq.) of Title 23.1” was substituted for “Chapter 4.9 (§ 23-38.75 et seq.) of Title 23” in subsection A to conform to the recodification of Title 23 by Acts 2016, c. 588, effective October 1, 2016.

The 2020 amendments.

The 2020 amendment by c. 900, in subdivision B 2, substituted “married individuals” and “spouses” for “a husband and wife” and “the husband and wife, respectively.

§§ 58.1-345 through 58.1-346. Repealed by Acts 2005, cc. 860 and 889, cl. 2.

§ 58.1-346.1. Expired.

Editor’s note.

Acts 1988, c. 819, cl. 2, as amended by Acts 1993, c. 865, cl. 4, and by Acts 1993, c. 890, cl. 1, provided that the provisions of the 1988 act would be effective for taxable years beginning on and after January 1, 1988, and that the provisions of the 1988 act would expire for all taxable years beginning after December 31, 1996.

§ 58.1-346.1:1. Repealed by Acts 2005, cc. 860 and 889, cl. 2.

§ 58.1-346.2. Expired.

Editor’s note.

Acts 1988, c. 861, cl. 3, as amended by Acts 1993, c. 865, cl. 5, provided that the provisions of the 1988 act would be effective for taxable years beginning on and after January 1, 1988, and the provisions on the 1988 act would expire for all taxable years beginning after December 31, 1995.

§ 58.1-346.2:1. Repealed by Acts 2005, cc. 860 and 889, cl. 2.

§ 58.1-346.3. Expired.

Editor’s note.

Acts 1991, c. 173, cl. 2, as amended by Acts 1993, c. 865, cl. 3 and by Acts 1993, c. 890, cl. 2, provided that the provisions of the 1991 act would become effective for taxable years beginning on and after January 1, 1991, and would expire for taxable years beginning after December 31, 1996.

§ 58.1-346.3:1. Repealed by Acts 2005, cc. 860 and 889, cl. 2.

§ 58.1-346.4. Expired.

Editor’s note.

Acts 1991, c. 179, cl. 2, as amended by Acts 1993, c. 865, cl. 2, provided that the provisions of the 1991 act would become effective for taxable years beginning on and after January 1, 1991, and would expire for all taxable years beginning after December 31, 1995.

§§ 58.1-346.4:1 through 58.1-346.24. Repealed by Acts 2005, cc. 860 and 889, cl. 2.

Editor’s note.

Acts 2005, c. 816, amended former § 58.1-346.23. For current provisions as to voluntary contributions to the Spay and Neuter Fund, see § 58.1-344.3 B 19.

§ 58.1-347. Penalty for failure to file income tax returns in time.

All individual or fiduciary income tax returns required by law to be filed with the commissioner of the revenue shall be filed with the commissioner of the revenue within the time required by this chapter, unless the time for filing such returns is extended by the Department. Upon all returns on which tax is due, filed with or assessed by the commissioner of the revenue after the time herein prescribed for the filing of returns, the commissioner of the revenue shall assess a penalty equal to six percent of the amount of taxes assessable thereon if the failure is for not more than one month, with an additional six percent for each additional month or fraction thereof during which such failure to file continues, not exceeding thirty percent in the aggregate. Such penalty shall be collected in the same manner as is provided by law for the collection of other taxes.

History. Code 1950, § 58-151.073; 1971, Ex. Sess., c. 171; 1974, c. 178; 1984, c. 675; 1989, cc. 629, 642; 1991, cc. 316, 331.

Law Review.

For survey of Virginia law on taxation for the year 1973-1974, see 60 Va. L. Rev. 1607 (1974).

§ 58.1-348. Criminal prosecution for failure or refusal to file return of income or for making false statement therein; limitation.

Notwithstanding any other provisions of this title and in addition to any other penalties provided by law, any individual or fiduciary required under this chapter to make a return of income, who willfully fails or refuses to make such return, at the time or times required by law, shall be guilty of a Class 1 misdemeanor, or who, with intent to defraud the Commonwealth, makes any false statement in any such return, shall be guilty of a Class 6 felony. A prosecution under this section shall be commenced within five years next after the commission of the offense.

History. Code 1950, § 58-151.074; 1971, Ex. Sess., c. 171; 1977, c. 246; 1984, c. 675; 2003, c. 180.

Cross references.

As to failure to make returns required of corporations and partnerships, and fraudulent returns and statements made for them, see §§ 58.1-450 , 58.1-451 , and 58.1-452 .

As to punishment for Class 6 felonies, see § 18.2-10 .

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

The 2003 amendments.

The 2003 amendment by c. 180, in the first sentence, inserted “shall be guilty of a Class 1 misdemeanor” and substituted “Class 6 felony” for “Class 1 misdemeanor” at the end.

Law Review.

For survey article on developments in the law affecting Virginia taxation, see 38 U. Rich. L. Rev. 267 (2003).

§ 58.1-348.1. Fraudulent assistance; penalty.

Any income tax return preparer, as defined in § 58.1-302 , who knowingly and willfully aids or assists in, counsels or advises the preparation or presentation of a return, affidavit, claim or other document required by this chapter that he knows is fraudulent or false as to any material matter, is guilty of a Class 6 felony.

History. 2005, c. 48.

Cross references.

As to punishment for Class 6 felony, see § 18.2-10 .

Law Review.

For annual survey of Virginia law on taxation, see 40 U. Rich. L. Rev. 291 (2005).

§ 58.1-348.2. Authority to enjoin income tax return preparers.

1. The Department may commence a civil action to enjoin any person who is an income tax return preparer from further engaging in any conduct described in subsection B or from further action as an income tax return preparer. The venue for any action under this section shall be brought in the circuit court in the circuit where the income tax return preparer resides or has his principal place of business or in the jurisdiction in which the taxpayer with respect to whose income tax return the action is brought resides. The court may exercise its jurisdiction over such action separate and apart from any other administrative or judicial action brought by the Commonwealth against such income tax return preparer or any taxpayer.
2. In any action under subsection A, the court may enjoin the income tax return preparer from further engaging in any conduct specified in this subsection if the court finds that injunctive relief is appropriate to prevent the recurrence of such conduct. The court may enjoin conduct when an income tax return preparer has:
   1. Engaged in any conduct subject to penalty under § 6694 or 6695 of the Internal Revenue Code, or subject to any criminal penalty provided by the Internal Revenue Code or this title; or
   2. Engaged in any other fraudulent or deceptive conduct that substantially interferes with the proper administration of the tax laws of the Commonwealth.
3. If the court finds that an income tax return preparer has continually or repeatedly engaged in any conduct described in subsection B and that an injunction prohibiting such conduct would not be sufficient to prevent such person’s interference with the proper administration of the tax laws of the Commonwealth, the court may enjoin such person from acting as an income tax return preparer. The fact that that person has been enjoined from preparing income tax returns for the United States or any other state in the five years preceding the petition for an injunction shall establish a prima facie case for an injunction under this section.
4. 1. The Department may bar or suspend any income tax return preparer, without resort to the injunctive remedies described in this section, from filing returns with the Department for repeated violations of § 58.1-348.4 . Such disbarment or suspension shall be subject to appeal pursuant to the procedures described in subdivision D 2. D. 1. The Department may bar or suspend any income tax return preparer, without resort to the injunctive remedies described in this section, from filing returns with the Department for repeated violations of § 58.1-348.4 . Such disbarment or suspension shall be subject to appeal pursuant to the procedures described in subdivision D 2.
   2. 1. Any income tax preparer barred or suspended pursuant to subdivision D 1 may, within 30 days from the date of such barring or suspension, apply for relief to the Commissioner or appeal directly to the Circuit Court of the City of Richmond. Such application shall be in the form prescribed by the Department, and shall fully set forth the grounds upon which the tax preparer relies and all facts relevant to the tax preparer’s contention. The Commissioner may also require such additional information, testimony, or documentary evidence as he deems necessary to a fair determination of the application.
      2. Any income tax preparer barred or suspended against whom an order or decision of the Commissioner has been adversely rendered pursuant to subdivision D 2 a may, within fifteen days of such order or decision, appeal from such order or decision to the Circuit Court of the City of Richmond.
      3. Any income tax preparer barred or suspended shall not file any Virginia income tax returns pending application for relief to the Commissioner and appeal to the Circuit Court of the City of Richmond.

History. 2005, c. 48; 2018, c. 150.

The 2018 amendments.

The 2018 amendment by c. 150 added subsection D.

Law Review.

For annual survey of Virginia law on taxation, see 40 U. Rich. L. Rev. 291 (2005).

§ 58.1-348.3. Requirement that income tax return preparers use identification numbers.

1. As used in this section, “PTIN” means the Preparer Tax Identification Number that the Internal Revenue Service uses to identify tax return preparers pursuant to 26 U.S.C. § 6109.
2. For taxable years beginning on and after January 1, 2019, the Department shall require any income tax return preparer to include his PTIN on any tax return that he prepares or assists in preparing.
3. The Department shall promulgate regulations for using the PTIN as an oversight mechanism to assess returns and to identify high error rates, patterns of suspected fraud, and unsubstantiated bases for tax positions by income tax return preparers.
4. 1. The Department shall establish formal and regular communication protocols with the Internal Revenue Service to share and exchange PTIN information on income tax return preparers who are suspected of fraud, who are disciplined, or who are barred from filing tax returns with the Department or the Internal Revenue Service. D. 1. The Department shall establish formal and regular communication protocols with the Internal Revenue Service to share and exchange PTIN information on income tax return preparers who are suspected of fraud, who are disciplined, or who are barred from filing tax returns with the Department or the Internal Revenue Service.
   2. The Department may establish communication protocols with other states to exchange the enforcement and discipline information described in subdivision D 1.
   3. Notwithstanding the provisions of § 58.1-3 or any other provision of this title, the Department is authorized to provide to the Internal Revenue Service and other state tax or revenue agencies for their confidential use preparer and return data, including PTIN information, taxpayer names, taxpayer identification numbers, and other information as necessary to enforce the provisions of this section and §§ 58.1-348.2 and 58.1-348.4 .
5. The failure of an income tax return preparer to include his PTIN on a tax return shall not be used by the Department as a basis for rejecting such return as improperly filed.

History. 2018, c. 150.

§ 58.1-348.4. Failure to provide identification number; civil penalty.

1. No income tax return preparer may provide tax preparation services for Virginia income tax returns unless he provides his PTIN, as defined in § 58.1-348.3 , when submitting a return and signing as an income tax return preparer.
2. In addition to all other penalties provided by law, any person who violates subsection A shall pay a civil penalty to the Department in the amount of $50 per offense, but not to exceed $25,000 per calendar year. No penalty shall be imposed if the violation is reasonable and unintentional as determined by the Department.

History. 2018, c. 150.

§ 58.1-349. Information returns prima facie evidence.

In any prosecution under § 58.1-348 , any information return filed with the Department of Taxation or with the local commissioners of the revenue, as required by this chapter, may be admitted in evidence in any court in the Commonwealth as prima facie evidence of what is stated in said return.

History. Code 1950, § 58-151.075; 1971, Ex. Sess., c. 171; 1984, c. 675.

§ 58.1-350. Procuring returns from delinquent individuals or fiduciaries.

The commissioner of the revenue shall secure a return from every delinquent individual or fiduciary within his jurisdiction, or if any such individual or fiduciary refuses to make a return or fails to make such return for fifteen days after the commissioner of the revenue calls upon him to do so, such commissioner shall, from the best information he can obtain, make an estimate of the income of such individual or fiduciary and report the same to the Department.

The commissioner of the revenue shall have authority to assess taxes, penalties and interest upon such estimate, and such taxes, penalties and interest shall be collected in like manner as is provided by law for the collection of state taxes.

History. Code 1950, § 58-151.076; 1971, Ex. Sess., c. 171; 1984, c. 675.

§ 58.1-351. When, where and how individual income taxes payable and collectible.

Each individual and fiduciary liable for income tax shall pay the same to the treasurer of the county or city with whose commissioner of the revenue the taxpayer files his return at the time fixed by law for filing the return. The full amount of the tax payable as shown on the face of the return shall be so paid. A taxpayer may file his return and pay his tax in full in the closing days of his taxable year provided he is able to prepare a complete return.

If any payment is not made in full when due, there shall be added to the entire tax or to any unpaid balance of the tax, a penalty of six percent of the amount thereof, if the failure is for not more than one month, with an additional six percent for each additional month or fraction thereof during which such failure to pay continues, not exceeding thirty percent in the aggregate. The entire tax or any unpaid balance of the tax, together with such penalty, will immediately become collectible. Interest upon such tax or any unpaid balance of the tax, and on the accrued penalty, shall be added at a rate determined in accordance with § 58.1-15 , from the date the tax or any unpaid balance of the tax, was originally due until paid. In the case of an additional tax assessed by the commissioner of the revenue under the provisions of § 58.1-307 , if the return was made in good faith and the understatement of the amount in the return was not due to any fault of the taxpayer, there shall be no penalty on the additional tax because of such understatement, but interest shall be added to the amount of the deficiency at a rate determined in accordance with § 58.1-15 , from the time the said return was required by law to be filed until paid.

The penalty under this section shall not be applicable to any month or fraction thereof for which the individual is subject to the penalty imposed under § 58.1-347 . In no event shall the total amount of penalty assessed under this section and under § 58.1-347 exceed thirty percent in the aggregate.

History. Code 1950, § 58-151.077; 1971, Ex. Sess., c. 171; 1977, c. 396; 1984, c. 675; 1989, cc. 629, 642; 1991, cc. 316, 331.

§ 58.1-352. Memorandum assessments.

The commissioner of the revenue shall prepare a memorandum assessment if the taxpayer, on filing his return, desires to pay in currency. Such memorandum shall be prepared on a form to be prescribed and furnished by the Department and a copy of such memorandum assessment shall be immediately certified to the treasurer, who shall receive the currency or coin from the taxpayer and give his receipt therefor. Memorandum assessments shall be subsequently entered by the commissioner of the revenue on the prescribed assessment sheets or forms, and the Department may prescribe and furnish forms for making memorandum assessments in all additional cases in which, in the opinion of the Department, the same may be necessary to facilitate the assessment and collection of individual and fiduciary income taxes.

History. Code 1950, § 58-151.077; 1971, Ex. Sess., c. 171; 1977, c. 396; 1984, c. 675.

§ 58.1-353. Duties of county and city treasurer in collecting tax.

Each county and city treasurer shall proceed promptly to collect all individual and fiduciary income taxes for the taxable year that have been assessed by the commissioner of the revenue and remain unpaid after the time fixed by law for payment and shall continue his efforts so to collect until the close of the then current calendar year. The collection of such taxes shall be enforced by legal process, as provided in § 58.1-3919 , and all remedies available to the treasurer for the collection of other taxes shall apply to the collection of individual and fiduciary income taxes. Forms of necessary tax bills and receipts shall be prescribed by the Department.

Within thirty-one days after the close of such calendar year, the treasurer shall transmit to the Department in such form as the Department may prescribe such information and data as may be required by such Department with respect to all assessments made by the commissioner of the revenue during such calendar year as the treasurer was unable to collect. The Department, upon receiving and examining the same, shall certify to the Comptroller the necessary information to enable the Comptroller to give such treasurer proper credit on the Comptroller’s books for all unpaid items, and such treasurer shall not receive any of such taxes after he has transmitted such information and data to the Department, but the same shall be paid directly into the state treasury.

History. Code 1950, § 58-151.077; 1971, Ex. Sess., c. 171; 1977, c. 396; 1984, c. 675; 1986, c. 267.

§ 58.1-354. Separate individual income assessment sheets or forms; how kept.

The assessment of individual income taxes shall be made on separate sheets or forms to be prescribed by the Department, all copies of which shall be kept by the commissioner of the revenue, the treasurer and the Department, respectively, in such manner as shall preclude inspection by unauthorized persons.

History. Code 1950, § 58-151.099; 1971, Ex. Sess., c. 171; 1972, c. 565; 1984, c. 675.

Law Review.

For survey of Virginia law on taxation for the year 1971-1972, see 58 Va. L. Rev. 1338 (1972).

§ 58.1-355. Income taxes of members of armed services on death.

The provisions of § 692(a) and (c) of the Internal Revenue Code, as amended, shall be applicable in the same manner for purposes of the tax imposed in Article 2 of this chapter.

History. 1991, cc. 346, 361.

Editor’s note.

Acts 1991, cc. 346 and 361, which enacted this section, in cl. 2 provide that guidelines and rules issued by the Tax Commissioner for the administration of this act shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.).

§ 58.1-356. Reporting of payments by third-party settlement organizations.

1. As used in this section:“Participating payee” has the same meaning as that term is defined in § 6050W of the Internal Revenue Code.“Reportable payment transactions” has the same meaning as that term is defined in § 6050W of the Internal Revenue Code.“Third-party settlement organization” has the same meaning as that term is defined in § 6050W of the Internal Revenue Code.
2. Any third-party settlement organization shall report to the Department, and to any participating payee, all information required by § 6050W of the Internal Revenue Code with respect to reportable payment transactions made on or after January 1, 2020, to such participating payee. For the purposes of this requirement, the de minimis limitations of § 6041(a) of the Internal Revenue Code shall apply in lieu of the de minimis limitations of § 6050W(e) of the Internal Revenue Code. This section shall apply only with respect to participating payees with a Virginia mailing address.
3. Any information required by this section shall be reported to the Department on forms and using an electronic medium prescribed by the Tax Commissioner. The Tax Commissioner shall have the authority to waive the requirement to submit this information electronically upon a determination that the requirement creates an unreasonable burden on the third-party settlement organization that is required to report information pursuant to this section. All requests for waiver shall be transmitted to the Tax Commissioner in writing.
4. Any information required by this section shall be reported to the Department and participating payees within 30 days of the relevant federal deadlines for reporting such information. This requirement shall be applied as if the de minimis limitations of § 6041(a) of the Internal Revenue Code had been imposed for federal purposes rather than the de minimis limitations of § 6050W(e) of the Internal Revenue Code.

History. 2020, cc. 63, 248.

Article 6. Taxation of Estates and Trusts.

§ 58.1-370. Credit to trust beneficiary receiving accumulation distribution.

1. A beneficiary of a trust whose Virginia taxable income includes all or part of an accumulation distribution by such trust, as defined in the laws of the United States relating to federal income taxes, shall be allowed a credit against the tax otherwise due under this chapter for all or a proportionate part of any tax paid by the trust under this chapter which would not have been payable if the trust had in fact made distributions to its beneficiaries at the times and in the amounts specified in the laws of the United States relating to federal income taxes.
2. The credit under this section shall not reduce the tax otherwise due from the beneficiary under this chapter to an amount less than would have been due if the accumulation distribution or his part thereof were excluded from his Virginia taxable income.

History. Code 1950, § 58-151.026; 1971, Ex. Sess., c. 171; 1984, c. 675.

§ 58.1-371. Credits for taxes paid other states.

The provisions of § 58.1-332 shall be applicable mutatis mutandis to trusts and estates.

History. Code 1950, § 58-151.027; 1971, Ex. Sess., c. 171; 1984, c. 675.

§ 58.1-380. Accounting.

1. An estate and trust taxable year under this chapter shall be the same as its taxable year for federal income tax purposes.
2. If a taxpayer’s taxable year is changed for federal income tax purposes, its taxable year for purposes of this chapter shall be similarly changed. If a taxable year of less than twelve months results from a change of taxable year, the Virginia taxable income shall be prorated under regulations of the Department.
3. A taxpayer’s method of accounting under this chapter shall be the same as its method of accounting for federal income tax purposes. In the absence of any method of accounting for federal income tax purposes, Virginia taxable income shall be computed under such method as in the opinion of the Tax Commissioner clearly reflects income.
4. If a taxpayer’s method of accounting is changed for federal income tax purposes, its method of accounting for purposes of this chapter shall be similarly changed. If a taxpayer’s method of accounting is changed, other than from an accrual to an installment method, any additional tax which results from adjustments determined to be necessary solely by reason of the change shall not be greater than if such adjustments were ratably allocated and included for the taxable year of the change and the preceding taxable years, not in excess of two, during which the taxpayer used the method of accounting from which the change is made. If a taxpayer’s method of accounting is changed from an accrual to an installment method, any additional tax for the year of such change of method and for any subsequent year which is attributable to the receipt of installment payments properly accrued in a prior year, shall be reduced by the portion of tax for any prior taxable year attributable to the accrual of such installment payments, in accordance with regulations of the Department.
5. In computing a taxpayer’s Virginia taxable income for any taxable year under a method of accounting different from the method under which the taxpayer’s Virginia taxable income was computed, there shall be taken into account those adjustments which are determined, under regulations prescribed by the Department of Taxation, to be necessary solely by reason of change in order to prevent amounts from being duplicated or omitted.
6. Notwithstanding any other provisions of this section, any accounting adjustments made for federal income tax purposes for any taxable year shall be applied in computing the taxpayer’s taxable income for such year.

History. Code 1950, § 58-151.061; 1971, Ex. Sess., c. 171; 1984, c. 675.

Law Review.

For survey of Virginia law on taxation for the year 1970-1971, see 57 Va. L. Rev. 1618 (1971).

§ 58.1-381. Returns of estates and trusts.

1. On or before May 1 of each year if the taxable year is a calendar year, or on or before the fifteenth day of the fourth month following the close of a taxable year other than a calendar year, an income tax return under this chapter shall be made and filed by or for:
   1. Every resident estate or trust required to file a federal income tax return for the taxable year, or having any Virginia taxable income for the taxable year. If the return is for a fractional part of a year, the due date shall be determined as if the return were for a full twelve-month period;
   2. Every nonresident estate or trust having Virginia taxable income for the taxable year determined under § 58.1-362 .
2. The return for any deceased individual shall be made and filed by his executor, administrator, or other person charged with his property.
3. The return for an estate or trust shall be made and filed by the fiduciary.
4. If two or more fiduciaries are acting jointly, the return may be made by any one of them.

History. Code 1950, § 58-151.062; 1971, Ex. Sess., c. 171; 1972, c. 827; 1978, c. 796; 1984, c. 675; 1985, c. 221.

Editor’s note.

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item § 3-5.22 A, effective for the biennium ending June 30, 2022, provides: “Any income tax payments originally due during the period from April 1, 2020 to June 1, 2020 may be submitted to the Department of Taxation without the accrual of interest as would otherwise be required for late payments pursuant to Chapter 3 of Title 58.1, provided that full payment is made on or before June 1, 2020. For purposes of this section, ‘income tax payment‘ means any payment required to be made with a return filed pursuant to §§ 58.1-341 , 58.1-381 , and 58.1-441 ; any payment required to be made with respect to an election to file an extension of time within which to file such a return; any payment of estimated tax required pursuant to Article 19 and Article 20 of Chapter 3 of Title 58.1; and any payment of consumer use tax made with a return filed pursuant to § 58.1-341 .”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 K 1, effective for the biennium ending June 30, 2022, provides:

“1. Notwithstanding any provision of the Code of Virginia or this act to the contrary,

“a. Effective January 1, 2013, all corporations are required to file estimated tax payments and their annual income tax return and final payment using an electronic medium in a format prescribed by the Tax Commissioner.

“b. Effective July 1, 2013, every employer shall file the annual report required by § 58.1-478 and all forms required by § 58.1-472 , Code of Virginia, using an electronic medium in a format prescribed by the Tax Commissioner.

“c. Effective July 1, 2014, every employer shall file the annual report required by § 58.1-478 , not later than January 31 of the calendar year succeeding the calendar year in which wages were withheld from employees.

“d. Effective January 1, 2015, for taxable years beginning on and after January 1, 2014, every pass-through entity shall file the annual return required by § 58.1-392 , Code of Virginia, and make related payments using an electronic medium in a format prescribed by the Tax Commissioner.

“e.i. Effective until January 1, 2020, all estates and trusts are required to file estimated tax payments pursuant to § 58.1-490 et seq., Code of Virginia, and their annual income tax return pursuant to § 58.1-381 , Code of Virginia, and final payment using an electronic medium in a format prescribed by the Tax Commissioner.

“ii. Effective January 1, 2020, annual income tax returns of estates and trusts required pursuant to § 58.1-381 , Code of Virginia, that are prepared by an income tax return preparer, as defined in § 58.1-302 , Code of Virginia, must be filed using an electronic medium in a format prescribed by the Tax Commissioner.

“f. Taxpayers subject to the taxes imposed pursuant to § 58.1-320 and required to pay estimated tax pursuant to § 58.1-490 et seq., shall be required to file and remit using an electronic medium in a format prescribed by the Tax Commissioner all installment payments of estimated tax and all payments made with regard to a return or an extension of time to file if (i) any one such payment exceeds or is required to exceed $2,500, or if (ii) the taxpayer’s total tax liability exceeds or can be reasonably expected to exceed $10,000 in any taxable year beginning on or after January 1, 2021. This requirement shall apply to any payments made on and after July 1, 2021. The Department of Taxation shall provide reasonable advanced notice to taxpayers affected by this requirement.”

Law Review.

For survey of Virginia law on taxation for the year 1971-1972, see 58 Va. L. Rev. 1338 (1972).

For annual survey article, “Taxation,” see 48 U. Rich. L. Rev. 169 (2013).

Research References.

Harrison on Wills and Administration for Virginia and West Virginia (Matthew Bender). Chapter 31 Taxation. § 31.11 Income Taxes. Cox.

§ 58.1-382. Place of filing.

Every fiduciary required to file a return on behalf of an estate or trust shall file such return with the commissioner of the revenue having jurisdiction in the county or city in which the fiduciary qualified or, if there has been no qualification in this Commonwealth, in the county or city in which such fiduciary resides, does business or has an office or wherein the beneficiary or any of them may reside, or with the Department if provided by regulation thereof.

History. Code 1950, § 58-151.064; 1971, Ex. Sess., c. 171; 1984, c. 675.

§ 58.1-383. Extension of time for filing returns.

The provisions of § 58.1-344 shall be applicable to the extension of time for filing returns by a fiduciary on behalf of an estate or trust.

History. 1984, c. 675.

§ 58.1-390. Repealed by Acts 2004, Sp. Sess. I, c. 3, effective September 1, 2004.

§ 58.1-390.1. Definitions.

The following words and terms, when used in this article, shall have the following meanings unless the context clearly indicates otherwise:

“Owner” means any individual or entity who is treated as a partner, member, or shareholder of a pass-through entity for federal income tax purposes.

“Pass-through entity” means any entity, including a limited partnership, a limited liability partnership, a general partnership, a limited liability company, a professional limited liability company, a business trust or a Subchapter S corporation, that is recognized as a separate entity for federal income tax purposes, in which the partners, members or shareholders report their share of the income, gains, losses, deductions and credits from the entity on their federal income tax returns.

History. 2004, Sp. Sess. I, c. 3.

Editor’s note.

Acts 2004, Sp. Sess. I, c. 3, cl. 2 provides: “That the provisions of this act amending §§ 58.1-302 , 58.1-391 , 58.1-392 , 58.1-402 , and 58.1-441 of the Code of Virginia and adding §§ 58.1-390.1 , 58.1-393.1 , 58.1-394.1 , 58.1-394.2 , and 58.1-395 to the Code of Virginia shall apply for taxable years beginning on and after January 1, 2004. The amendments to subdivision D 2 of § 58.1-322 of the Code of Virginia pursuant to the provisions of this act shall apply for taxable years beginning on and after January 1, 2006.”

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. I, c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

OPINIONS OF THE ATTORNEY GENERAL

Taxation of pass-through entities. —

Certain receipts, including gifts and contributions, of a domestic single member limited liability company (SMLLC) that is classified as a disregarded entity for federal income tax purposes and solely owned by a charitable organization that qualifies for charitable deductions under the Internal Revenue Code, may be excluded from business, professional and occupational license (BPOL) taxation, if applicable requirements of subdivision C 18 of § 58.1-3703 have been satisfied. See opinion of Attorney General to The Honorable Philip J. Kellam, Commissioner of the Revenue for Virginia Beach, 18-027, (8/9/19).

§ 58.1-390.2. Taxation of pass-through entities.

Except as provided for in this article, owners of pass-through entities shall be liable for tax under this chapter only in their separate or individual capacities on income passed through to the owners of pass-through entities. Any taxes imposed on the pass-through entity itself, such as, but not limited to, sales and use taxes, withholding taxes with respect to employees or nonresident owners, and minimum taxes in lieu of income taxes, shall be paid by the pass-through entity.

History. 2004, Sp. Sess. I, c. 3; 2009, cc. 37, 152.

Editor’s note.

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess., c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

Acts 2009, cc. 37 and 152, cl. 3 provides: “That the provisions of this act amending and reenacting § 58.1-390.2 of the Code of Virginia are declarative of existing law and therefore effective September 1, 2004.” Acts 2009, c. 37 was effective February 23, 2009, and c. 152 was effective March 6, 2009, by emergency.

Effective date.

This section became effective September 1, 2004.

The 2009 amendments.

The 2009 amendments by cc. 37 and 152, effective September 1, 2004, are identical, and added “on income passed through to the owners of pass-through entities” at the end of the first sentence and added the last sentence. See Editor’s note for effective date.

§ 58.1-391. Virginia taxable income of owners of a pass-through entity.

1. In determining Virginia taxable income of an owner, any modification described in §§ 58.1-322.01 , 58.1-322.02 , 58.1-322.03 , and 58.1-322.04 that relates to an item of pass-through entity income, gain, loss or deduction shall be made in accordance with the owner’s distributive share, for federal income tax purposes, of the item to which the modification relates. Where an owner’s distributive share of any such item is not included in any category of income, gain, loss or deduction required to be taken into account separately for federal income tax purposes, the owner’s distributive share of such item shall be determined in accordance with his distributive share, for federal income tax purposes, of pass-through entity taxable income or loss.
2. Each item of pass-through entity income, gain, loss or deduction shall have the same character for an owner under this chapter as for federal income tax purposes. Where an item is not characterized for federal income tax purposes, it shall have the same character for an owner as if realized directly from the source from which realized by the pass-through entity or incurred in the same manner by the pass-through entity.
3. Where an owner’s distributive shares of an item of pass-through entity income, gain, loss or deduction is determined for federal income tax purposes by special provision in the pass-through entity agreement with respect to such item, and where the principal purpose of such provision is the avoidance or evasion of tax under this chapter, the owner’s distributive share of such item, and any modification required with respect thereto, shall be determined as if the pass-through entity agreement made no special provision with respect to such item.

History. Code 1950, § 58-151.014; 1971, Ex. Sess., c. 171; 1984, c. 675; 2004, Sp. Sess. I, c. 3; 2017, c. 444.

Editor’s note.

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. I, c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

The 2004 amendments.

The 2004 amendment by Sp. Sess. I, c. 3, effective September 1, 2004, and applicable for taxable years beginning on and after January 1, 2004, throughout the section, substituted “an owner” for “partner,” “pass-through entity” for “partnership,” “owner’s” for “partner’s” and “an owner’s” for “a partner’s”; and substituted “that” for “which” in the first sentence of subsection A.

The 2017 amendments.

The 2017 amendment by c. 444, in subsection A, substituted “§§ 58.1-322.01 , 58.1-322.02 , 58.1-322.03 , and 58.1-322 .04” for “§ 58.1-322 .”

Law Review.

For article on recent developments in the law affecting Virginia taxation, see 43 U. Rich. L. Rev. 405 (2008).

§ 58.1-392. Reports by pass-through entities.

1. Every pass-through entity doing business in Virginia, or having income from Virginia sources, shall make a return to the Department of Taxation on or before the fifteenth day of the fourth month following the close of its taxable year. Such returns shall be made and filed in the manner prescribed by the Department.
2. The return of a pass-through entity shall be signed by any one of the owners. An owner’s name signed on the return shall be prima facie evidence that such owner is authorized to sign the return on behalf of the pass-through entity.
3. The Tax Commissioner may establish an income threshold for the filing of returns by pass-through entities and their owners. Pass-through entities and owners with income below this threshold shall not be required to file a return.
4. Receivers, trustees in dissolution, trustees in bankruptcy, and assignees operating the property or business of pass-through entities must make and file returns of income for such pass-through entities. If a receiver has full custody of and control over the business or property of a pass-through entity, he shall be deemed to be operating such business or property, whether he is engaged in carrying on the business for which the pass-through entity was organized or only in marshaling, selling, or disposing of its assets for purposes of liquidation.
5. Pass-through entities may be required to file the return using an electronic medium prescribed by the Tax Commissioner. The Tax Commissioner shall establish a minimum number of owners for the electronic filing requirement. Waivers shall be granted only if the Tax Commissioner finds that the requirement creates an unreasonable burden on the pass-through entity. All requests for waivers must be submitted to the Tax Commissioner in writing. A pass-through entity that has fewer than the established minimum number of owners may, at such pass-through entity’s option, file such annual return on such prescribed electronic medium in lieu of filing the annual return on paper.

History. Code 1950, §§ 58-151.078, 58-151.084; 1971, Ex. Sess., c. 171; 1972, c. 465; 1984, c. 675; 1988, c. 249; 2004, Sp. Sess. I, c. 3.

Editor’s note.

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. I, c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 282 K 1, effective for the biennium ending June 30, 2022, provides:

“1. Notwithstanding any provision of the Code of Virginia or this act to the contrary,

“a. Effective January 1, 2013, all corporations are required to file estimated tax payments and their annual income tax return and final payment using an electronic medium in a format prescribed by the Tax Commissioner.

“b. Effective July 1, 2013, every employer shall file the annual report required by § 58.1-478 and all forms required by § 58.1-472 , Code of Virginia, using an electronic medium in a format prescribed by the Tax Commissioner.

“c. Effective July 1, 2014, every employer shall file the annual report required by § 58.1-478 , not later than January 31 of the calendar year succeeding the calendar year in which wages were withheld from employees.

“d. Effective January 1, 2015, for taxable years beginning on and after January 1, 2014, every pass-through entity shall file the annual return required by § 58.1-392 , Code of Virginia, and make related payments using an electronic medium in a format prescribed by the Tax Commissioner.

“e.i. Effective until January 1, 2020, all estates and trusts are required to file estimated tax payments pursuant to § 58.1-490 et seq., Code of Virginia, and their annual income tax return pursuant to § 58.1-381 , Code of Virginia, and final payment using an electronic medium in a format prescribed by the Tax Commissioner.

“ii. Effective January 1, 2020, annual income tax returns of estates and trusts required pursuant to § 58.1-381 , Code of Virginia, that are prepared by an income tax return preparer, as defined in § 58.1-302 , Code of Virginia, must be filed using an electronic medium in a format prescribed by the Tax Commissioner.

“f. Taxpayers subject to the taxes imposed pursuant to § 58.1-320 and required to pay estimated tax pursuant to § 58.1-490 et seq., shall be required to file and remit using an electronic medium in a format prescribed by the Tax Commissioner all installment payments of estimated tax and all payments made with regard to a return or an extension of time to file if (i) any one such payment exceeds or is required to exceed $2,500, or if (ii) the taxpayer’s total tax liability exceeds or can be reasonably expected to exceed $10,000 in any taxable year beginning on or after January 1, 2021. This requirement shall apply to any payments made on and after July 1, 2021. The Department of Taxation shall provide reasonable advanced notice to taxpayers affected by this requirement.”

The 2004 amendments.

The 2004 amendment by Sp. Sess. I, c. 3, effective September 1, 2004, and applicable for taxable years beginning on and after January 1, 2004, rewrote the section.

Law Review.

For 2003/2004 survey of the law of taxation, see 39 U. Rich. L. Rev. 413 (2004).

Research References.

Virginia Forms (Matthew Bender). No. 16-101. Residential Lease Agreement.

Michie’s Jurisprudence.

For related discussion, see 18 M.J. Taxation, § 22.

§ 58.1-393. Repealed by Acts 1988, c. 249.

§ 58.1-393.1. Extension of time for filing return by pass-through entity.

1. In accordance with procedures established by the Tax Commissioner, any pass-through entity may elect an extension of time within which to file the report or return required by this article to the date six months after such due date, or 30 days after the extended date for filing the federal report, whichever is later.
2. If the return is not filed on or before the extended due date elected under subsection A, the penalty imposed by § 58.1-394.1 shall apply as if no extension had been granted.

History. 2004, Sp. Sess. I, c. 3; 2005, c. 100.

Editor’s note.

Acts 2004, Sp. Sess. I, c. 3, cl. 2 provides: “That the provisions of this act amending §§ 58.1-302 , 58.1-391 , 58.1-392 , 58.1-402 , and 58.1-441 of the Code of Virginia and adding §§ 58.1-390.1 , 58.1-393.1 , 58.1-394.1 , 58.1-394.2 , and 58.1-395 to the Code of Virginia shall apply for taxable years beginning on and after January 1, 2004. The amendments to subdivision D 2 of § 58.1-322 of the Code of Virginia pursuant to the provisions of this act shall apply for taxable years beginning on and after January 1, 2006.”

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. I, c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

Effective date.

This section became effective September 1, 2004. For applicability provisions, see the Editor’s note.

The 2005 amendments.

The 2005 amendment by c. 100, applicable for taxable years beginning on and after January 1, 2005, rewrote the section.

Law Review.

For annual survey of Virginia law on taxation, see 40 U. Rich. L. Rev. 291 (2005).

§ 58.1-394. Repealed by Acts 2004, Sp. Sess. I, c. 3, effective September 1, 2004.

§ 58.1-394.1. Failure of pass-through entity to make a return.

1. Any pass-through entity that fails to file a return required by this article within the time required shall be liable for a penalty of $200 if the failure is for not more than one month, with an additional $200 for each additional month or fraction thereof during which such failure to file continues, not exceeding six months in the aggregate. In no case, however, shall the penalty be less than $200.
2. If any pass-through entity’s failure to file a return required by this article exceeds six months, the Department shall assess a penalty of six percent of the total amount of Virginia taxable income derived by its owners from the pass-through entity for the taxable year. The Department may determine such penalty from any information in its possession. The penalty assessed pursuant to this subsection shall be reduced by the penalty assessed pursuant to subsection A and any tax paid by the owners on their share of income from the pass-through entity for the taxable year.
3. The penalties set forth in this subsection shall be assessed and collected by the Department in the manner provided for the assessment and collection of taxes under this chapter or in a civil action, at the instance of the Department. In addition, such pass-through entity shall be compellable by mandamus to file such return.

History. 2004, Sp. Sess. I, c. 3.

Cross references.

For penalty on withholding tax on Virginia source income of nonresident owners on pass-through entities, see § 58.1-486.3 .

Editor’s note.

Acts 2004, Sp. Sess. I, c. 3, cl. 2 provides: “That the provisions of this act amending §§ 58.1-302 , 58.1-391 , 58.1-392 , 58.1-402 , and 58.1-441 of the Code of Virginia and adding §§ 58.1-390.1 , 58.1-393.1 , 58.1-394.1 , 58.1-394.2 , and 58.1-395 to the Code of Virginia shall apply for taxable years beginning on and after January 1, 2004. The amendments to subdivision D 2 of § 58.1-322 of the Code of Virginia pursuant to the provisions of this act shall apply for taxable years beginning on and after January 1, 2006.”

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. I, c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

Effective date.

This section became effective September 1, 2004. For applicability provisions, see the Editor’s note.

§ 58.1-394.2. Fraudulent returns, etc., of pass-through entities; penalty.

1. Any officer or owner of any pass-through entity who makes a fraudulent return or statement with the intent of assisting or facilitating the evasion of the payment of the taxes prescribed by this chapter by the pass-through entity or an owner shall be liable for a penalty of not more than $1,000, to be assessed and collected in the manner provided for the assessment and collection of taxes under this chapter or in a civil action, at the instance of the Department.
2. In addition to other penalties provided by law, any officer or owner of a pass-through entity who makes a fraudulent return or statement with the intent of assisting or facilitating the evasion of the payment of the taxes prescribed by this chapter by the pass-through entity or an owner, or who willfully fails or refuses to make a return required by this chapter at the time or times required by law shall be guilty of a Class 1 misdemeanor. A prosecution under this section shall be commenced within five years next after the commission of the offense.

History. 2004, Sp. Sess. I, c. 3.

Cross references.

As to punishment for Class 1 misdemeanors, see § 18.2-11 .

Editor’s note.

Acts 2004, Sp. Sess. I, c. 3, cl. 2 provides: “That the provisions of this act amending §§ 58.1-302 , 58.1-391 , 58.1-392 , 58.1-402 , and 58.1-441 of the Code of Virginia and adding §§ 58.1-390.1 , 58.1-393.1 , 58.1-394.1 , 58.1-394.2 , and 58.1-395 to the Code of Virginia shall apply for taxable years beginning on and after January 1, 2004. The amendments to subdivision D 2 of § 58.1-322 of the Code of Virginia pursuant to the provisions of this act shall apply for taxable years beginning on and after January 1, 2006.”

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. I, c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

Effective date.

This section became effective September 1, 2004. For applicability provisions, see the Editor’s note.

§ 58.1-394.3. Pass-through entity items.

1. The period for assessing any tax imposed by this chapter that is attributable to any pass-through entity item with respect to any owner of a pass-through entity shall not expire before the date that is three years after the later of (i) the last day for filing the pass-through entity return for the taxable year of the pass-through entity, as extended, or (ii) the date on which the pass-through entity return for such taxable year was filed.
2. The period for assessing any tax, as provided in subsection A, may be extended pursuant to agreement under § 58.1-101 or 58.1-220 between the Department and the owner who signed the pass-through entity return or any other owner or person authorized to sign the pass-through entity return.
3. The Tax Commissioner shall mail to each owner whose name and address have been provided by the pass-through entity notice of the beginning of an administrative proceeding at the pass-through entity level with respect to a pass-through entity item, and the final pass-through entity administrative adjustment resulting from any such proceeding. The Tax Commissioner shall not be required to mail notices to any owner with less than a one-percent interest in the profits of the pass-through entity if such entity has more than 100 owners.
4. In any administrative proceeding under § 58.1-1821 in which the taxation of pass-through entity items is an issue, the pass-through entity shall be permitted to participate in the proceeding. In addition, the Department may consolidate proceedings involving more than one taxpayer when the same pass-through items are in issue.
5. The provisions of this section shall apply to any tax attributable to items of income, gain, loss, deduction, credit, or other tax attribute that is recognized or reportable by the pass-through entity and that is required to be reported by the owner of the pass-through entity pursuant to § 58.1-391 or other sections of this chapter.

History. 2008, c. 549.

Editor’s note.

Acts 2008, c. 549, cl. 2 provides: “That the provisions of this act shall apply to disclosures made in the course of assessing tax on or after July 1, 2008, and to administrative proceedings pending on or filed after July 1, 2008.”

Law Review.

For article on recent developments in the law affecting Virginia taxation, see 43 U. Rich. L. Rev. 405 (2008).

§ 58.1-395. Nonresident owners.

Pass-through entities may make written application to the Tax Commissioner for permission to file a statement of combined pass-through entity income attributable to nonresident owners and thereby relieve nonresident owners from filing individual nonresident returns. The application must state the reasons for seeking such permission. The Tax Commissioner, in his sole discretion, may, for good cause, grant permission to file a combined nonresident return upon such terms as he may determine.

History. 2004, Sp. Sess. I, c. 3.

Cross references.

For penalty on withholding tax on Virginia source income of nonresident owners on pass-through entities, see § 58.1-486.3 .

Editor’s note.

Acts 2004, Sp. Sess. I, c. 3, cl. 2 provides: “That the provisions of this act amending §§ 58.1-302 , 58.1-391 , 58.1-392 , 58.1-402 , and 58.1-441 of the Code of Virginia and adding §§ 58.1-390.1 , 58.1-393.1 , 58.1-394.1 , 58.1-394.2 , and 58.1-395 to the Code of Virginia shall apply for taxable years beginning on and after January 1, 2004. The amendments to subdivision D 2 of § 58.1-322 of the Code of Virginia pursuant to the provisions of this act shall apply for taxable years beginning on and after January 1, 2006.”

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

Acts 2020, c. 1289, § 3-6.03 B, as amended by Acts 2021, Sp. Sess. I, c. 552, effective for the biennium ending June 30, 2022, provides: “Notwithstanding the provisions of § 46.2-395 of the Code of Virginia, no court shall suspend any person’s privilege to drive a motor vehicle solely for failure to pay any fines, court costs, forfeitures, restitution, or penalties assessed against such person. The Commissioner of the Department of Motor Vehicles shall reinstate a person’s privilege to drive a motor vehicle that was suspended prior to July 1, 2019, solely pursuant to § 46.2-395 of the Code of Virginia and shall waive all fees relating to reinstating such person’s driving privileges including those paid to the Trauma Center Fund. Nothing herein shall require the Commissioner to reinstate a person’s driving privileges if such privileges have been otherwise lawfully suspended or revoked or if such person is otherwise ineligible for a driver’s license.”

Effective date.

This section became effective September 1, 2004. For applicability provisions, see the Editor’s note.

§ 58.1-396. Definitions.

As used in this article, unless the context requires otherwise:

“Administrative adjustment request” means an administrative adjustment request filed by a partnership pursuant to § 6227 of the Internal Revenue Code.

“Audited partnership” means a partnership subject to a partnership-level audit that results in a federal adjustment.

“Corporate partner” means a partner that is subject to tax under Article 10 (§ 58.1-400 et seq.).

“Direct” means, with respect to a partner, that such partner holds a direct interest in a partnership or a pass-through entity and that such interest is not held indirectly through another partnership or pass-through entity.

“Exempt” means, with respect to a partner, that such partner is exempt from Virginia income taxation. If such partner has unrelated business taxable income but otherwise is exempt from Virginia income taxation, such partner shall considered exempt.

“Federal adjustment” means a change to an item or amount determined under the Internal Revenue Code that is used by a taxpayer to compute Virginia tax owed, regardless of whether that change results from an action by the Internal Revenue Service including a partnership-level audit, or the filing of an amended federal return, federal refund claim, or administrative adjustment request by the taxpayer. A federal adjustment is positive to the extent that it increases Virginia taxable income and is negative to the extent that it decreases Virginia taxable income.

“Federal adjustments report” means any methods or forms required by the Department for use by a partner or partnership to report final federal adjustments.

“Federal partnership representative” means the person that a partnership designates for the taxable year as its representative or the person that the Internal Revenue Service appoints pursuant to § 6223(a) of the Internal Revenue Code to act as the federal partnership representative.

“Final determination date” means the date determined pursuant to the provisions of § 58.1-311.2 .

“Final federal adjustment” means a federal adjustment for which the final determination date has passed.

“Indirect” means, with respect to a partner, that such partner does not hold a direct interest in a partnership or pass-through entity but instead holds a direct interest in another partnership or pass-through entity that itself holds an interest directly, or through another indirect partner, in the partnership or pass-through entity.

“Nonresident” means, with respect to an individual, estate, or trust partner, that such partner is not a resident partner.

“Partner” means a person that holds an interest directly or indirectly in a partnership or pass-through entity.

“Partnership” means an entity subject to taxation under Subchapter K, 26 U.S.C. § 701 et seq., of Chapter 1 of Subtitle A of the Internal Revenue Code.

“Partnership-level audit” means an examination by the Internal Revenue Service at the partnership level pursuant to Subchapter C, 26 U.S.C. § 6221 et seq., of Chapter 63 of Subtitle F of the Internal Revenue Code that results in federal adjustments.

“Pass-through entity” means any pass-through entity as defined in § 58.1-390.1 , other than a partnership as defined in this section.

“Resident” means, with respect to an individual partner, that such partner is a resident, as defined in § 58.1-302 , for the relevant tax period. “Resident” means, with respect to an estate or trust partner, that such partner is a resident estate or trust, as defined in § 58.1-302 , for the relevant tax period.

“Reviewed year” means the taxable year of a partnership that is subject to a partnership-level audit from which federal adjustments arise.

“State partnership representative” means the person identified as the representative of a partnership pursuant to the provisions of § 58.1-398 .

“Tiered partner” means any partner that is a partnership or a pass-through entity and is not an individual.

“Unrelated business taxable income” has the same meaning as such term is defined in § 512 of the Internal Revenue Code.

History. 2020, c. 1030.

§ 58.1-397. Reporting requirement; administrative adjustment requests.

Partnerships and partners shall report final federal adjustments arising from a partnership-level audit or an administrative adjustment request and make required payments pursuant to the provisions of this article and shall not be required to comply with the provisions of § 58.1-311 . This section shall not apply to adjustments required to be reported for federal income tax purposes pursuant to § 6225(a)(2) of the Internal Revenue Code and shall not apply to the distributive share of adjustments that have been reported as required under § 58.1-311 .

History. 2020, c. 1030.

Editor’s note.

Acts 2020, c. 1030, cl. 2 provides: “That the Department of Taxation shall develop guidelines implementing the provisions of this act. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).”

§ 58.1-398. State partnership representative.

1. With respect to an action required or permitted to be taken under this article, and with respect to any administrative or judicial appeal of such action pursuant to Chapter 18 (§ 58.1-1800 et seq.), the state partnership representative, as identified pursuant to the provisions of subsection B, shall have the sole authority to act on behalf of a partnership. The actions of the state partnership representative shall be binding on the direct partners and indirect partners of the partnership.
2. The state partnership representative for a reviewed year is the partnership’s federal partnership representative unless the partnership designates in writing another person as its state partnership representative.
3. The Department shall establish reasonable qualifications and procedures for designating a person, other than a federal partnership representative, to be the state partnership representative.

History. 2020, c. 1030.

§ 58.1-399. Reporting and payment requirements for a partnership subject to a final federal adjustment.

1. Except as otherwise provided in this article, any final federal adjustment shall be reported pursuant to the provisions of subsection B. This subsection shall not apply to a final federal adjustment for which election has been properly made pursuant to § 58.1-399.1 .
2. No later than 90 days after the final determination date, a partnership shall:
   1. File with the Department a completed federal adjustments report, which shall include any information required by the Department;
   2. Notify each direct partner of its distributive share of the final federal adjustments and provide to each direct partner any other information required by the Department;
   3. File an amended composite return pursuant to § 58.1-395 if such return previously was filed on behalf of nonresident partners;
   4. File an amended return pursuant to § 58.1-392 ; and
   5. Pay any additional amount that may be required pursuant to the provisions of §§ 58.1-395 and 58.1-486.2 .
3. Except as provided under § 58.1-321 , no later than one year after the final determination date, each direct partner subject to tax pursuant to the provisions of Article 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.), or 10 (§ 58.1-400 ) shall:
   1. File a federal adjustments report that identifies the distributive share of adjustments reported to such direct partner under subdivision B 2; and
   2. Pay any additional amount of tax due as if final federal adjustments had been properly reported, including any penalty and interest due under this title. Such payment may be reduced by any credit for related amounts paid or withheld and remitted on behalf of the direct partner pursuant to subdivision B 3, 4, or 5.

History. 2020, c. 1030.

§ 58.1-399.1. Elective payment by a partnership.

1. Notwithstanding §§ 58.1-390.2 and 58.1-399 , an audited partnership may make an elective payment pursuant to the provisions of this section. Such partnership shall:
   1. No later than 90 days after the final determination date, file a completed federal adjustments report, which shall include any information required by the Department;
   2. No later than 90 days after a final determination date, notify the Department that it is making an elective payment; and
   3. No later than one year after the final determination date, pay the elective payment amount specified in subsection B. Such amount shall be in lieu of taxes owed by the direct and indirect partners.
2. The elective payment amount shall be the amount of final federal adjustments, subject to the following modifications:
   1. The elective payment amount shall exclude the distributive share of final federal adjustments that is reported to a direct exempt partner;
   2. For the total distributive shares of the remaining final federal adjustments reported to (i) any direct corporate partner subject to tax under § 58.1-400 and (ii) any direct exempt partner subject to tax under § 58.1-400 on its unrelated business income or other taxable income, such adjustments shall be apportioned or allocated, as applicable, pursuant to the provisions of §§ 58.1-405 through 58.1-423 and, after such apportionment or allocation, shall be multiplied by the tax rate specified in § 58.1-400 and, after such multiplication, shall be included in the elective payment;
   3. For the total distributive shares of the remaining final federal adjustments reported to any nonresident direct partner that is subject to tax under Article 2 (§ 58.1-320 et seq.) or 6 (§ 58.1-360 et seq.), such adjustments shall be sourced to Virginia pursuant to applicable laws governing sourcing, and any adjustments sourced to Virginia shall be multiplied by the highest tax rate specified in § 58.1-320 and, after such multiplication, shall be included in the elective payment;
   4. For the total distributive shares of the remaining final federal adjustments reported to any tiered partner, the elective payment shall include the amount specified in this subdivision. Subject to the modifications specified in this subdivision, the amount shall (i) include that portion of the adjustments that are of a type that would be sourced to Virginia pursuant to applicable laws governing sourcing, and (ii) include all adjustments that are of a type that would not be subject to sourcing in Virginia pursuant to applicable laws governing sourcing. However, the amount specified in clause (ii) shall exclude any amount that can be established, under guidelines issued by the Department, to be properly (a) allocable to a nonresident indirect partner, (b) allocable to a partner that is not subject to tax on such amount, or (c) excludable under procedures for alternative reporting and payment as specified in § 58.1-399.3 . The amount specified in clauses (i) and (ii), as reduced by the exclusions specified in clauses (a), (b), and (c), shall be multiplied by the highest tax rate specified in § 58.1-320 or 58.1-360 , as applicable, and, after such multiplication, shall be included in the elective payment;
   5. For the total distributive shares of the remaining final federal adjustments reported to any resident direct partner that is subject to tax under § 58.1-320 or 58.1-360 , such adjustments shall be multiplied by the highest tax rate specified in § 58.1-320 or 58.1-360, as applicable, and, after such multiplication, shall be included in the elective payment; and
   6. Any penalty and interest provided for by this title shall be included in the elective payment.

History. 2020, c. 1030.

§ 58.1-399.2. Tiered partners.

1. The following categories of partners shall be subject to the reporting and payment requirements specified in § 58.1-399 , entitled to make elections as provided in § 58.1-399 .1, and entitled to elect an alternative reporting and payment method as provided in § 58.1-399.3 :
   1. Any direct tiered partner of an audited partnership;
   2. Any indirect tiered partner of an audited partnership; and
   3. Any partner of a partner specified in subdivision 1 or 2.
2. A partner subject to the provisions of subsection A shall make required reports and payments no later than 90 days after the time for filing and providing statements to tiered partners and their partners pursuant to the provisions of § 6226 of the Internal Revenue Code and any regulations promulgated thereunder. The Department may establish procedures and deadlines for reports and payments required pursuant to this section.

History. 2020, c. 1030.

§ 58.1-399.3. Alternative reporting and payment method.

Under procedures adopted by and subject to the approval of the Department, an audited partnership or a tiered partner may enter into an agreement with the Department to use an alternative reporting and payment method. However, the Department shall enter into such agreement only if such audited partnership or tiered partner demonstrates, to the satisfaction of the Department, that the alternative method is reasonably expected to provide for the reporting and payment of taxes, penalties, and interest due under the provisions of this article. Application for approval of an alternative reporting and payment method shall be made by the audited partnership or tiered partner within the applicable time period specified in § 58.1-399.1 or 58.1-399.2 .

History. 2020, c. 1030.

§ 58.1-399.4. Effect of election.

1. If a partnership or partner makes an election pursuant to § 58.1-399.1 or 58.1-399.3 , such election shall not be revocable by such partnership or partner. However, the Department may make a discretionary determination that allows such election to be revoked.
2. If properly reported and paid by the audited partnership or tiered partner, the amount determined pursuant to § 58.1-399.1 or 58.1-399.3 shall be treated as paid in lieu of taxes owed by a direct or indirect partner, to the extent applicable, on the final federal adjustments. A direct partner or indirect partner shall be prohibited from claiming any subtraction, deduction, credit, or refund for such amount. This section shall not prohibit a partner that is a direct partner and a resident partner from (i) claiming a credit against taxes paid to Virginia pursuant to § 58.1-332 or (ii) claiming a credit for any amount paid by the audited partnership or tiered partner on the resident partner’s behalf to another jurisdiction in accordance with the provisions of § 58.1-332 .

History. 2020, c. 1030.

§ 58.1-399.5. Failure to pay.

If an audited partnership or tiered partner fails to timely make any report or payment required by this article, the Department may assess the direct and indirect partners of such partnership or partner for any taxes owed.

History. 2020, c. 1030.

§ 58.1-399.6. De minimis exception.

The Department may establish a de minimis tax liability amount. If a partner or partnership has a tax liability less than such amount, the Department may exempt such partner or partnership from the reporting and payment requirements of this article.

History. 2020, c. 1030.

§ 58.1-399.7. Administration.

1. For partners and partnerships subject to the provisions of this article, the Department shall assess, collect from, and refund any Virginia income tax, interest, and penalties arising from final federal adjustments as set forth in this article. If any partner or partnership makes an election pursuant to § 58.1-399.1 , the Department shall assess and collect in-lieu-of amounts, interest, and penalties arising from final federal adjustments as if the in-lieu-of-amounts are a corporate income tax imposed pursuant to the provisions of Article 10 (§ 58.1-400 et seq.). Penalties and interest imposed on a partner or partnership shall be determined based on the date the partnership return for the reviewed year originally was due. If any partner or partnership subject to § 58.1-399 fails to file its federal adjustments report within the time required, the provisions of § 58.1-394.1 shall be applicable to such report, mutatis mutandis.
2. Notwithstanding the provisions of subsection C of § 58.1-312 and clause (ii) of § 58.1-1823 , an assessment shall be issued and an amended return for refund shall be filed by the following dates:
   1. If a partner or partnership files with the Department a federal adjustments report or an amended Virginia tax return within the time period specified in § 58.1-399 , or § 58.399.1, as applicable, the Department may assess any amounts, including taxes, in-lieu-of-amounts, interest, and penalties arising from those federal adjustments, if the Department issues a notice of assessment to the partner or partnership no later than the expiration of the one-year period following the date of filing with the Department of the federal adjustments report.
   2. If a partner or partnership fails to file the federal adjustments report within the time period specified in § 58.1-399 , or § 58.399.1, as applicable, or if the federal adjustments report filed by the partner or partnership omits final federal adjustments or understates the correct amount of tax owed, the Department may assess amounts or additional amounts including taxes, in-lieu-of-amounts, interest, and penalties arising from the final federal adjustments, if the Department issues a notice of assessment to the partner or partnership no later than the expiration of the one-year period following the date of filing with the Department of the federal adjustments report.
   3. An amended return for refund arising from federal adjustments made by the Internal Revenue Service shall be filed no later than one year from the date a federal adjustments report, as required by § 58.1-399, or § 58.399.1, as applicable, was due to the Department, including any extensions issued pursuant to the provisions of this section. The partner or partnership may, on the federal adjustments report, report additional tax due, report a claim for refund or credit of a tax, and make any other adjustments resulting from adjustments to the partner’s or partnership’s federal taxable income, including adjustments to its net operating losses.
   4. Unless otherwise agreed to in writing by the partnership or partner and the Department, any adjustments by the Department or by the partner or partnership that are made pursuant to the one-year statute of limitations provided for in this subsection are limited to adjustments to the partner’s or partnership’s tax liability that arise from federal adjustments.
3. The one-year statute of limitations provided for in subsection B may be extended:
   1. Automatically, upon written notice to the Department, by 60 days for an audited partnership or a tiered partner that has 10,000 or more direct partners; or
   2. By written agreement between the partnership or partner and the Department pursuant to § 58.1-101 .
4. 1. Any extension granted pursuant to subsection C shall extend by an equal time period the last day for the Department to assess any additional amounts arising from the adjustments to federal taxable income and the period for filing a claim for refund or credit of taxes. D. 1. Any extension granted pursuant to subsection C shall extend by an equal time period the last day for the Department to assess any additional amounts arising from the adjustments to federal taxable income and the period for filing a claim for refund or credit of taxes.
   2. The one-year statute of limitations provided for in subsection B shall not affect the time within which or the amount for which an assessment may otherwise be made or a refund sought under this title.

History. 2020, c. 1030.

§ 58.1-400. Imposition of tax.

A tax at the rate of six percent is hereby annually imposed on the Virginia taxable income for each taxable year of every corporation organized under the laws of the Commonwealth and every foreign corporation having income from Virginia sources.

History. Code 1950, §§ 58-151.03, 58-151.031; 1971, Ex. Sess., c. 171; 1972, cc. 310, 563; 1978, cc. 159, 796; 1981, c. 402; 1984, c. 675.

Cross references.

As to biodiesel and green fuels producers tax credits, see § 58.1-439.12:02 .

As to motion picture production tax credit, see § 58.1-439.12:03 .

For the Neighborhood Assistance Act Tax Credit, see § 58.1-439.18 et seq.

Law Review.

For survey of Virginia law on taxation for the year 1970-1971, see 57 Va. L. Rev. 1618 (1971).

For survey of Virginia law on taxation for the year 1971-1972, see 58 Va. L. Rev. 1338 (1972).

For 2003/2004 survey of the law of taxation, see 39 U. Rich. L. Rev. 413 (2004).

For 2006 survey article, “Taxation,” see 41 U. Rich. L. Rev. 283 (2006).

Research References.

Tax Planning for Corporations and Shareholders (Matthew Bender). Cavitch and Cavitch.

Tax Planning for Corporations and Shareholders: Forms (Matthew Bender). Cavitch and Cavitch.

Tax Planning for S Corporations (Matthew Bender). Robinson, Levitt and Looney.

Michie’s Jurisprudence.

For related discussion, see 18 M.J. Taxation, §§ 22, 188, 191.

§ 58.1-400.1. Minimum tax on telecommunications companies.

1. A telecommunications company that is incorporated shall be subject to a minimum tax, instead of the corporate income tax imposed by § 58.1-400 , at the applicable rate on its gross receipts for the calendar year which ends during the taxable year if the tax imposed by § 58.1-400 is less than the minimum tax imposed by this section. A telecommunications company that is organized as a limited liability company, partnership, corporation that has made an election under subchapter S of the Internal Revenue Code, or other entity treated as a pass-through entity shall be subject to the minimum tax in the manner prescribed by regulation.The minimum tax shall be imposed at the rate of 0.5 percent of gross receipts.
2. In the case of an income tax return for a period of less than twelve months, the minimum tax shall be based on the gross receipts for the calendar year which ends during the taxable period or, if none, the most recent calendar year which ended before the taxable period. The minimum tax shall be prorated by the number of months in the taxable period.
3. The State Corporation Commission shall certify to the Department for each tax year as defined in § 58.1-2600 the name, address, and gross receipts for each telecommunications company. The Commission shall mail or otherwise deliver a copy of the certification to each affected telecommunications company.
4. The following words and terms, when used in this section, shall have the following meanings:“Gross receipts”  means all revenue from business done within the Commonwealth, including the proportionate part of interstate revenue attributable to the Commonwealth if such inclusion will result in annual gross receipts exceeding $5 million, with the following deductions:
   1. Revenue billed on behalf of another such telephone company or person to the extent such revenues are later paid over to or settled with that company or person; and
   2. Revenues received from a telecommunications company, or from a telephone utility company providing interstate communications service, for providing to the company any of the following: (i) unbundled network facilities, (ii) completion, origination or interconnection of telephone calls with the taxpayer’s network, (iii) transport of telephone calls over taxpayer’s network, or (iv) taxpayer’s telephone services for resale.“Telecommunications company”  means a telephone company or other person holding a certificate of convenience and necessity granted by the State Corporation Commission authorizing telephone service; or a person authorized by the Federal Communications Commission to provide commercial mobile service as defined in § 332(d)(1) of the Communications Act of 1934, as amended, where such service includes cellular mobile radio communications services or broadband personal communications services; or a person holding a certificate issued pursuant to § 214 of the Communications Act of 1934, as amended, authorizing domestic telephone service and belonging to an affiliated group including a person holding a certificate of convenience and necessity granted by the State Corporation Commission authorizing telephone service; or a telegraph company or other person operating the apparatus necessary to communicate by telegraph. The term “affiliated group” shall have the meaning given in § 58.1-3700.1 .

History. 1988, c. 899; 1995, c. 507; 1998, c. 897; 2000, c. 368; 2009, cc. 37, 152.

Editor’s note.

Acts 1988, c. 899, cl. 7, provides: “That if a telecommunications company has a taxable year for federal income tax purposes which includes January 1, 1989, and ends on a day other than December 31, 1989, such company shall file a Virginia income tax return for such taxable year. The tax for such taxable year shall be the tax computed as otherwise provided in this act, including the provisions of §§ 58.1-400.1 and 58.1-434 , multiplied by a fraction the numerator of which is the number of months in such taxable year in 1989 and the denominator of which is the number of months in such taxable year.”

Acts 1998, c. 897, which amended this section, in cl. 2 provides: “That the provisions of this act shall be effective for tax years beginning on and after January 1, 1999.”

Acts 2009, cc. 37 and 152, cl. 4 provides: “That the provisions of this act amending and reenacting §§ 58.1-400.1 and 58.1-400.3 of the Code of Virginia shall be effective for taxable years beginning on and after January 1, 2004.” Acts 2009, c. 37 was effective February 23, 2009, and c. 152 was effective March 6, 2009, by emergency.

The 2000 amendments.

The 2000 amendment by c. 368, in subsection C, deleted “annually” following “shall certify,” inserted “for each tax year as defined in § 58.1-2600 ,” and added the second sentence.

The 2009 amendments.

The 2009 amendments by cc. 37 and 152, effective for taxable years beginning on and after January 1, 2004, are identical and rewrote subsection A.

Law Review.

For an article, “Technology and the Law,” see 32 U. Rich. L. Rev. 1383 (1998).

For annual survey article, “Taxation,” see 44 U. Rich. L. Rev. 599 (2009).

§ 58.1-400.2. Taxation of electric suppliers, pipeline distribution companies, gas utilities, and gas suppliers.

1. Any electric supplier, pipeline distribution company, gas utility, or gas supplier that is subject to income tax pursuant to the Internal Revenue Code of 1986, as amended, except those organized as cooperatives and exempt from federal taxation under § 501 of the Internal Revenue Code of 1986, as amended, shall be subject to the tax levied pursuant to § 58.1-400 .
2. Any electric supplier that operates as a cooperative and is exempt from income tax pursuant to § 501 of the Internal Revenue Code of 1986, shall be subject to tax at the tax rate set forth in § 58.1-400 on all modified net income derived from nonmember sales. Any gas supplier, pipeline distribution company or gas utility which has a taxable year that begins after January 1, 2001, but before January 1, 2002, shall also be subject to the provisions under subsection E.
3. The following words and terms when used in this section shall have the following meanings:“Electric supplier” means any corporation, cooperative, partnership or other business entity providing electric service.“Electricity” is deemed tangible personal property for purposes of the corporate income tax pursuant to this article.“Gas supplier” means any person licensed by the State Corporation Commission to engage in the business of selling natural gas.“Gas utility” has the same meaning as provided in § 56-235.8.“Members” means those customers of a cooperative who receive allocations of patronage capital from a cooperative.“Modified net income” means all revenue of a cooperative from the sale of electricity within the Commonwealth with the following subtractions:
   1. Revenue attributable to sales of electric power to its members.
   2. Nonmember share of all ordinary and necessary expenses paid or incurred during the taxable year in carrying on the sale of electric power to nonmembers. Such nonmember expenses shall be determined by allocating the amount of such expenses between sales of electricity to members and sales of electricity to nonmembers. Such allocation shall be applicable to all tax credits available to an electric supplier.“Nonmember” means those customers which are not members.“Ordinary and necessary expenses paid or incurred” means ordinary and necessary expenses determined according to generally accepted accounting principles.“Pipeline distribution company” has the same meaning as provided in § 58.1-2600 .
4. The Department of Taxation shall promulgate all regulations necessary to implement the intent of this section. This section shall apply to taxable years beginning on and after January 1, 2001.
5. 1. Any gas supplier, pipeline distribution company or gas utility which has a taxable year that begins after January 1, 2001, but before January 1, 2002, shall be required to file an income tax return as if a short taxable year has occurred covering the period beginning January 1, 2001, and ending on the last day prior to the beginning of the gas supplier’s, pipeline distribution company’s or gas utility’s taxable year pursuant to § 58.1-440 A. E. 1. Any gas supplier, pipeline distribution company or gas utility which has a taxable year that begins after January 1, 2001, but before January 1, 2002, shall be required to file an income tax return as if a short taxable year has occurred covering the period beginning January 1, 2001, and ending on the last day prior to the beginning of the gas supplier’s, pipeline distribution company’s or gas utility’s taxable year pursuant to § 58.1-440 A.
   2. If a return is required to be made under subdivision 1 of this subsection, federal taxable income will be determined using the methodology prescribed in § 443 of the Internal Revenue Code, as if the gas supplier, pipeline distribution company or gas utility was undergoing a change of annual accounting period, and § 58.1-440 B and the regulations thereunder.

History. 1999, c. 971; 2000, cc. 691, 706.

The 2000 amendments.

The 2000 amendments by cc. 691 and 706 are identical, and inserted “pipeline distribution company, gas utility, or gas supplier” in subsection A, added the last sentence in subsection B, and, in subsection C, substituted “this article” for “Article 10 (§ 58.1-400 et seq.) of this chapter” in the paragraph defining “Electricity,” added the paragraphs defining “Gas supplier,” “Gas utility,” and “Pipeline distribution company,” and added subsection E.

§ 58.1-400.3. Minimum tax on certain electric suppliers.

1. 1. An electric supplier, except for those organized as cooperatives and exempt from federal taxation under § 501 of the Internal Revenue Code of 1986, as amended, shall be subject to a minimum tax imposed by this section, instead of the corporate income tax imposed by § 58.1-400 if applicable, net of any income tax credits that may be used to offset such tax, if the tax imposed by § 58.1-400 is less than the minimum tax imposed by this subsection. An electric supplier that is organized as a limited liability, partnership, corporation that has made an election under subchapter S of the Internal Revenue Code, or other entity treated as a pass-through entity shall be subject to the minimum tax in the manner prescribed by regulation. A. 1. An electric supplier, except for those organized as cooperatives and exempt from federal taxation under § 501 of the Internal Revenue Code of 1986, as amended, shall be subject to a minimum tax imposed by this section, instead of the corporate income tax imposed by § 58.1-400 if applicable, net of any income tax credits that may be used to offset such tax, if the tax imposed by § 58.1-400 is less than the minimum tax imposed by this subsection. An electric supplier that is organized as a limited liability, partnership, corporation that has made an election under subchapter S of the Internal Revenue Code, or other entity treated as a pass-through entity shall be subject to the minimum tax in the manner prescribed by regulation.
   2. The minimum tax imposed by this subsection shall be equal to 1.45 percent of such electric supplier’s gross receipts for the calendar year that ends during the taxable year minus the state’s portion of the electric utility consumption tax billed to consumers.
2. 1. An electric supplier that is organized as a cooperative and exempt from federal taxation under § 501 of the Internal Revenue Code of 1986, as amended, shall be subject to a minimum tax, instead of the tax on modified net income imposed by § 58.1-400.2 , if the tax imposed by § 58.1-400.2 , net of any credits that may be used to offset such tax, is less than the minimum tax imposed by this subsection. B. 1. An electric supplier that is organized as a cooperative and exempt from federal taxation under § 501 of the Internal Revenue Code of 1986, as amended, shall be subject to a minimum tax, instead of the tax on modified net income imposed by § 58.1-400.2, if the tax imposed by § 58.1-400.2, net of any credits that may be used to offset such tax, is less than the minimum tax imposed by this subsection.
   2. The minimum tax imposed by this subsection shall be equal to 1.45 percent of such electric supplier’s gross receipts from sales to nonmembers for the calendar year that ends during the taxable year minus the consumption tax collected from nonmembers.
3. In the case of an income tax return for a period of less than 12 months, the minimum tax shall be based on the gross receipts for the calendar year that ends during the taxable period or, if none, the most recent calendar year that ended before the taxable period. The minimum tax shall be prorated by the number of months in the taxable period.
4. The State Corporation Commission shall calculate and certify to the Department for each tax year as defined in § 58.1-2600 the name, address, and minimum tax for each electric supplier. The Commission shall mail or otherwise deliver a copy of the certification to each affected electric supplier.
5. When an electric supplier subject to the tax imposed by this section is one of several affiliated corporations that file a consolidated or combined income tax return, the portion of the affiliated corporations’ tax liability that is attributable to the electric supplier shall be computed as follows:
   1. Each corporation included in the consolidated or combined return shall recompute its corporate income tax liability, net of any income tax credits, as if it were filing a separate return. The separate income tax liability of the electric supplier shall then be compared to the affiliated corporations’ tax liability, net of any income tax credits, indicated on the consolidated or combined return. For purposes of this section, the lesser amount shall be deemed to be the corporate income tax imposed by § 58.1-400 and attributable to the electric supplier.
   2. 1. If such corporate income tax amount is less than the minimum tax of the electric supplier as calculated pursuant to subsection A, the electric supplier shall be subject to the minimum tax in lieu of the corporate income tax imposed by § 58.1-400 .
      2. If such corporate income tax amount exceeds the minimum tax of the electric supplier as calculated pursuant to subsection A, the electric supplier shall not owe the minimum tax.
6. The requirements imposed under Article 20 (§ 58.1-500 et seq.) of Chapter 3 of this title regarding the filing of a declaration of estimated income taxes and the payment of such estimated taxes, shall be applicable to electric suppliers regardless of whether such taxpayer expects to be subject to the minimum tax imposed herein or to the corporate income tax imposed by § 58.1-400 .For purposes of determining the applicability of the exceptions under which the addition to the tax for the underpayment of any installment of estimated taxes shall not be imposed, it shall be irrelevant whether the tax shown on the return for the preceding taxable year is the corporate income tax or the minimum tax.
7. To the extent that a taxpayer is subject to the minimum tax imposed under this section, there shall be allowed a credit against the separate, combined, or consolidated corporate income tax for the total amount of minimum tax paid by the electric supplier in all previous years that is in excess of the tax imposed by § 58.1-400 on the electric supplier for such years.
8. 1. To the extent an electric supplier or its parent company has remitted estimated income tax payments in excess of its corporate income tax liability for the taxable years beginning on or after January 1, 2001, but before January 1, 2004, such overpayments shall only be utilized to offset any corporate income tax liabilities incurred pursuant to § 58.1-400 for taxable years beginning on and after January 1, 2004, and shall not be claimed as a refund of overpaid taxes, except as provided in subdivision 2 of this subsection. For the purposes of this subsection, estimated income tax payments shall include any overpayments from a prior taxable year carried forward as an estimated payment to be credited towards a future tax liability. H. 1. To the extent an electric supplier or its parent company has remitted estimated income tax payments in excess of its corporate income tax liability for the taxable years beginning on or after January 1, 2001, but before January 1, 2004, such overpayments shall only be utilized to offset any corporate income tax liabilities incurred pursuant to § 58.1-400 for taxable years beginning on and after January 1, 2004, and shall not be claimed as a refund of overpaid taxes, except as provided in subdivision 2 of this subsection. For the purposes of this subsection, estimated income tax payments shall include any overpayments from a prior taxable year carried forward as an estimated payment to be credited towards a future tax liability.
   2. If an electric supplier has had a corporate income tax liability of greater than $0 for each taxable year beginning on or after January 1, 2001, but before January 1, 2003, then such electric supplier may claim a refund of any estimated income tax payments in excess of their taxable year 2003 corporate income tax liability.
9. Every electric supplier which owes the minimum tax imposed by this section shall remit such tax payment to the Department of Taxation.
10. Notwithstanding any of the foregoing provisions, an electric supplier may not adjust capped rates pursuant to § 56-582 of the Code of Virginia on any portion of the minimum tax due to the Commonwealth.
11. The following words and terms, for purposes of this section, shall have the following meanings:“Consumption tax” means the state’s portion of the electric utility consumption tax billed pursuant to Chapter 29 (§ 58.1-2900 et seq.) of this title, for which the electric supplier is defined as the “service provider” pursuant to § 58.1-2901 less any amounts billed on behalf of utilities owned and operated by municipalities.“Electric supplier” means an incumbent electric utility in the Commonwealth that, prior to July 1, 1999, supplied electric energy to retail customers located in an exclusive service territory established by the State Corporation Commission.“Gross receipts” has the same meaning as defined in § 58.1-2600 less receipts from sales to federal, state and local governments for their own use.“Nonmember” has the same meaning as defined in § 58.1-400.2 .

History. 2004, c. 716; 2009, cc. 37, 152.

Editor’s note.

Acts 2004, c. 716, cl. 2 provides: “That the provisions of this act shall be effective for taxable years beginning on or after January 1, 2004.”

Acts 2004, c. 716, cl. 3 provides: “That an emergency exists and this act is in force from its passage [April 12, 2004].

Acts 2009, cc. 37 and 152, cl. 2 provides: “Until such time as the Department of Taxation promulgates a regulation for electric suppliers, the provisions of 23 VAC 10-120-89, Noncorporate telecommunications companies, shall apply, mutatis mutandis, to the minimum tax imposed by § 58.1-400.3 of the Code of Virginia.”

Acts 2009, cc. 37 and 152, cl. 4 provides: “That the provisions of this act amending and reenacting §§ 58.1-400.1 and 58.1-400.3 of the Code of Virginia shall be effective for taxable years beginning on and after January 1, 2004.” Acts 2009, c. 37 was effective February 23, 2009, and c. 152 was effective March 6, 2009, by emergency clauses.

The 2009 amendments.

The 2009 amendments by cc. 37 and 152, effective for taxable years beginning on and after January 1, 2004, are identical, and added the last sentence in subdivision A 1. See Editor’s note for effective date.

§ 58.1-400.4. Minimum tax on home service contract providers.

1. As used in this section, unless the context requires a different meaning:“Collected provider fees” means provider fees collected on home service contracts issued to a resident of the Commonwealth.“Home service contract” means the same as that term is defined in § 59.1-434.1.“Provider” means the same as that term is defined in § 59.1-434.1.“Provider fee” means the consideration paid for a home service contract issued to a resident of the Commonwealth.
2. For taxable years beginning on and after January 1, 2018, a provider shall be subject to a minimum tax instead of the corporate income tax imposed by § 58.1-400 , if applicable, net any income tax credits that may be used to offset such tax, if the tax imposed by § 58.1-400 is less than the minimum tax imposed by this subsection. The minimum tax imposed by this subsection shall be equal to 2.25 percent of such provider’s collected provider fees.
3. In the case of an income tax return for a period of less than 12 months, the minimum tax shall be based on the collected provider fees for the calendar year that ends during the taxable period or, if none, the most recent calendar year that ended before the taxable period. The minimum tax shall be prorated by the number of months in the taxable period.
4. For purposes of the corporate income tax imposed by § 58.1-400 , a provider’s collected provider fees shall be considered sales in the Commonwealth when determining such provider’s sales factor pursuant to § 58.1-414 .
5. When a provider that is subject to the tax imposed by this section is one of several affiliated corporations that file a consolidated or combined income tax return, the portion of the affiliated corporations’ tax liability that is attributable to the provider shall be computed as follows:
   1. Each corporation included in the consolidated or combined return shall recompute its corporate income tax liability, net of any income tax credits, as if it were filing a separate return. The separate income tax liability of the provider shall then be compared to the affiliated corporation’s tax liability, net of any income tax credits, indicated on the consolidated or combined return. For purposes of this section, the lesser amount shall be deemed to be the corporate income tax imposed by § 58.1-400 and attributable to the provider.
   2. If such corporate income tax amount is less than the minimum tax of the provider as calculated pursuant to subsection B, the provider shall be subject to the minimum tax in lieu of the corporate income tax imposed by § 58.1-400 .
   3. If such corporate income tax amount exceeds the minimum tax of the provider as calculated pursuant to subsection B, the provider shall not owe the minimum tax.
6. The requirements imposed under Article 20 (§ 58.1-500 et seq.) of Chapter 3 regarding the filing of a declaration of estimated income taxes and the payment of such estimated taxes shall be applicable to a provider regardless of whether such taxpayer expects to be subject to the minimum tax imposed herein or to the corporate income tax imposed by § 58.1-400 .For purposes of determining the applicability of the exceptions under which the addition to the tax for the underpayment of any installment of estimated taxes shall not be imposed, it shall be irrelevant whether the tax shown on the return for the preceding taxable year is the corporate income tax or the minimum tax.
7. Every provider that owes the minimum tax imposed by this section shall remit such tax payment to the Department of Taxation.
8. The minimum tax imposed by this section on providers is in lieu of all other state and local license fees or license taxes on providers and home service contracts.
9. The minimum tax imposed by this section shall:
   1. Apply to (i) any entity that immediately prior to January 1, 2018, was licensed as a provider under former Article 2 (§ 38.2-2617 et seq.) of Chapter 26 of Title 38.2 and that continues to act as a provider on and after January 1, 2018, and (ii) any entity that registers to sell home service contracts under Chapter 33.1 (§ 59.1-434.1 et seq.) of Title 59.1 on or after January 1, 2018; and
   2. Not apply to any entity that was exempt from the provisions of former Article 2 (§ 38.2-2617 et seq.) of Chapter 26 of Title 38.2 immediately prior to January 1, 2018.
10. Notwithstanding § 58.1-3 or any other provision of law, the Department of Taxation and the Department of Agriculture and Consumer Services may exchange information regarding providers for purposes of enforcing the provisions of Chapter 33.1 (§ 59.1-434.1 et seq.) of Title 59.1.

History. 2017, c. 727.

Editor’s note.

Acts 2017, c. 727, cl. 3 provides: “Until such time as the Department of Taxation promulgates a regulation for providers as defined in § 59.1-434.1 of the Code of Virginia, the provisions of 23 VAC 10-120-89 shall apply, mutatis mutandis, to the minimum tax imposed by § 58.1-400.4 of the Code of Virginia, as created by this act.”

Acts 2017, c. 727, cl. 5 provides: “That the provisions of this act shall become effective on January 1, 2018.”

§ 58.1-401. Exemptions and exclusions.

No tax levied pursuant to § 58.1-400 , 58.1-400.1 or 58.1-400.2 is imposed on:

1. A public service corporation to the extent such corporation is subject to the license tax on gross receipts contained in Chapter 26 (§ 58.1-2600 et seq.) of this title;
2. Insurance companies to the extent such company is subject to the license tax on gross premiums under Chapter 25 (§ 58.1-2500 et seq.) of this title and reciprocal or interinsurance exchanges which pay a premium tax to the Commonwealth as provided by law;
3. State and national banks, banking associations and trust companies to the extent such companies are subject to the bank franchise tax on net capital;
4. Electing small business corporations (S corporations);
5. Religious, educational, benevolent and other corporations not organized or conducted for pecuniary profit which by reason of their purposes or activities are exempt from income tax under the laws of the United States, except those organizations which have unrelated business income or other taxable income under such laws, except as provided in § 58.1-400.2 ;
6. Telephone companies chartered in the Commonwealth which are exclusively a local mutual association and are not designated to accumulate profits for the benefit of, or to pay dividends to, the stockholders or members thereof;
7. A corporation that has contracted with a commercial printer for printing and that is not otherwise taxable shall not become taxable by reason of: (i) the ownership or leasing by that corporation of tangible personal property located at the Virginia premises of the commercial printer and used solely in connection with the printing contract with such person; (ii) the sale by that corporation at another location of property of any kind printed at and shipped or distributed from the Virginia premises of the commercial printer; (iii) the activities in connection with the printing contract with such person of any kind performed by or on behalf of that corporation at the Virginia premises of the commercial printer; and (iv) the activities in connection with the printing contract with such person performed by the commercial printer for or on behalf of that corporation;
8. Foreign sales corporations (FSC) and any income attributable to an FSC under the rules relating to the taxation of an FSC in Part III, Subpart C of the Internal Revenue Code (§ 921 et seq.) and the regulations thereunder; and
9. For taxable years beginning on or after January 1, 2014, domestic international sales corporations (DISC) under the rules relating to the taxation of a DISC in Part IV, Subpart A of the Internal Revenue Code (§ 991 et seq.) and the regulations thereunder.

3a. Credit unions organized and conducted as such under the laws of the Commonwealth or under the laws of the United States;

History. Code 1950, § 58-151.03; 1971, Ex. Sess., c. 171; 1972, c. 310; 1978, cc. 159, 796; 1981, c. 402; 1984, c. 675; 1985, c. 221; 1987, c. 484; 1988, cc. 581, 899; 1995, cc. 422, 472; 1999, c. 971; 2014, cc. 26, 186.

Editor’s note.

Acts 1988, c. 899, cl. 7, provides: “That if a telecommunications company has a taxable year for federal income tax purposes which includes January 1, 1989, and ends on a day other than December 31, 1989, such company shall file a Virginia income tax return for such taxable year. The tax for such taxable year shall be the tax computed as otherwise provided in this act, including the provisions of §§ 58.1-400.1 and 58.1-434 , multiplied by a fraction the numerator of which is the number of months in such taxable year in 1989 and the denominator of which is the number of months in such taxable year.”

The 1999 amendment, in the introductory language, deleted “or §” following “58.1-400” and inserted “or § 58.1-400 .2”; and added “except as provided in § 58.1-400 .2” at the end of subdivision 5.

The 2014 amendments.

The 2014 amendments by cc. 26 and 186 are identical, and in the introductory paragraph, substituted “§ 58.1-400 , 58.1-400.1 or 58.1-400 .2” for “§§ 58.1-400, 58.1-400.1 or § 58.1-400.2 ”; deleted “and” at the end of subdivision 7; added “and” to end of subdivision 8; and added subdivision 9.

Law Review.

For article, “Virginia Tax Laws Affecting Churches,” see 18 U. Rich. L. Rev. 301 (1984).

For 1987 survey of Virginia taxation law, see 21 U. Rich. L. Rev. 837 (1987).

For Student Note, “Extra Law Prices: Why MRPC 5.4 Continues to Needlessly Burden Access to Civil Justice for Low- to Moderate-Income Clients,” see 25 Wash. & Lee J. Civil Rts. & Soc. Just. 499 (2019).

§ 58.1-402. Virginia taxable income.

1. For purposes of this article, Virginia taxable income for a taxable year means the federal taxable income and any other income taxable to the corporation under federal law for such year of a corporation adjusted as provided in subsections B, C, D, E, G, and H.

   For a regulated investment company and a real estate investment trust, such term means the “investment company taxable income” and “real estate investment trust taxable income,” respectively, to which shall be added in each case any amount of capital gains and any other income taxable to the corporation under federal law which shall be further adjusted as provided in subsections B, C, D, E, G, and H.

2. There shall be added to the extent excluded from federal taxable income:
   1. Interest, less related expenses to the extent not deducted in determining federal taxable income, on obligations of any state other than Virginia, or of a political subdivision of any such other state unless created by compact or agreement to which the Commonwealth is a party;
   2. Interest or dividends, less related expenses to the extent not deducted in determining federal taxable income, on obligations or securities of any authority, commission or instrumentality of the United States, which the laws of the United States exempt from federal income tax but not from state income taxes;
   3. [Repealed.]
   4. The amount of any net income taxes and other taxes, including franchise and excise taxes, which are based on, measured by, or computed with reference to net income, imposed by the Commonwealth or any other taxing jurisdiction, to the extent deducted in determining federal taxable income;
   5. Unrelated business taxable income as defined by § 512 of the Internal Revenue Code;
   6. [Repealed.]
   7. The amount required to be included in income for the purpose of computing the partial tax on an accumulation distribution pursuant to § 667 of the Internal Revenue Code;
   8. 1. For taxable years beginning on and after January 1, 2004, the amount of any intangible expenses and costs directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with one or more related members to the extent such expenses and costs were deductible or deducted in computing federal taxable income for Virginia purposes. This addition shall not be required for any portion of the intangible expenses and costs if one of the following applies:
         1. The corresponding item of income received by the related member is subject to a tax based on or measured by net income or capital imposed by Virginia, another state, or a foreign government that has entered into a comprehensive tax treaty with the United States government;
         2. The related member derives at least one-third of its gross revenues from the licensing of intangible property to parties who are not related members, and the transaction giving rise to the expenses and costs between the corporation and the related member was made at rates and terms comparable to the rates and terms of agreements that the related member has entered into with parties who are not related members for the licensing of intangible property; or
         3. The corporation can establish to the satisfaction of the Tax Commissioner that the intangible expenses and costs meet both of the following: (i) the related member during the same taxable year directly or indirectly paid, accrued or incurred such portion to a person who is not a related member, and (ii) the transaction giving rise to the intangible expenses and costs between the corporation and the related member did not have as a principal purpose the avoidance of any portion of the tax due under this chapter.
      2. A corporation required to add to its federal taxable income intangible expenses and costs pursuant to subdivision a may petition the Tax Commissioner, after filing the related income tax return for the taxable year and remitting to the Tax Commissioner all taxes, penalties, and interest due under this article for such taxable year including tax upon any amount of intangible expenses and costs required to be added to federal taxable income pursuant to subdivision a, to consider evidence relating to the transaction or transactions between the corporation and a related member or members that resulted in the corporation’s taxable income being increased, as required under subdivision a, for such intangible expenses and costs. If the corporation can demonstrate to the Tax Commissioner’s sole satisfaction, by clear and convincing evidence, that the transaction or transactions between the corporation and a related member or members resulting in such increase in taxable income pursuant to subdivision a had a valid business purpose other than the avoidance or reduction of the tax due under this chapter, the Tax Commissioner shall permit the corporation to file an amended return. For purposes of such amended return, the requirements of subdivision a shall not apply to any transaction for which the Tax Commissioner is satisfied (and has identified) that the transaction had a valid business purpose other than the avoidance or reduction of the tax due under this chapter. Such amended return shall be filed by the corporation within one year of the written permission granted by the Tax Commissioner and any refund of the tax imposed under this article shall include interest at a rate equal to the rate of interest established under § 58.1-15 and such interest shall accrue as provided under § 58.1-1833 . However, upon the filing of such amended return, any related member of the corporation that subtracted from taxable income amounts received pursuant to subdivision C 21 shall be subject to the tax imposed under this article on that portion of such amounts for which the corporation has filed an amended return pursuant to this subdivision. In addition, for such transactions identified by the Tax Commissioner herein by which he has been satisfied by clear and convincing evidence, the Tax Commissioner may permit the corporation in filing income tax returns for subsequent taxable years to deduct the related intangible expenses and costs without making the adjustment under subdivision a. The Tax Commissioner may charge a fee for all direct and indirect costs relating to the review of any petition pursuant to this subdivision, to include costs necessary to secure outside experts in evaluating the petition. The Tax Commissioner may condition the review of any petition pursuant to this subdivision upon payment of such fee. No suit for the purpose of contesting any action of the Tax Commissioner under this subdivision shall be maintained in any court of this Commonwealth.
      3. Nothing in subdivision B 8 shall be construed to limit or negate the Department’s authority under § 58.1-446 ;
   9. 1. For taxable years beginning on and after January 1, 2004, the amount of any interest expenses and costs directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with one or more related members to the extent such expenses and costs were deductible or deducted in computing federal taxable income for Virginia purposes. This addition shall not be required for any portion of the interest expenses and costs, if:
         1. The related member has substantial business operations relating to interest-generating activities, in which the related member pays expenses for at least five full-time employees who maintain, manage, defend or are otherwise responsible for operations or administration relating to the interest-generating activities; and
         2. The interest expenses and costs are not directly or indirectly for, related to or in connection with the direct or indirect acquisition, maintenance, management, sale, exchange, or disposition of intangible property; and
         3. The transaction giving rise to the expenses and costs between the corporation and the related member has a valid business purpose other than the avoidance or reduction of taxation and payments between the parties are made at arm’s length rates and terms; and
         4. One of the following applies:
            1. The corresponding item of income received by the related member is subject to a tax based on or measured by net income or capital imposed by Virginia, another state, or a foreign government that has entered into a comprehensive tax treaty with the United States government;
            2. Payments arise pursuant to a pre-existing contract entered into when the parties were not related members provided the payments continue to be made at arm’s length rates and terms;
            3. The related member engages in transactions with parties other than related members that generate revenue in excess of $2 million annually; or
            4. The transaction giving rise to the interest payments between the corporation and a related member was done at arm’s length rates and terms and meets any of the following: (a) the related member uses funds that are borrowed from a party other than a related member or that are paid, incurred or passed-through to a person who is not a related member; (b) the debt is part of a regular and systematic funds management or portfolio investment activity conducted by the related member, whereby the funds of two or more related members are aggregated for the purpose of achieving economies of scale, the internal financing of the active business operations of members, or the benefit of centralized management of funds; (c) financing the expansion of the business operations; or (d) restructuring the debt of related members, or the pass-through of acquisition-related indebtedness to related members.
      2. A corporation required to add to its federal taxable income interest expenses and costs pursuant to subdivision a may petition the Tax Commissioner, after filing the related income tax return for the taxable year and remitting to the Tax Commissioner all taxes, penalties, and interest due under this article for such taxable year including tax upon any amount of interest expenses and costs required to be added to federal taxable income pursuant to subdivision a, to consider evidence relating to the transaction or transactions between the corporation and a related member or members that resulted in the corporation’s taxable income being increased, as required under subdivision a, for such interest expenses and costs. If the corporation can demonstrate to the Tax Commissioner’s sole satisfaction, by clear and convincing evidence, that the transaction or transactions between the corporation and a related member or members resulting in such increase in taxable income pursuant to subdivision a had a valid business purpose other than the avoidance or reduction of the tax due under this chapter and that the related payments between the parties were made at arm’s length rates and terms, the Tax Commissioner shall permit the corporation to file an amended return. For purposes of such amended return, the requirements of subdivision a shall not apply to any transaction for which the Tax Commissioner is satisfied (and has identified) that the transaction had a valid business purpose other than the avoidance or reduction of the tax due under this chapter and that the related payments between the parties were made at arm’s length rates and terms. Such amended return shall be filed by the corporation within one year of the written permission granted by the Tax Commissioner and any refund of the tax imposed under this article shall include interest at a rate equal to the rate of interest established under § 58.1-15 and such interest shall accrue as provided under § 58.1-1833 . However, upon the filing of such amended return, any related member of the corporation that subtracted from taxable income amounts received pursuant to subdivision C 21 shall be subject to the tax imposed under this article on that portion of such amounts for which the corporation has filed an amended return pursuant to this subdivision. In addition, for such transactions identified by the Tax Commissioner herein by which he has been satisfied by clear and convincing evidence, the Tax Commissioner may permit the corporation in filing income tax returns for subsequent taxable years to deduct the related interest expenses and costs without making the adjustment under subdivision a. The Tax Commissioner may charge a fee for all direct and indirect costs relating to the review of any petition pursuant to this subdivision, to include costs necessary to secure outside experts in evaluating the petition. The Tax Commissioner may condition the review of any petition pursuant to this subdivision upon payment of such fee. No suit for the purpose of contesting any action of the Tax Commissioner under this subdivision shall be maintained in any court of this Commonwealth.
      3. Nothing in subdivision B 9 shall be construed to limit or negate the Department’s authority under § 58.1-446 .
      4. For purposes of subdivision B 9: “Arm’s-length rates and terms” means that (i) two or more related members enter into a written agreement for the transaction, (ii) such agreement is of a duration and contains payment terms substantially similar to those that the related member would be able to obtain from an unrelated entity, (iii) the interest is at or below the applicable federal rate compounded annually for debt instruments under § 1274(d) of the Internal Revenue Code that was in effect at the time of the agreement, and (iv) the borrower or payor adheres to the payment terms of the agreement governing the transaction or any amendments thereto. “Valid business purpose” means one or more business purposes that alone or in combination constitute the motivation for some business activity or transaction, which activity or transaction improves, apart from tax effects, the economic position of the taxpayer, as further defined by regulation.
   10. 1. For taxable years beginning on and after January 1, 2009, the amount of dividends deductible under §§ 561 and 857 of the Internal Revenue Code by a Captive Real Estate Investment Trust (REIT). For purposes of this subdivision, a REIT is a Captive REIT if:
          1. It is not regularly traded on an established securities market;
          2. More than 50 percent of the voting power or value of beneficial interests or shares of which, at any time during the last half of the taxable year, is owned or controlled, directly or indirectly, by a single entity that is (i) a corporation or an association taxable as a corporation under the Internal Revenue Code; and (ii) not exempt from federal income tax pursuant to § 501(a) of the Internal Revenue Code; and
          3. More than 25 percent of its income consists of rents from real property as defined in § 856(d) of the Internal Revenue Code.
       2. For purposes of applying the ownership test of subdivision 10 a (2), the following entities shall not be considered a corporation or an association taxable as a corporation:
          1. Any REIT that is not treated as a Captive REIT;
          2. Any REIT subsidiary under § 856 of the Internal Revenue Code other than a qualified REIT subsidiary of a Captive REIT;
          3. Any Listed Australian Property Trust, or an entity organized as a trust, provided that a Listed Australian Property Trust owns or controls, directly or indirectly, 75 percent or more of the voting or value of the beneficial interests or shares of such trust; and
          4. Any Qualified Foreign Entity.
       3. For purposes of subdivision B 10, the constructive ownership rules prescribed under § 318(a) of the Internal Revenue Code, as modified by § 856(d)(5) of the Internal Revenue Code, shall apply in determining the ownership of stock, assets, or net profits of any person.
       4. For purposes of subdivision B 10: “Listed Australian Property Trust” means an Australian unit trust registered as a Management Investment Scheme, pursuant to the Australian Corporations Act, in which the principal class of units is listed on a recognized stock exchange in Australia and is regularly traded on an established securities market. “Qualified Foreign Entity” means a corporation, trust, association or partnership organized outside the laws of the United States and that satisfies all of the following criteria:
          1. At least 75 percent of the entity’s total asset value at the close of its taxable year is represented by real estate assets, as defined in § 856(c)(5)(B) of the Internal Revenue Code, thereby including shares or certificates of beneficial interest in any REIT, cash and cash equivalents, and U.S. Government securities;
          2. The entity is not subject to a tax on amounts distributed to its beneficial owners, or is exempt from entity level tax;
          3. The entity distributes, on an annual basis, at least 85 percent of its taxable income, as computed in the jurisdiction in which it is organized, to the holders of its shares or certificates of beneficial interest;
          4. The shares or certificates of beneficial interest of such entity are regularly traded on an established securities market or, if not so traded, not more than 10 percent of the voting power or value in such entity is held directly, indirectly, or constructively by a single entity or individual; and
          5. The entity is organized in a country that has a tax treaty with the United States.
       5. For taxable years beginning on or after January 1, 2016, for purposes of subdivision B 10, any voting power or value of the beneficial interests or shares in a REIT that is held in a segregated asset account of a life insurance corporation as described in § 817 of the Internal Revenue Code shall not be taken into consideration when determining if such REIT is a Captive REIT.
   11. For taxable years beginning on or after January 1, 2016, to the extent that tax credit is allowed for the same donation pursuant to § 58.1-439.12:12 , any amount claimed as a federal income tax deduction for such donation under § 170 of the Internal Revenue Code, as amended or renumbered.
3. There shall be subtracted to the extent included in and not otherwise subtracted from federal taxable income:
   1. Income derived from obligations, or on the sale or exchange of obligations, of the United States and on obligations or securities of any authority, commission or instrumentality of the United States to the extent exempt from state income taxes under the laws of the United States including, but not limited to, stocks, bonds, treasury bills, and treasury notes, but not including interest on refunds of federal taxes, interest on equipment purchase contracts, or interest on other normal business transactions.
   2. Income derived from obligations, or on the sale or exchange of obligations of this Commonwealth or of any political subdivision or instrumentality of this Commonwealth.
   3. Dividends upon stock in any domestic international sales corporation, as defined by § 992 of the Internal Revenue Code, 50 percent or more of the income of which was assessable for the preceding year, or the last year in which such corporation has income, under the provisions of the income tax laws of the Commonwealth.
   4. The amount of any refund or credit for overpayment of income taxes imposed by this Commonwealth or any other taxing jurisdiction.
   5. Any amount included therein by the operation of the provisions of § 78 of the Internal Revenue Code (foreign dividend gross-up).
   6. The amount of wages or salaries eligible for the federal Targeted Jobs Credit which was not deducted for federal purposes on account of the provisions of § 280C(a) of the Internal Revenue Code.
   7. Any amount included therein by the operation of § 951 of the Internal Revenue Code (subpart F income) or, for taxable years beginning on and after January 1, 2018, § 951A of the Internal Revenue Code (Global Intangible Low-Taxed Income).
   8. Any amount included therein which is foreign source income as defined in § 58.1-302 .
   9. [Repealed.]
   10. The amount of any dividends received from corporations in which the taxpaying corporation owns 50 percent or more of the voting stock.
   11. [Repealed.] 12, 13. [Expired.] 19, 20. [Repealed.] “Qualified portfolio company” means a company that (i) has its principal place of business in the Commonwealth; (ii) has a primary purpose of production, sale, research, or development of a product or service other than the management or investment of capital; and (iii) provides equity in the company to the Virginia venture capital account in exchange for a capital investment. “Qualified portfolio company” does not include a company that is an individual or sole proprietorship. “Virginia venture capital account” means an investment fund that has been certified by the Department as a Virginia venture capital account. In order to be certified as a Virginia venture capital account, the operator of the investment fund shall register the investment fund with the Department prior to December 31, 2023, (i) indicating that it intends to invest at least 50 percent of the capital committed to its fund in qualified portfolio companies and (ii) providing documentation that it employs at least one investor who has at least four years of professional experience in venture capital investment or substantially equivalent experience. “Substantially equivalent experience” includes, but is not limited to, an undergraduate degree from an accredited college or university in economics, finance, or a similar field of study. The Department may require an investment fund to provide documentation of the investor’s training, education, or experience as deemed necessary by the Department to determine substantial equivalency. If the Department determines that the investment fund employs at least one investor with the experience set forth herein, the Department shall certify the investment fund as a Virginia venture capital account at such time as the investment fund actually invests at least 50 percent of the capital committed to its fund in qualified portfolio companies. “Distressed” means satisfying the criteria applicable to a locality described in subdivision E 2 of § 2.2-115 . “Double distressed” means satisfying the criteria applicable to a locality described in subdivision E 3 of § 2.2-115 . “Virginia real estate investment trust” means a real estate investment trust, as defined in 26 U.S.C. § 856, that has been certified by the Department as a Virginia real estate investment trust. In order to be certified as a Virginia real estate investment trust, the trustee shall register the trust with the Department prior to December 31, 2024, indicating that it intends to invest at least 90 percent of trust funds in Virginia and at least 40 percent of trust funds in real estate in localities that are distressed or double distressed. If the Department determines that the trust satisfies the preceding criteria, the Department shall certify the trust as a Virginia real estate investment trust at such time as the trust actually invests at least 90 percent of trust funds in Virginia and at least 40 percent of trust funds in real estate in localities that are distressed or double distressed.
4. For taxable years beginning on and after January 1, 2006, there shall be subtracted from federal taxable income contract payments to a producer of quota tobacco or a tobacco quota holder as provided under the American Jobs Creation Act of 2004 (P.L. 108-357) as follows:
   1. If the payment is received in installment payments, then the recognized gain, including any gain recognized in taxable year 2005, may be subtracted in the taxable year immediately following the year in which the installment payment is received.
   2. If the payment is received in a single payment, then 10 percent of the recognized gain may be subtracted in the taxable year immediately following the year in which the single payment is received. The taxpayer may then deduct an equal amount in each of the nine succeeding taxable years.
5. Adjustments to federal taxable income shall be made to reflect the transitional modifications provided in § 58.1-315 .
6. Notwithstanding any other provision of law, the income from any disposition of real property which is held by the taxpayer for sale to customers in the ordinary course of the taxpayer’s trade or business, as defined in § 453(l)(1)(B) of the Internal Revenue Code, of property made on or after January 1, 2009, may, at the election of the taxpayer, be recognized under the installment method described under § 453 of the Internal Revenue Code, provided that (i) the election relating to the dealer disposition of the property has been made on or before the due date prescribed by law (including extensions) for filing the taxpayer’s return of the tax imposed under this chapter for the taxable year in which the disposition occurs, and (ii) the dealer disposition is in accordance with restrictions or conditions established by the Department, which shall be set forth in guidelines developed by the Department. Along with such restrictions or conditions, the guidelines shall also address the recapture of such income under certain circumstances. The development of the guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.).
7. For taxable years beginning on and after January 1, 2018, there shall be deducted to the extent included in and not otherwise subtracted from federal taxable income 20 percent of business interest disallowed as a deduction pursuant to § 163(j) of the Internal Revenue Code. For purposes of this subsection, “business interest” means the same as that term is defined under § 163(j) of the Internal Revenue Code.
8. For taxable years beginning before January 1, 2021, there shall be deducted to the extent not otherwise subtracted from federal taxable income up to $100,000 of the amount that is not deductible when computing federal taxable income solely on account of the portion of subdivision B 10 of § 58.1-301 related to Paycheck Protection Program loans.

14. For taxable years beginning on or after January 1, 1995, the amount for “qualified research expenses” or “basic research expenses” eligible for deduction for federal purposes, but which were not deducted, on account of the provisions of § 280C(c) of the Internal Revenue Code.

15. For taxable years beginning on or after January 1, 2000, the total amount actually contributed in funds to the Virginia Public School Construction Grants Program and Fund established in Chapter 11.1 (§ 22.1-175.1 et seq.) of Title 22.1.

16. For taxable years beginning on or after January 1, 2000, but before January 1, 2015, the gain derived from the sale or exchange of real property or the sale or exchange of an easement to real property which results in the real property or the easement thereto being devoted to open-space use, as that term is defined in § 58.1-3230 , for a period of time not less than 30 years. To the extent a subtraction is taken in accordance with this subdivision, no tax credit under this chapter for donating land for its preservation shall be allowed for three years following the year in which the subtraction is taken.

17. For taxable years beginning on and after January 1, 2001, any amount included therein with respect to § 58.1-440.1 .

18. For taxable years beginning on and after January 1, 1999, income received as a result of (i) the “Master Settlement Agreement,” as defined in § 3.2-3100; and (ii) the National Tobacco Grower Settlement Trust dated July 19, 1999, by (a) tobacco farming businesses; (b) any business holding a tobacco marketing quota, or tobacco farm acreage allotment, under the Agricultural Adjustment Act of 1938; or (c) any business having the right to grow tobacco pursuant to such a quota allotment.

21. For taxable years beginning on and after January 1, 2004, any amount of intangible expenses and costs or interest expenses and costs added to the federal taxable income of a corporation pursuant to subdivision B 8 or B 9 shall be subtracted from the federal taxable income of the related member that received such amount if such related member is subject to Virginia income tax on the same amount.

22. For taxable years beginning on and after January 1, 2009, any gain recognized from the sale of launch services to space flight participants, as defined in 49 U.S.C. § 70102, or launch services intended to provide individuals the training or experience of a launch, without performing an actual launch. To qualify for a deduction under this subdivision, launch services must be performed in Virginia or originate from an airport or spaceport in Virginia.

23. For taxable years beginning on and after January 1, 2009, any gain recognized as a result of resupply services contracts for delivering payload, as defined in 49 U.S.C. § 70102, entered into with the Commercial Orbital Transportation Services division of the National Aeronautics and Space Administration or other space flight entity, as defined in § 8.01-227.8 , and launched from an airport or spaceport in Virginia.

24. For taxable years beginning on or after January 1, 2011, any income taxed as a long-term capital gain for federal income tax purposes, or any income taxed as investment services partnership interest income (otherwise known as investment partnership carried interest income) for federal income tax purposes. To qualify for a subtraction under this subdivision, such income must be attributable to an investment in a “qualified business,” as defined in § 58.1-339.4 , or in any other technology business approved by the Secretary of Administration, provided the business has its principal office or facility in the Commonwealth and less than $3 million in annual revenues in the fiscal year prior to the investment. To qualify for a subtraction under this subdivision, the investment must be made between the dates of April 1, 2010, and June 30, 2020. No taxpayer who has claimed a tax credit for an investment in a “qualified business” under § 58.1-339.4 shall be eligible for the subtraction under this subdivision for an investment in the same business.

25. a. Income, including investment services partnership interest income (otherwise known as investment partnership carried interest income), attributable to an investment in a Virginia venture capital account. To qualify for a subtraction under this subdivision, the investment shall be made on or after January 1, 2018, but before December 31, 2023. No subtraction shall be allowed under this subdivision for an investment in a company that is owned or operated by an affiliate of the taxpayer. No subtraction shall be allowed under this subdivision for a taxpayer who has claimed a subtraction under subdivision C 24 for the same investment.

b. As used in this subdivision 25:

26. a. Income attributable to an investment in a Virginia real estate investment trust. To qualify for a subtraction under this subdivision, the investment shall be made on or after January 1, 2019, but before December 31, 2024. No subtraction shall be allowed for an investment in a trust that is managed by an affiliate of the taxpayer. No subtraction shall be allowed under this subdivision for a taxpayer who has claimed a subtraction under subdivision C 24 or 25 for the same investment.

b. As used in this subdivision 26:

27. For taxable years beginning on and after January 1, 2019, any gain recognized from the taking of real property by condemnation proceedings.

28. For taxable years beginning before January 1, 2021, up to$100,000 of all grant funds received by the taxpayer under the Rebuild Virginia program established by the Governor and administered by the Department of Small Business and Supplier Diversity.

History. Code 1950, §§ 58-151.013, 58-151.032; 1971, Ex. Sess., c. 171; 1972, cc. 310, 827; 1973, cc. 198, 345, 458; 1974, cc. 320, 682; 1975, cc. 46, 50; 1976, cc. 528, 694, 781; 1977, cc. 297, 612; 1978, cc. 67, 158, 783, 785; 1979, cc. 226, 371, 596; 1981, cc. 402, 414; 1982, c. 633; 1983, cc. 452, 472; 1984, cc. 153, 162, 636, 672, 674, 675, 729; 1985, cc. 221, 465; 1987, c. 484; 1989, cc. 39, 639; 1992, c. 678; 1994, c. 590; 1997, c. 106; 1998, c. 874; 1999, cc. 339, 971; 2000, cc. 419, 1021, 1039; 2003, cc. 3, 58, 209; 2004, Sp. Sess. I, c. 3; 2006, c. 214; 2008, cc. 149, 211; 2009, cc. 426, 508, 558; 2010, cc. 802, 830; 2011, c. 851; 2012, cc. 96, 256; 2015, cc. 248, 335, 336; 2016, cc. 304, 342, 391; 2017, c. 762; 2018, c. 821; 2019, cc. 17, 18, 270; 2020, c. 738; 2021, Sp. Sess. I, cc. 117, 118, 552; 2022 3, § 1, effective February 23, 2022.

Editor’s note.

The 1989 amendments by cc. 39 and 639, effective July 1, 1989, and applicable for taxable years beginning on and after January 1, 1989, are identical, and added “former” preceding “ § 58.1-328 B” in subdivision C 9, and added subdivision C 13. Acts 1989, cc. 39 and 639, cl. 2, as amended by Acts 1993, cc. 28 and 541, cls. 1 and 2, and by Acts 1998, c. 135, cls. 1 and 2, provide that the provisions of the 1989 acts shall expire for taxable years beginning on and after January 1, 2004.

Acts 2004, Sp. Sess. I, c. 3, cl. 10 provides: “That the provisions of this act shall not become effective unless the Commonwealth’s reimbursements to certain local governments for tangible personal property tax relief on qualifying vehicles, as such term is defined in § 58.1-3523 of the Code of Virginia, are set at $950 million per year for tax year 2006 and each succeeding tax year, payable over the 12-month period that corresponds with the Commonwealth’s fiscal year, beginning July 2006, under legislation passed by the 2004 Special Session I of the General Assembly that becomes law.” Acts 2004, Sp. Sess. I, c. 1, set the reimbursement rate at $950 million for tax years beginning in 2006.

At the direction of the Virginia Code Commission, Title 3.2 references were substituted for Title 3.1 references to conform to the title revision by Acts 2008, c. 860, effective October 1, 2008.

Acts 2009, cc. 426 and 558, cl. 2 provides: “Notwithstanding the provisions of subdivision B 10 a of § 58.1-402 , the addition specified in such subdivision shall be reduced by one-half for taxable years beginning on and after January 1, 2009, but before January 1, 2011.”

Acts 2010, cc. 802 and 830, cl. 2 provides: “That no investment shall be qualified for a deduction pursuant to subdivision C 35 of § 58.1-322 or for a deduction pursuant to subdivision C 24 of § 58.1-402 if the investment is in a business that performs research in Virginia on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos. The foregoing provision shall not apply to research performed using stem cells other than human embryonic stem cells.”

Acts 2011, c. 851, cl. 3 provides: “That the provisions of this act are effective for taxable periods on or after January 1, 2011.”

Acts 2015, cc. 335 and 336, cl. 2 provides: “That beginning in 2015 the Department of Taxation shall record on an annual basis using the most recent taxable year data available the fiscal savings from the long-term capital gain and investment services partnership interest income subtraction accruing to (i) individuals pursuant to subdivision C 35 of § 58.1-322 of the Code of Virginia and (ii) corporations pursuant to subdivision C 24 of § 58.1-402 of the Code of Virginia. The Department shall also record the number of individual income tax returns and corporate income tax returns on which the subtraction was claimed. The Department shall report such information to the Governor, any member of the General Assembly, or other person upon request.”

Acts 2017, c. 762, cl. 2 provides: “That prior to December 31, 2017, the Department of Taxation shall promulgate regulations in accordance with the Administrative Process Act ( § 2.2-4000 et seq. of the Code of Virginia) establishing procedures implementing the provisions of this act relating to (i) the registration of an investment fund as a Virginia venture capital account; (ii) the provision of documentation regarding an investor’s training, education, or experience as deemed necessary by the Department to meet the requirements of this act; and (iii) the certification of an investment fund as a Virginia venture capital account by the Department of Taxation.”

Acts 2017, c. 762, cl. 3 provides: “That the Department of Taxation shall report annually by November 1 of each year to the Chairmen of the House Committee on Appropriations and the Senate Committee on Finance regarding the number of registrations and certifications of Virginia venture capital accounts.

Acts 2018, c. 821, cl. 2 provides: “That prior to December 31, 2018, the Department of Taxation shall develop guidelines establishing procedures implementing the provisions of this act relating to the registration and certification of a real estate investment trust as a Virginia real estate investment trust. Such guidelines shall be exempt from the provisions of the Administrative Process Act ( § 2.2-4000 et seq. of the Code of Virginia).”

Acts 2018, c. 821, cl. 3 provides: “That the Department of Taxation shall report annually by November 1 of each year to the Chairmen of the House Committee on Appropriations and the Senate Committee on Finance regarding the number of registrations and certifications of Virginia real estate investment trusts.”

Acts 2019, cc. 17 and 18, cl. 4 provides: “That in addition to any refund due pursuant to § 58.1-309 of the Code of Virginia, and for taxable years beginning on and after January 1, 2018, but before January 1, 2019, an individual filing a final return before July 1, 2019, or married persons filing a final joint return before July 1, 2019, shall be issued a refund out of the Taxpayer Relief Fund (the Fund) established in the fifth enactment of this act in an amount up to $110 for an individual, or $220 for married persons filing a joint return. The Governor, in consultation with the State Comptroller and the Tax Commissioner, shall certify to the General Assembly on or before September 1, 2019, the estimated amount available in the Fund for the issuance of such refunds after taking into account the amounts in the Fund necessary to fund the tax policy changes set forth in the first enactment of this act for taxable years beginning on and after January 1, 2018, but before January 1, 2019. If such estimated amount is insufficient to issue refunds of $110 for an individual, or $220 for married persons filing a joint return, then such refunds shall be reduced and prorated based on the amount of available funds. An individual shall only be allowed a refund pursuant to this enactment up to the amount of such individual’s tax liability after the application of any deductions, subtractions, or credits to which the individual is entitled pursuant to Chapter 3 ( § 58.1-300 et seq.) of Title 58.1 of the Code of Virginia. Married persons filing a joint return shall only be allowed a refund pursuant to this enactment up to the amount of such married persons’ tax liability after the application of any deductions, subtractions, or credits to which the married persons are entitled pursuant to Chapter 3 of Title 58.1 of the Code of Virginia. Any refund issued pursuant to this enactment shall be subject to collection under the provisions of the Setoff Debt Collection Act ( § 58.1-520 et seq. of the Code of Virginia). Refunds due pursuant to this enactment shall be issued on or after October 1, 2019, but before October 15, 2019.”

Acts 2019, cc. 17 and 18, cl. 5 provides: “That there is hereby established a special nonreverting fund to be known as the “Taxpayer Relief Fund” (the Fund). Any revenues generated by the individual reform provisions contained in Subtitle A of Title I and §§ 13611-13613 of the federal Tax Cuts and Jobs Act, P.L. 115-97 (2017), from the collection of taxes during Fiscal Years 2019 through 2025, estimated to be approximately $450 million annually, beyond those revenues reasonably expected to be collected due to general economic growth and absent the federal policy changes, less the estimated reduction in revenues needed to implement the tax policy changes set forth in the first enactment of this act for the relevant fiscal year, shall be transferred to the Fund. The Governor, in consultation with the State Comptroller and the Tax Commissioner, shall certify to the General Assembly on or before September 1 each year the estimated amount to be transferred to the Fund pursuant to this act. The amount certified shall take into account changes in taxpayer behavior and changes in general revenue collections unrelated to federal tax policy changes. The amount certified shall also take into account and be adjusted accordingly for additional tax policy changes adopted by the federal government after January 1, 2019, that may be reasonably expected to positively or negatively impact revenues of the Commonwealth. The General Assembly shall appropriate any revenues in the Fund to effectuate permanent or temporary tax reform measures.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, Item 111 C, effective for the biennium ending June 30, 2022, provides: “Notwithstanding any contrary provision of law, the authority and responsibilities of the Secretary of Technology referenced in § 2.2-205 , § 2.2-2221, § 2.2-2221.1, § 2.2-2233.1, § 2.2-2240.1 , § 2.2-2485 , § 2.2-2698 , § 2.2-2699.1 , § 2.2-2738 , § 15.2-2425 , § 23.1-2911.1 , § 23.1-3102 , § 23.1-3132 , § 58.1-322.02 , and § 58.1-402 , Code of Virginia, shall be executed by the Secretary of Commerce and Trade. Notwithstanding any contrary provision of law, the authority and responsibilities of the Secretary of Technology referenced in § 2.2-225 , Code of Virginia, shall be divided between the Secretary of Administration and the Secretary of Commerce and Trade as determined by the Governor.”

Acts 2020, c. 1289, as amended by Acts 2021, Sp. Sess. I, c. 552, § 3-5.09, effective for the biennium ending June 30, 2022, provides: “Notwithstanding the provisions of § 58.1-402 (B)(8), Code of Virginia, for taxable years beginning on and after January 1, 2004:

“(i) The exception in § 58.1-402 (B)(8)(a)(1) for income that is subject to a tax based on or measured by net income or capital imposed by Virginia, another state, or a foreign government shall be limited and apply only to the portion of such income received by the related member, which portion is attributed to a state or foreign government in which the related member has sufficient nexus to be subject to such taxes; and

“(ii) The exception in § 58.1-402 (B)(8)(a)(2) for a related member deriving at least one-third of its gross revenues from licensing to unrelated parties shall be limited and apply only to the portion of such income derived from licensing agreements for which the rates and terms are comparable to the rates and terms of agreements that the related member has actually entered into with unrelated entities.”

The 1999 amendments.

The 1999 amendment by c. 339 added subdivision C 16.

The 1999 amendment by c. 971 added subdivision C 17.

The 2000 amendments.

The 2000 amendment by c. 419 repealed subdivision C 9 which formerly read: “For taxable years beginning after December 31, 1983, the available portion of total excess cost recovery as defined in former § 58.1-323 B and for taxable years beginning after December 31, 1987, the excess cost recovery amount specified in § 58.1-323.1 C.”

The 2000 amendments by cc. 1021 and 1039, effective April 19, 2000, are identical, and added subdivision C 18.

The 2003 amendments.

The 2003 amendments by c. 3, effective February 17, 2003, and c. 58, effective March 16, 2003, are virtually identical and substituted “50” for “fifty” in subdivisions C 3 and C 10; substituted “30” for “thirty” in subdivision C 16; and added subdivision C 19.

The 2003 amendment by c. 209, effective March 16, 2003, substituted “50” for “fifty” throughout the section; substituted “30” for “thirty” in subdivision C 16; and added subdivision C 19 (now subdivision C 20).

The 2004 amendments.

The 2004 amendment by Sp. Sess. I, c. 3, effective September 1, 2004, and applicable for taxable years beginning on and after January 1, 2004, added subdivisions B 8, B 9 and C 21.

The 2006 amendments.

The 2006 amendment by c. 214 substituted “B, C, D, and E” for “B, C, and D” in the first and second paragraphs of subsection A; added subsection D; and redesignated former subsection D as subsection E.

The 2008 amendments.

The 2008 amendments by cc. 149 and 211 are identical, and added subdivisions C 22 and C 23.

The 2009 amendments.

The 2009 amendments by cc. 426 and 558 are identical, and added subdivision B 10. See Editor’s note.

The 2009 amendment by c. 508 added subsection F.

The 2010 amendments.

The 2010 amendments by c. 802, effective April 21, 2010, and c. 830, effective July 1, 2010, added subdivision C 24. In subdivision C 24, c. 802 reads “investment must be made between the dates of July 1, 2010,” while c. 830 reads “investment must be made between the dates of April 1, 2010.” Subdivision C 24 has been set out in the form above at the direction of the Virginia Code Commission. See Editor’s note for applicability provision.

The 2011 amendments.

The 2011 amendment by c. 851, effective for taxable periods on or after January 1, 2011, in subdivision B 6, substituted “[Repealed.]” for “The amount of employee stock ownership credit carry-over deducted by the corporation in computing federal taxable income under § 404(i) of the Internal Revenue Code”; in subdivision C 18, deleted clause (iii), which read: “the Tobacco loss Assistance Program, pursuant to 7 C.F.R. Part 1464 (Subpart C, §§ 1464.201 through 1464.205)”; repealed subdivisions C 19 and C 20, containing obsolete language; and made minor stylistic changes.

The 2012 amendments.

The 2012 amendments by cc. 96 and 256 are identical, and substituted “June 30, 2015” for “June 30, 2013” in the next-to-last sentence of subdivision C 24.

The 2015 amendments.

The 2015 amendment by c. 248 inserted “but before January 1, 2015” in subdivision C 16.

The 2015 amendments by cc. 335 and 336 are identical, and substituted “June 30, 2020” for “June 30, 2015” in subdivision C 24.

The 2016 amendments.

The 2016 amendments by cc. 304 and 391 are identical, and added subdivision B 11.

The 2016 amendment by c. 342 added subdivision B 10 e.

The 2017 amendments.

The 2017 amendment by c. 762 added subdivision C 25.

The 2018 amendments.

The 2018 amendment by c. 821 added subdivision C 26.

The 2019 amendments.

The 2019 amendments by cc. 17 and 18, effective February 15, 2019, are identical, and in subsection A, substituted “subsections B, C, D, E, and G” for “subsections B, C, D, and E” at the end of the first and second paragraphs; in subdivision C 7, added “or, for taxable years beginning on and after January 1, 2018, § 951A of the Internal Revenue Code (Global Intangible Low-Taxed Income)” at the end and added subsection G.

The 2019 amendment by c. 270 added subdivision C 27.

The 2020 amendments.

The 2020 amendment by c. 738, substituted “Administration” for “Technology” in subdivision C 24 in the second sentence.

The 2021 Sp. Sess. I amendments.

The 2021 amendments by Sp. Sess. I, cc. 117 and 118, effective March 15, 2021, and c. 552, cl. 11, effective April 7, 2021, are identical and added subsection H to the list of subsection references in each paragraph in subsection A, added subdivision C 28 and added subsection H.

The 2022 amendments.

The 2022 amendments, c. 3, effective February 23, 2022, in subdivisions C 28 and subsection H, deleted “on and after January 1, 2020, but” following “For taxable years beginning.”

Law Review.

For survey of Virginia law on taxation for the year 1971-1972, see 58 Va. L. Rev. 1338 (1972).

For survey of Virginia law on taxation for the year 1973-1974, see 60 Va. L. Rev. 1607 (1974).

For survey of Virginia law on taxation for the year 1974-1975, see 61 Va. L. Rev. 1849 (1975).

For survey of Virginia law on taxation for the year 1975-1976, see 62 Va. L. Rev. 1479 (1976).

For survey of Virginia law on taxation for the year 1976-1977, see 63 Va. L. Rev. 1486 (1977).

For survey of Virginia law on taxation for the year 1978-1979, see 66 Va. L. Rev. 367 (1980).

For survey of Virginia law on taxation for the year 1989, see 23 U. Rich. L. Rev. 839 (1989).

For article, “Recent Changes In Allocation And Apportionment Of Corporate Taxable Income Under Virginia Law,” see 5 G.M.U. L. Rev. 135 (1982).

For article on federal taxation of reinvested corporate earnings, see 24 Wm. & Mary L. Rev. 1 (1982).

For survey article on developments in the law affecting Virginia taxation, see 38 U. Rich. L. Rev. 267 (2003).

For article on recent developments in the law affecting Virginia taxation, see 43 U. Rich. L. Rev. 405 (2008).

For annual survey article, “Taxation,” see 44 U. Rich. L. Rev. 599 (2009).

For article, “Medical Malpractice Law,” see 45 U. Rich. L. Rev. 319 (2010).

For article, “Taxation,” see 45 U. Rich. L. Rev. 377 (2010).

For annual survey of Virginia law article, “Taxation,” see 47 U. Rich. L. Rev. 307 (2012).

§ 58.1-403. Additional modifications to determine Virginia taxable income for certain corporations.

In addition to the modifications set forth in § 58.1-402 for determining Virginia taxable income for corporations generally, the adjustments set forth in subdivision 1 shall be made to the federal taxable income for savings institutions and as set forth in subdivisions 2 and 3 for railway companies, as set forth in subdivisions 6 and 7 for telecommunications companies, and as set forth in subdivisions 8 and 9 for gas suppliers, pipeline distribution companies and gas utilities.

1. There shall be added the deduction allowed for bad debts. The percentage which would have been used in determining the bad debt deduction under the Internal Revenue Code of 1954, as in effect immediately prior to the enactment of the Tax Reform Act of 1986 (Public Law 99-514), shall then be applied to federal taxable income as adjusted under the provisions of § 58.1-402 and the amount so determined subtracted therefrom.
2. There shall be added to federal taxable income any amount which was deducted in determining taxable income as a net operating loss carryover from any taxable year beginning on or before December 31, 1978.
3. Where such railway company would have been allowed to deduct an amount as a net operating loss carryover or net capital loss carryover in determining taxable income for a taxable year beginning after December 31, 1978, but for the fact that such loss, or a portion of such loss, had been carried back in determining taxable income for a taxable year beginning prior to January 1, 1979, there shall be added to federal taxable income any amount which was actually deducted in determining taxable income as a net operating loss carryover or net capital loss carryover and there shall be subtracted from federal taxable income the amount which could have been deducted as a net operating loss carryover or net capital loss carryover in arriving at taxable income but for the fact that such loss, or a portion of such loss, had been carried back for federal purposes.4., 5. [Repealed.]

6. There shall be added to federal taxable income any amount which was deducted in determining taxable income as a net operating loss carryover from any taxable year beginning on or before December 31, 1988.

7. Where such telecommunications company would have been allowed to deduct an amount as a net operating loss carryover or net capital loss carryover in determining taxable income for a taxable year beginning after December 31, 1988, but for the fact that such loss, or a portion of such loss, had been carried back in determining taxable income for a taxable year beginning prior to January 1, 1989, there shall be added to federal taxable income any amount which was actually deducted in determining taxable income as a net operating loss carryover or net capital loss carryover and there shall be subtracted from federal taxable income the amount which could have been deducted as a net operating loss carryover or net capital loss in arriving at taxable income but for the fact that such loss, or a portion of such loss, had been carried back for federal purposes.

8. There shall be added to federal taxable income any amount that was deducted in determining taxable income as a net operating loss carryover from any taxable year beginning on or before December 31, 2000.

9. Where such gas supplier, pipeline distribution company or gas utility would have been allowed to deduct an amount as a net operating loss carryover or net capital loss carryover in determining taxable income for a taxable year beginning after December 31, 2000, but for the fact that such loss, or a portion of such loss, had been carried back in determining taxable income for a taxable year beginning prior to January 1, 2001, there shall be added to federal taxable income any amount that was actually deducted in determining taxable income as a net operating loss carryover or net capital loss carryover and there shall be subtracted from federal taxable income the amount that could have been deducted as a net operating loss carryover or net capital loss in arriving at taxable income but for the fact that such loss, or a portion of such loss, had been carried back for federal purposes.

History. Code 1950, §§ 58-151.032:1, 58-151.032:2; 1972, c. 310; 1973, c. 198; 1978, c. 784; 1979, c. 226; 1981, c. 402; 1982, c. 633; 1984, cc. 672, 675; 1985, c. 221; 1987, c. 614; 1988, c. 899; 1996, c. 77; 2000, cc. 691, 706.

Editor’s note.

Acts 1988, c. 899, cl. 7, provides: “That if a telecommunications company has a taxable year for federal income tax purposes which includes January 1, 1989, and ends on a day other than December 31, 1989, such company shall file a Virginia income tax return for such taxable year. The tax for such taxable year shall be the tax computed as otherwise provided in this act, including the provisions of §§ 58.1-400.1 and 58.1-434 , multiplied by a fraction the numerator of which is the number of months in such taxable year in 1989 and the denominator of which is the number of months in such taxable year.”

The 2000 amendments.

The 2000 amendments by cc. 691 and 706 are identical, and in the first paragraph, deleted “and” after “railway companies” and added the language beginning “and as set forth”; and added subdivisions 8 and 9.

§ 58.1-404. Reserved.

§ 58.1-405. Corporations transacting or conducting entire business within this Commonwealth.

Except as provided in § 58.1-405.1 , if the entire business of the corporation is transacted or conducted within the Commonwealth, the tax imposed by this chapter shall be upon the entire Virginia taxable income of such corporation for each taxable year; however, if such corporation is certified by the Virginia Economic Development Partnership Authority as an eligible company pursuant to § 58.1-405.1 , it may elect to (i) apportion its income between qualified localities, as defined in § 58.1-405.1, and other localities in the Commonwealth, provided that it shall not apportion any of its income to a state other than Virginia and (ii) utilize any modification for which it may be eligible pursuant to the provisions of § 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, or 58.1-422.2 , as applicable. The entire business of the corporation shall be deemed to have been transacted or conducted within the Commonwealth if such corporation is not subject in any other state to a net income tax, a franchise tax measured by net income, or a franchise tax for the privilege of doing business.

History. Code 1950, § 58-151.033; 1971, Ex. Sess., c. 171; 1981, c. 402; 1984, c. 675; 2018, cc. 801, 802.

Editor’s note.

Acts 2018, cc. 801 and 802, cl. 2 provides: “That the Virginia Economic Development Partnership Authority shall promulgate guidelines regarding the certification process described in subsection B of § 58.1-405 .1 of the Code of Virginia, as created by this act, and that the Department of Taxation shall promulgate guidelines regarding the modifications to apportionment formulae described in §§ 58.1-405 , 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, and 58.1-422.2 of the Code of Virginia, as amended by this act.”

Acts 2018, cc. 801 and 802, cl. 3 provides: “That any eligible company, as defined in § 58.1-405.1 of the Code of Virginia, as created by this act, that apportions its income pursuant to the provisions of this act shall include with its income tax return information regarding the modification of its apportionment method pursuant to this act, including the amounts subtracted from the relevant apportionment factors. The Department of Taxation shall use such information to compute the fiscal savings to such companies and shall report annually by the first day of each regular session of the General Assembly to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance the number of returns processed during the prior fiscal year for eligible companies that claimed a modified method of apportionment under this act and the estimated revenue impact of such modified methods of apportionment.”

The 2018 amendments.

The 2018 amendments by cc. 801 and 802 are identical, and added the exception at the beginning and the language beginning “however, if such corporation is certified” at the end of the first sentence.

Law Review.

For article, “Recent Changes in Allocation and Apportionment of Corporate Taxable Income Under Virginia Law,” see 5 G.M.U. L. Rev. 135 (1982).

§ 58.1-405.1. Eligibility of companies for apportionment modification; certification by the Virginia Economic Development Partnership Authority.

1. For purposes of this section:“Authority” means the Virginia Economic Development Partnership Authority.“Eligible company” means a corporation or pass-through entity, as defined in § 58.1-390.1 , that does not have any existing property or payroll in Virginia as of January 1, 2018, and on or after January 1, 2018, but before January 1, 2025, (i) either (a) spends at least $5 million on new capital investment in a qualified locality or qualified localities and creates at least 10 new jobs in a qualified locality or qualified localities or (b) creates at least 50 new jobs in a qualified locality or qualified localities; (ii) is a traded-sector company; and (iii) is certified by the Authority as generating a positive fiscal impact pursuant to subsection B.“New capital investment” means real property acquired in a qualified locality or qualified localities on or after January 1, 2018, but before January 1, 2025, and any improvements to real property in a qualified locality or qualified localities on or after January 1, 2018, but before January 1, 2025.“New job” means a permanent, full-time position of indefinite duration that pays at least 150 percent of the minimum wage, as defined in the Virginia Minimum Wage Act (§ 40.1-28.8 et seq.), and that requires a minimum of (i) 35 hours of an employee’s time a week for the entire normal year of the eligible company’s operations, which normal year shall consist of at least 48 weeks, or (ii) 1,680 hours per year.“Qualified development site” means real property that is in a locality adjacent to a qualified locality and, before January 1, 2018, either (i) was owned or partly owned by a qualified locality or an industrial development authority of which a qualified locality is a member or (ii) was owned or partly owned by a locality or industrial development authority, was leased to a private party, and was subject to a revenue-sharing agreement providing that a portion of the revenues from the lease would be distributed to a qualified locality. “Qualified development site” does not include real property that is not owned by the Commonwealth or a political subdivision thereof.“Qualified locality” means (i) the County of Alleghany, Bland, Buchanan, Carroll, Craig, Dickenson, Giles, Grayson, Lee, Page, Russell, Scott, Smyth, Tazewell, Washington, Wise, or Wythe or the City of Bristol, Galax, or Norton; (ii) the County of Amelia, Appomattox, Buckingham, Charlotte, Cumberland, Halifax, Henry, Lunenburg, Mecklenburg, Nottoway, Patrick, Pittsylvania, or Prince Edward or the City of Danville or Martinsville; (iii) the County of Accomack, Caroline, Essex, Gloucester, King and Queen, King William, Lancaster, Mathews, Middlesex, Northampton, Northumberland, Richmond, or Westmoreland; or (iv) the County of Brunswick or Dinwiddie or the City of Petersburg. “Qualified locality” includes a qualified development site.“Traded-sector company” means a company that directly or indirectly derives more than 50 percent of its revenue from out-of-state sources.
2. 1. The Authority shall determine whether a company will generate a positive fiscal impact based on the following factors: (i) job creation; (ii) private capital investment; and (iii) anticipated additional state and local tax revenue. The Authority also shall consider the additional revenue the Commonwealth likely would expend in and for the localities if the economy in the localities continues to erode. In making its determination, the Authority shall consult with the Department regarding the revenue impact of certifying such company. The Authority shall certify a company only if it determines such company will generate a positive fiscal impact. B. 1. The Authority shall determine whether a company will generate a positive fiscal impact based on the following factors: (i) job creation; (ii) private capital investment; and (iii) anticipated additional state and local tax revenue. The Authority also shall consider the additional revenue the Commonwealth likely would expend in and for the localities if the economy in the localities continues to erode. In making its determination, the Authority shall consult with the Department regarding the revenue impact of certifying such company. The Authority shall certify a company only if it determines such company will generate a positive fiscal impact.
   2. The Authority shall deny certification to any company if it determines such taxpayer has engaged in a merger, acquisition, similar business combination, name change, change in business form, or other transaction the primary purpose of which is to obtain status as an eligible company.
   3. The Authority shall make an annual re-certification according to subdivision B 1, and no company shall remain an eligible company for any taxable year that the Authority does not grant re-certification.
3. Any eligible company may elect to apportion its income pursuant to the provisions of § 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, or 58.1-422.2 , as applicable. However, if the entire business of an eligible company is transacted or conducted within the Commonwealth, it shall not apportion its income pursuant to this subsection but may elect to apportion its income pursuant to the provisions of § 58.1-405 .

History. 2018, cc. 801, 802; 2019, cc. 262, 263.

Editor’s note.

Acts 2018, cc. 801 and 802, cl. 2 provides: “That the Virginia Economic Development Partnership Authority shall promulgate guidelines regarding the certification process described in subsection B of § 58.1-405 .1 of the Code of Virginia, as created by this act, and that the Department of Taxation shall promulgate guidelines regarding the modifications to apportionment formulae described in §§ 58.1-405 , 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, and 58.1-422.2 of the Code of Virginia, as amended by this act.”

Acts 2018, cc. 801 and 802, cl. 3 provides: “That any eligible company, as defined in § 58.1-405.1 of the Code of Virginia, as created by this act, that apportions its income pursuant to the provisions of this act shall include with its income tax return information regarding the modification of its apportionment method pursuant to this act, including the amounts subtracted from the relevant apportionment factors. The Department of Taxation shall use such information to compute the fiscal savings to such companies and shall report annually by the first day of each regular session of the General Assembly to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance the number of returns processed during the prior fiscal year for eligible companies that claimed a modified method of apportionment under this act and the estimated revenue impact of such modified methods of apportionment.”

The 2019 amendments.

The 2019 amendments by cc. 262 and 263 are identical, and inserted “Page” in the definition of “Qualified locality” in subsection A.

§ 58.1-406. Allocation and apportionment of income.

Any corporation having income from business activity which is taxable both within and without the Commonwealth shall allocate and apportion its Virginia taxable income as provided in §§ 58.1-407 through 58.1-420 .

History. Code 1950, § 58-151.035; 1971, Ex. Sess., c. 171; 1976, c. 436; 1979, c. 371; 1984, c. 675.

Law Review.

For article, “Recent Changes in Allocation and Apportionment of Corporate Taxable Income Under Virginia Law,” see 5 G.M.U. L. Rev. 135 (1982).

For note on state taxation of nondomiciliary corporations, see 40 Wash. & Lee L. Rev. 191 (1983).

CIRCUIT COURT OPINIONS

Statutory method properly applied. —

Tax Commissioner did not abuse his discretion in applying the statutory method to a taxpayer’s income activities because no direct evidence or reasonable inference showed the extent to which any of the taxpayer’s customers actually operated or used the data or information within its billing address, or the extent, if any, to which the data and information were accessed; the information and data were created, developed, improved, and maintained in Virginia. Corp. Exec. Bd. v. Va. Dep't of Taxation, 96 Va. Cir. 287, 2017 Va. Cir. LEXIS 151 (Arlington County Sept. 1, 2017), aff'd, 297 Va. 57 , 822 S.E.2d 918, 2019 Va. LEXIS 6 (2019).

§ 58.1-407. How dividends allocated.

Dividends received to the extent included in Virginia taxable income are allocable to the state of commercial domicile of the taxpaying corporation.

History. Code 1950, § 58-151.037; 1971, Ex. Sess., c. 171; 1981, c. 402; 1984, c. 675.

Cross references.

As to definition of “debt buyer” and apportionment of income to debt buyers, see § 58.1-422.3 .

§ 58.1-408. What income apportioned and how.

1. The Virginia taxable income of any corporation, except those subject to the provisions of § 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, 58.1-422.2 , or 58.1-422.3 , excluding income allocable under § 58.1-407 , shall be apportioned to the Commonwealth by multiplying such income by a fraction, the numerator of which is the property factor plus the payroll factor, plus twice the sales factor, and the denominator of which is four; however, where the sales factor does not exist, the denominator of the fraction shall be the number of existing factors and where the sales factor exists but the payroll factor or the property factor does not exist, the denominator of the fraction shall be the number of existing factors plus one.
2. Any eligible company, as defined in § 58.1-405.1 , may subtract from the numerator of the corresponding factor the value of its (i) property acquired in any qualified locality or qualified localities, as defined in § 58.1-405.1 , on or after January 1, 2018, but before January 1, 2025; (ii) payroll attributable to jobs created on or after January 1, 2018, but before January 1, 2025, in any qualified locality or qualified localities; and (iii) sales in the Commonwealth during the taxable year. Such eligible company may make such modification for the taxable year in which it first becomes eligible and for the six subsequent, consecutive taxable years, except for any year in which the eligible company’s (a) total, cumulative new capital investment falls below the applicable initial threshold or (b) number of new jobs falls below the applicable initial threshold.

History. Code 1950, § 58-151.041; 1971, Ex. Sess., c. 171; 1981, c. 402; 1984, c. 675; 1999, cc. 158, 186; 2009, c. 821; 2012, cc. 86, 666; 2015, cc. 92, 237; 2018, cc. 801, 802, 807.

Editor’s note.

Acts 1999, cc. 158 and 186, cl. 2 provides: “That the provisions of this act are effective for taxable years beginning on and after January 1, 2000, unless one or more of the events listed in subsection C of § 58.1-3524 [relating to actual general find revenues being less than forecasted general fund revenues] has occurred prior to such date. If any one of these events occur before January 1, 2000, this act shall not become effective for taxable years beginning on and after January 1, 2000, but shall instead become effective for taxable years beginning on and after January 1 of the first year thereafter when none of the events listed in subsection C of § 58.1-3524 have occurred during the immediately preceding calendar year.” None of the events listed in subsection C of § 58.1-3524 occurred. Therefore, Acts 1999, cc. 158 and 186 are in effect.

Acts 2009, c. 821, cl. 2 provides: “That the Department of Taxation shall develop and make publicly available guidelines implementing the provisions of this act. Among other items, the guidelines shall provide processes and procedures for determining the number of full-time employees of a manufacturing company in cases such as a merger, acquisition, spin-off, or other change in corporate structure. The development of the guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.) of the Code of Virginia.”

Acts 2018, cc. 801 and 802, cl. 2 provides: “That the Virginia Economic Development Partnership Authority shall promulgate guidelines regarding the certification process described in subsection B of § 58.1-405 .1 of the Code of Virginia, as created by this act, and that the Department of Taxation shall promulgate guidelines regarding the modifications to apportionment formulae described in §§ 58.1-405 , 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, and 58.1-422.2 of the Code of Virginia, as amended by this act.”

Acts 2018, cc. 801 and 802, cl. 3 provides: “That any eligible company, as defined in § 58.1-405.1 of the Code of Virginia, as created by this act, that apportions its income pursuant to the provisions of this act shall include with its income tax return information regarding the modification of its apportionment method pursuant to this act, including the amounts subtracted from the relevant apportionment factors. The Department of Taxation shall use such information to compute the fiscal savings to such companies and shall report annually by the first day of each regular session of the General Assembly to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance the number of returns processed during the prior fiscal year for eligible companies that claimed a modified method of apportionment under this act and the estimated revenue impact of such modified methods of apportionment.”

The 1999 amendments by cc. 158 and 186, are identical, and substituted “twice the sales factor, and the denominator of which is four; however, where the sales factor does not exist, the denominator of the fraction shall be the number of existing factors and where the sales factor exists but the payroll factor or the property factor does not exist, the denominator of the fraction shall be the number of existing factors plus one” for “the sales factor, and the denominator of which is three, reduced by the number of factors, if any, having no denominator” at the end of the paragraph. For effective date, see the Editor’s note.

The 2009 amendments.

The 2009 amendment by c. 821 inserted “or 58.1-422 ” and made a related change.

The 2012 amendments.

The 2012 amendments by cc. 86 and 666 are identical, and inserted “or 58.1-422.1 ” following “58.1-422” and made a related change.

The 2015 amendments.

The 2015 amendments by cc. 92 and 237 are identical, and substituted “58.1-422.1, or 58.1-422.2 ” for “or 58.1-422.1 .”

The 2018 amendments.

The 2018 amendments by cc. 801 and 802 are identical, and designated the existing provisions as subsection A, and added subsection B.

The 2018 amendment by c. 807 inserted “or 58.1-422.3 ” in the first sentence.

Law Review.

For survey of Virginia taxation law for the year 1975-1976, see 62 Va. L. Rev. 1479 (1976).

For note on state taxation of nondomiciliary corporations, see 40 Wash. & Lee L. Rev. 191 (1983).

For 2000 survey of Virginia tax law, see 34 U. Rich. L. Rev. 1019 (2000).

§ 58.1-409. Property factor.

The property factor is a fraction, the numerator of which is the average value of the corporation’s real and tangible personal property owned and used or rented and used in the Commonwealth during the taxable year and the denominator of which is the average value of all the corporation’s real and tangible personal property owned and used or rented and used during the taxable year and located everywhere, to the extent that such property is used to produce Virginia taxable income and is effectively connected with the conduct of a trade or business within the United States and income therefrom is includable in federal taxable income.

History. Code 1950, § 58-151.042; 1971, Ex. Sess., c. 171; 1978, c. 184; 1981, c. 402; 1984, c. 675.

Law Review.

For note on state taxation of nondomiciliary corporations, see 40 Wash. & Lee L. Rev. 191 (1983).

§ 58.1-410. Valuation of property owned or rented.

Property owned by the corporation shall be valued at its original cost plus the cost of additions and improvements. Property rented by the corporation shall be valued at eight times the annual rental rate paid by the corporation. The value of movable tangible personal property used both within and without the Commonwealth shall be included in the numerator to the extent of its utilization in the Commonwealth. The extent of such utilization shall be determined by multiplying the total value of such property by a fraction, the numerator of which is the number of days of physical location of the property in the Commonwealth during the taxable period and the denominator of which is the number of days of physical location of the property everywhere during the taxable period. The number of days of physical location of the property may be determined on a statistical basis or by such other reasonable method acceptable to the Department.

History. Code 1950, § 58-151.043; 1971, Ex. Sess., c. 171; 1981, c. 402; 1984, c. 675.

§ 58.1-411. Average value of property.

The average value of property shall be determined by averaging the value at the beginning and ending of the taxable year, but the Department may require the averaging of monthly values during the taxable year if reasonably required to reflect properly the average value of the corporation’s property.

History. Code 1950, § 58-151.044; 1971, Ex. Sess., c. 171; 1984, c. 675.

§ 58.1-412. Payroll factor.

The payroll factor is a fraction, the numerator of which is the total amount paid or accrued in the Commonwealth during the tax period by the corporation for compensation, and the denominator of which is the total compensation paid or accrued everywhere during the taxable year, to the extent that such payroll is used to produce Virginia taxable income and is effectively connected with the conduct of a trade or business within the United States and income therefrom is includable in federal taxable income.

History. Code 1950, § 58-151.045; 1971, Ex. Sess., c. 171; 1981, c. 402; 1984, c. 675.

Law Review.

For note on state taxation of nondomiciliary corporations, see 40 Wash. & Lee L. Rev. 191 (1983).

CIRCUIT COURT OPINIONS

Apportionment method constitutional. —

Allocation of gross receipts entirely to Virginia under the apportionment formula did not violate the Due Process and Commerce Clauses because a taxpayer could not meet its burden of proof under the external consistency test; almost all the work on the information and content that encompassed a subscription service was performed within Virginia, and the maintenance, development, and improvement of the core product occurred in Virginia. Corp. Exec. Bd. v. Va. Dep't of Taxation, 96 Va. Cir. 287, 2017 Va. Cir. LEXIS 151 (Arlington County Sept. 1, 2017), aff'd, 297 Va. 57 , 822 S.E.2d 918, 2019 Va. LEXIS 6 (2019).

§ 58.1-413. When compensation deemed paid or accrued in this Commonwealth.

Compensation is paid or accrued in the Commonwealth if:

1. The employee’s service is performed entirely within the Commonwealth;
2. The employee’s service is performed both within and without the Commonwealth, but the service performed without the Commonwealth is incidental to the employee’s service within the Commonwealth; or
3. Some of the service is performed in the Commonwealth; and
   1. The base of operations or, if there is no base of operations, the place from which the service is directed or controlled is in the Commonwealth; or
   2. The base of operations or the place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the employee’s residence is in the Commonwealth.

History. Code 1950, § 58-151.046; 1971, Ex. Sess., c. 171; 1984, c. 675.

§ 58.1-414. Sales factor.

The sales factor is a fraction, the numerator of which is the total sales of the corporation in the Commonwealth during the taxable year, and the denominator of which is the total sales of the corporation everywhere during the taxable year, to the extent that such sales are used to produce Virginia taxable income and are effectively connected with the conduct of a trade or business within the United States and income therefrom is includable in federal taxable income.

History. Code 1950, § 58-151.047; 1971, Ex. Sess., c. 171; 1981, c. 402; 1984, c. 675.

Law Review.

For note on state taxation of nondomiciliary corporations, see 40 Wash. & Lee L. Rev. 191 (1983).

§ 58.1-415. When sales of tangible personal property deemed in the Commonwealth.

Sales of tangible personal property are in the Commonwealth if such property is received in the Commonwealth by the purchaser. In the case of delivery by common carrier or other means of transportation, the place at which such property is ultimately received after all transportation has been completed shall be considered as the place at which such property is received by the purchaser. Direct delivery in the Commonwealth, other than for purposes of transportation, to a person or firm designated by a purchaser, constitutes delivery to the purchaser in the Commonwealth, and direct delivery outside the Commonwealth to a person or firm designated by the purchaser does not constitute delivery to the purchaser in the Commonwealth, regardless of where title passes, or other conditions of sale.

History. Code 1950, § 58-151.048; 1971, Ex. Sess., c. 171; 1981, c. 402; 1984, c. 675.

Law Review.

As to the “Throwback” Rule, see 22 U. Rich. L. Rev. 739 (1988).

§ 58.1-416. When certain other sales deemed in the Commonwealth.

1. Sales, other than sales of tangible personal property, are in the Commonwealth if:
   1. The income-producing activity is performed in the Commonwealth; or
   2. The income-producing activity is performed both in and outside the Commonwealth and a greater proportion of the income-producing activity is performed in the Commonwealth than in any other state, based on costs of performance.
2. For debt buyers, as defined in § 58.1-422.3 , sales, other than sales of tangible personal property, are in the Commonwealth if they consist of money recovered on debt that a debt buyer collected from a person who is a resident of the Commonwealth or an entity that has its commercial domicile in the Commonwealth. Such rule shall apply regardless of the location of a debt buyer’s business.
3. The taxes under this article on the sales described under subsection B are imposed to the maximum extent permitted under the Constitutions of Virginia and the United States and federal law. For the collection of such taxes on such sales, it is the intent of the General Assembly that the Tax Commissioner and the Department assert the taxpayer’s nexus with the Commonwealth to the maximum extent permitted under the Constitutions of Virginia and the United States and federal law.
4. If necessary information is not available to the taxpayer to determine whether a sale other than a sale of tangible personal property is in the Commonwealth pursuant to the provisions of subsections B and C, the taxpayer may estimate the dollar value or portion of such sale in the Commonwealth, provided that the taxpayer can demonstrate to the satisfaction of the Tax Commissioner that (i) the estimate has been undertaken in good faith, (ii) the estimate is a reasonable approximation of the dollar value or portion of such sale in the Commonwealth, and (iii) in using an estimate the taxpayer did not have as a principal purpose the avoidance of any tax due under this article. The Department may implement procedures for obtaining its approval to use an estimate. The Department shall adopt remedies and corrective procedures for cases in which the Department has determined that the sourcing rules for sales other than sales of tangible personal property have been abused by the taxpayer, which may include reliance on the location of income-producing activity and direct costs of performance as described in subsection A.

History. Code 1950, § 58-151.049; 1971, Ex. Sess., c. 171; 1984, c. 675; 2018, c. 807.

Editor’s note.

Acts 2018, c. 807, cl. 2 provides: “That the Department of Taxation shall develop and make publicly available guidelines implementing the provisions of this act. In developing such guidelines, the Department of Taxation shall not be subject to the provisions of the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia) for guidelines promulgated on or before December 31, 2021, but shall cooperate with and seek the counsel of interested groups and shall not promulgate any guidelines, preliminary or final, without first seeking such counsel and conducting a public hearing. Preliminary guidelines shall be promulgated and made publicly available no later than December 31, 2018, and final guidelines shall be promulgated and made publicly available no later than December 31, 2019. Subsequent to December 31, 2019, the guidelines shall next be updated by December 31, 2021, under the same procedures as required for the preliminary and final guidelines. After December 31, 2021, the guidelines shall be subject to the Administrative Process Act and accorded the weight of regulations under § 58.1-205 of the Code of Virginia.”

The 2018 amendments.

The 2018 amendment by c. 807 designated the existing provisions as subsection A, and added subsections B through D.

§ 58.1-417. Motor carriers; apportionment.

1. Motor carriers of property or passengers shall apportion their net apportionable income to this Commonwealth by the use of the ratio of vehicle miles in this Commonwealth to total vehicle miles of the corporation everywhere. For the purposes of this section the words “vehicle miles” in the case of motor carriers of property shall mean miles traveled by vehicles (whether owned or operated by the corporation) hauling property for a charge or traveling on a scheduled route. In the case of motor carriers of passengers the same shall mean miles traveled by vehicles (whether owned or operated by the corporation) carrying passengers for a fare or traveling on a scheduled route.
2. The provisions of subsection A shall not be applicable to a carrier:
   1. Which neither owns nor rents real or tangible personal property within this Commonwealth, except vehicles, which has made no pick-ups or deliveries within this Commonwealth, and which has traveled less than 50,000 vehicle miles in this Commonwealth in the taxable year; or
   2. Which neither owns nor rents any real or tangible personal property within this Commonwealth, except vehicles, and which makes no more than twelve round trips into this Commonwealth during a taxable year.The mileage traveled under 50,000 miles or the mileage traveled in such round trips, however, may not represent more than 5 percent of the total miles annually traveled in all states by such carrier.
3. Any eligible company, as defined in § 58.1-405.1 , may subtract its vehicle miles traveled in any qualified locality or qualified localities, as defined in § 58.1-405.1 , during the taxable year from the numerator of the ratio in subsection A. Such eligible company may make such modification for the taxable year in which it first becomes eligible and for the six subsequent, consecutive taxable years, except for any year in which the eligible company’s (i) total, cumulative new capital investment falls below the applicable initial threshold or (ii) number of new jobs falls below the applicable initial threshold.

History. Code 1950, § 58-151.050; 1971, Ex. Sess., c. 171; 1977, c. 658; 1984, c. 675; 2018, cc. 801, 802.

Editor’s note.

Acts 2018, cc. 801 and 802, cl. 2 provides: “That the Virginia Economic Development Partnership Authority shall promulgate guidelines regarding the certification process described in subsection B of § 58.1-405 .1 of the Code of Virginia, as created by this act, and that the Department of Taxation shall promulgate guidelines regarding the modifications to apportionment formulae described in §§ 58.1-405 , 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, and 58.1-422.2 of the Code of Virginia, as amended by this act.”

Acts 2018, cc. 801 and 802, cl. 3 provides: “That any eligible company, as defined in § 58.1-405.1 of the Code of Virginia, as created by this act, that apportions its income pursuant to the provisions of this act shall include with its income tax return information regarding the modification of its apportionment method pursuant to this act, including the amounts subtracted from the relevant apportionment factors. The Department of Taxation shall use such information to compute the fiscal savings to such companies and shall report annually by the first day of each regular session of the General Assembly to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance the number of returns processed during the prior fiscal year for eligible companies that claimed a modified method of apportionment under this act and the estimated revenue impact of such modified methods of apportionment.”

The 2018 amendments.

The 2018 amendments by cc. 801 and 802 are identical, and added subsection C.

§ 58.1-418. Financial corporations; apportionment.

1. The Virginia taxable income of a financial corporation, as defined herein, excluding income allocable under § 58.1-407 , shall be apportioned within and without this Commonwealth in the ratio that the business within this Commonwealth is to the total business of the corporation. Business within this Commonwealth shall be based on cost of performance in the Commonwealth over cost of performance everywhere.
2. “Financial corporation” means any corporation not exempted from the imposition of tax under the provisions of § 58.1-401 , which derives more than seventy percent of its gross income from the classes of income enumerated in subdivisions 1 through 4 below, without reference to the state wherein such income is earned, including but not limited to small loan companies, sales finance companies, brokerage companies and investment companies:
   1. Fees, commissions, other compensation for financial services rendered;
   2. Gross profits from trading in stocks, bonds, or other securities;
   3. Interest; and
   4. Dividends received to the extent included in Virginia taxable income.
3. In computing the amounts referred to in subdivisions 1 through 4 of subsection B of this section, any amount received by a member of an affiliated group, determined under § 1504(a) of the Internal Revenue Code but without reference to whether any such corporation is an includable corporation under § 1504(b) of the Internal Revenue Code, from another member of such group shall be included only to the extent such amount exceeds expenses of the recipient directly related thereto.
4. Any eligible company, as defined in § 58.1-405.1 , may subtract the value of its business within any qualified locality or qualified localities, as defined in § 58.1-405.1 , during the taxable year from the numerator of the ratio in subsection A. Such eligible company may make such modification for the taxable year in which it first becomes eligible and for the six subsequent, consecutive taxable years, except for any year in which the eligible company’s (i) total, cumulative new capital investment falls below the applicable initial threshold or (ii) number of new jobs falls below the applicable initial threshold.

History. Code 1950, § 58-151.050:1; 1976, c. 436; 1979, c. 32; 1981, c. 402; 1984, c. 675; 2018, cc. 801, 802.

Editor’s note.

Acts 2018, cc. 801 and 802, cl. 2 provides: “That the Virginia Economic Development Partnership Authority shall promulgate guidelines regarding the certification process described in subsection B of § 58.1-405 .1 of the Code of Virginia, as created by this act, and that the Department of Taxation shall promulgate guidelines regarding the modifications to apportionment formulae described in §§ 58.1-405 , 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, and 58.1-422.2 of the Code of Virginia, as amended by this act.”

Acts 2018, cc. 801 and 802, cl. 3 provides: “That any eligible company, as defined in § 58.1-405.1 of the Code of Virginia, as created by this act, that apportions its income pursuant to the provisions of this act shall include with its income tax return information regarding the modification of its apportionment method pursuant to this act, including the amounts subtracted from the relevant apportionment factors. The Department of Taxation shall use such information to compute the fiscal savings to such companies and shall report annually by the first day of each regular session of the General Assembly to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance the number of returns processed during the prior fiscal year for eligible companies that claimed a modified method of apportionment under this act and the estimated revenue impact of such modified methods of apportionment.”

The 2018 amendments.

The 2018 amendments by cc. 801 and 802 are identical, and added subsection D.

Law Review.

For survey of Virginia taxation law for the year 1975-1976, see 62 Va. L. Rev. 1479 (1976).

For annual survey of Virginia law on taxation, see 40 U. Rich. L. Rev. 291 (2005).

§ 58.1-419. Construction corporations; apportionment.

1. Construction companies which have elected to report income on the completed contract basis shall apportion income within and without this Commonwealth in the ratio that the business within the Commonwealth is to the total business of the corporation.
2. All other construction corporations not reporting under the completed contract method shall determine Virginia taxable income by reference to §§ 58.1-406 through 58.1-416 .
3. Any eligible company, as defined in § 58.1-405.1 , may subtract the value of its business within any qualified locality or qualified localities, as defined in § 58.1-405.1 , during the taxable year from the numerator of the ratio in subsection A. Such eligible company may make such modification for the taxable year in which it first becomes eligible and for the six subsequent, consecutive taxable years, except for any year in which the eligible company’s (i) total, cumulative new capital investment falls below the applicable initial threshold or (ii) number of new jobs falls below the applicable initial threshold.

History. Code 1950, § 58-151.050:2; 1976, c. 436; 1981, c. 402; 1984, c. 675; 2018, cc. 801, 802.

Editor’s note.

Acts 2018, cc. 801 and 802, cl. 2 provides: “That the Virginia Economic Development Partnership Authority shall promulgate guidelines regarding the certification process described in subsection B of § 58.1-405 .1 of the Code of Virginia, as created by this act, and that the Department of Taxation shall promulgate guidelines regarding the modifications to apportionment formulae described in §§ 58.1-405 , 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, and 58.1-422.2 of the Code of Virginia, as amended by this act.”

Acts 2018, cc. 801 and 802, cl. 3 provides: “That any eligible company, as defined in § 58.1-405.1 of the Code of Virginia, as created by this act, that apportions its income pursuant to the provisions of this act shall include with its income tax return information regarding the modification of its apportionment method pursuant to this act, including the amounts subtracted from the relevant apportionment factors. The Department of Taxation shall use such information to compute the fiscal savings to such companies and shall report annually by the first day of each regular session of the General Assembly to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance the number of returns processed during the prior fiscal year for eligible companies that claimed a modified method of apportionment under this act and the estimated revenue impact of such modified methods of apportionment.”

The 2018 amendments.

The 2018 amendments by cc. 801 and 802 are identical, and added subsection C.

Law Review.

For survey of Virginia taxation law for the year 1975-1976, see 62 Va. L. Rev. 1479 (1976).

§ 58.1-420. Railway companies; apportionment.

1. Notwithstanding the provisions of § 58.1-408 , railway companies shall determine their net apportionable income to the Commonwealth by multiplying the Virginia taxable income of such company, excluding the classes of income allocable under § 58.1-407 , by the use of the ratio of revenue car miles in the Commonwealth to total revenue car miles of the company everywhere. For the purposes of this section, “revenue car mile” in the case of railway carriers of property or passengers means the movement of a unit of loaded car equipment a distance of one mile. The loaded car miles shall be determined in accordance with the Uniform System of Accounts for Railroad Companies of the Interstate Commerce Commission.
2. Any eligible company, as defined in § 58.1-405.1 , may subtract its revenue car miles traveled in any qualified locality or qualified localities, as defined in § 58.1-405.1 , during the taxable year from the numerator of the ratio in subsection A. Such eligible company may make such modification for the taxable year in which it first becomes eligible and for the six subsequent, consecutive taxable years, except for any year in which the eligible company’s (i) total, cumulative new capital investment falls below the applicable initial threshold or (ii) number of new jobs falls below the applicable initial threshold.

History. Code 1950, §§ 58-151.021, 58-151.050:3; 1971, Ex. Sess., c. 171; 1978, c. 784; 1979, c. 371; 1981, c. 402; 1984, c. 675; 2018, cc. 801, 802.

Editor’s note.

Acts 2018, cc. 801 and 802, cl. 2 provides: “That the Virginia Economic Development Partnership Authority shall promulgate guidelines regarding the certification process described in subsection B of § 58.1-405 .1 of the Code of Virginia, as created by this act, and that the Department of Taxation shall promulgate guidelines regarding the modifications to apportionment formulae described in §§ 58.1-405 , 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, and 58.1-422.2 of the Code of Virginia, as amended by this act.”

Acts 2018, cc. 801 and 802, cl. 3 provides: “That any eligible company, as defined in § 58.1-405.1 of the Code of Virginia, as created by this act, that apportions its income pursuant to the provisions of this act shall include with its income tax return information regarding the modification of its apportionment method pursuant to this act, including the amounts subtracted from the relevant apportionment factors. The Department of Taxation shall use such information to compute the fiscal savings to such companies and shall report annually by the first day of each regular session of the General Assembly to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance the number of returns processed during the prior fiscal year for eligible companies that claimed a modified method of apportionment under this act and the estimated revenue impact of such modified methods of apportionment.”

The 2018 amendments.

The 2018 amendments by cc. 801 and 802 are identical, and designated the existing provisions as subsection A, and added subsection B.

§ 58.1-421. Alternative method of allocation.

If any corporation believes that the method of allocation or apportionment hereinbefore prescribed as administered by the Department has operated or will so operate as to subject it to taxation on a greater portion of its Virginia taxable income than is reasonably attributable to business or sources within this Commonwealth, it shall be entitled to file with the Department a statement of its objections and of such alternative method of allocation or apportionment as it believes to be proper under the circumstances with such detail and proof and within such time as the Department may reasonably prescribe. If the Department concludes that the method of allocation or apportionment theretofore employed is in fact inapplicable or inequitable, it shall redetermine the taxable income by such other method of allocation or apportionment as seems best calculated to assign to the Commonwealth for taxation the portion of the income reasonably attributable to business and sources within the Commonwealth, not exceeding, however, the amount which would be arrived at by application of the statutory rules for allocation or apportionment.

History. Code 1950, § 58-151.051; 1971, Ex. Sess., c. 171; 1984, c. 675.

Law Review.

For survey of Virginia taxation law for the year 1975-1976, see 62 Va. L. Rev. 1479 (1976).

§ 58.1-422. Manufacturing companies; apportionment.

1. 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.
2. 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.
3. 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 90 percent of the base year employment, or the average wage of its full-time employees as certified by the taxpayer is not greater than the lower of the state or local average weekly wage, 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. 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 and interest are hereby imposed on manufacturing companies using the alternative apportionment set forth in this section.
4. As used in this section, unless the context 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.
5. 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.
6. Any eligible company, as defined in § 58.1-405.1 , that elects to apportion its income pursuant to subsection A may subtract the value of its sales in the Commonwealth during the taxable year from the numerator of the ratio in subdivision A 3. Such eligible company may make such modification for the taxable year in which it first becomes eligible and for the six subsequent, consecutive taxable years, except for any year in which the eligible company’s (i) total, cumulative new capital investment falls below the applicable initial threshold or (ii) number of new jobs falls below the applicable initial threshold.

History. 2009, c. 821; 2012, c. 427; 2018, cc. 801, 802.

Editor’s note.

Acts 2009, c. 821, cl. 2 provides: “That the Department of Taxation shall develop and make publicly available guidelines implementing the provisions of this act. Among other items, the guidelines shall provide processes and procedures for determining the number of full-time employees of a manufacturing company in cases such as a merger, acquisition, spin-off, or other change in corporate structure. The development of the guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.) of the Code of Virginia.”

Acts 2018, cc. 801 and 802, cl. 2 provides: “That the Virginia Economic Development Partnership Authority shall promulgate guidelines regarding the certification process described in subsection B of § 58.1-405 .1 of the Code of Virginia, as created by this act, and that the Department of Taxation shall promulgate guidelines regarding the modifications to apportionment formulae described in §§ 58.1-405 , 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, and 58.1-422.2 of the Code of Virginia, as amended by this act.”

Acts 2018, cc. 801 and 802, cl. 3 provides: “That any eligible company, as defined in § 58.1-405.1 of the Code of Virginia, as created by this act, that apportions its income pursuant to the provisions of this act shall include with its income tax return information regarding the modification of its apportionment method pursuant to this act, including the amounts subtracted from the relevant apportionment factors. The Department of Taxation shall use such information to compute the fiscal savings to such companies and shall report annually by the first day of each regular session of the General Assembly to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance the number of returns processed during the prior fiscal year for eligible companies that claimed a modified method of apportionment under this act and the estimated revenue impact of such modified methods of apportionment.”

The 2012 amendments.

The 2012 amendment by c. 427, in subsection C, in the first paragraph, inserted “90 percent of” and “or the average wage of its full-timeemployees as certified by the taxpayer is not greater than the lower of the state or local average weekly wage,” in the first sentence and deleted the former second sentence, which read: “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,” and at the beginning of the second paragraph, substituted “Such additional taxes and interest” for “Such additional taxes, penalty, and interest”; and in subsection D, substituted “unless the context requires another meaning” for “unless the context clearly shows otherwise, the term or phrase” in the introductory paragraph.

The 2018 amendments.

The 2018 amendments by cc. 801 and 802 are identical, and added subsection F.

Law Review.

For annual survey article, “Taxation,” see 44 U. Rich. L. Rev. 599 (2009).

§ 58.1-422.1. Retail companies; apportionment.

1. For taxable years beginning on or after July 1, 2012, the Virginia taxable income of a retail company, excluding income allocable under § 58.1-407 , shall be apportioned within and without the Commonwealth as follows:
   1. From July 1, 2012, until July 1, 2014, 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 that 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, 2014, until July 1, 2015, 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 that 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, 2015, and thereafter, by multiplying such income by the sales factor.
2. As used in this section, “retail company” means a domestic or foreign corporation primarily engaged in activities that, in accordance with the North American Industry Classification System (NAICS), United States Manual, United States Office of Management and Budget, 1997 Edition, would be included in Sectors 44-45.
3. Any eligible company, as defined in § 58.1-405.1 , may subtract the value of its sales in the Commonwealth during the taxable year from the numerator of the ratio in subdivision A 3. Such eligible company may make such modification for the taxable year in which it first becomes eligible and for the six subsequent, consecutive taxable years, except for any year in which the eligible company’s (i) total, cumulative new capital investment falls below the applicable initial threshold or (ii) number of new jobs falls below the applicable initial threshold.

History. 2012, cc. 86, 666; 2018, cc. 801, 802.

Editor’s note.

Acts 2018, cc. 801 and 802, cl. 2 provides: “That the Virginia Economic Development Partnership Authority shall promulgate guidelines regarding the certification process described in subsection B of § 58.1-405 .1 of the Code of Virginia, as created by this act, and that the Department of Taxation shall promulgate guidelines regarding the modifications to apportionment formulae described in §§ 58.1-405 , 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, and 58.1-422.2 of the Code of Virginia, as amended by this act.”

Acts 2018, cc. 801 and 802, cl. 3 provides: “That any eligible company, as defined in § 58.1-405.1 of the Code of Virginia, as created by this act, that apportions its income pursuant to the provisions of this act shall include with its income tax return information regarding the modification of its apportionment method pursuant to this act, including the amounts subtracted from the relevant apportionment factors. The Department of Taxation shall use such information to compute the fiscal savings to such companies and shall report annually by the first day of each regular session of the General Assembly to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance the number of returns processed during the prior fiscal year for eligible companies that claimed a modified method of apportionment under this act and the estimated revenue impact of such modified methods of apportionment.”

The 2018 amendments.

The 2018 amendments by cc. 801 and 802 are identical, and added subsection C.

§ 58.1-422.2. Apportionment; taxpayers with enterprise data center operations.

1. For taxable years beginning on or after July 1, 2016, the Virginia taxable income of taxpayers with enterprise data center operations, excluding income allocable under § 58.1-407 , shall be apportioned within and without the Commonwealth as follows:
   1. From July 1, 2016, until July 1, 2017, 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 that 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
   2. From July 1, 2017, and thereafter, by multiplying such income by the sales factor.
2. As used in this section:“Enterprise data center operations” means operations that (i) physically house information technology equipment such as servers, switches, routers, data storage devices, or related equipment; (ii) manage and process digital data and information to provide application services or management for data processing, such as web hosting, Internet, intranet, telecommunication, and information technology; (iii) are developed and owned by the taxpayer; and (iv) are operated by the taxpayer or any of its affiliates substantially for their own use.
3. The provisions of this section requiring an apportionment formula for taxpayers with enterprise data center operations shall apply only to taxpayers that have entered into a memorandum of understanding with the Virginia Economic Development Partnership Authority on or after July 1, 2015, to make a new capital investment of at least $150 million in an enterprise data center in the Commonwealth on or after such date. The apportionment formula under this section shall apply to such taxpayers beginning with the taxable year for which the Virginia Economic Development Partnership Authority provides a written certification to the taxpayer that the new capital investment has been completed.
4. The General Assembly of Virginia finds that capital investment in data centers is essential to the continued fiscal health of the Commonwealth. In this modern economy, states often compete for quality data centers. Accordingly, the provisions of subsection C relating to capital investment in enterprise data centers are integral to the purpose of 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.
5. Any eligible company, as defined in § 58.1-405.1 , that apportions its income pursuant to this section may subtract the value of its sales in the Commonwealth during the taxable year from the numerator of the ratio in subdivision A 2. Such eligible company may make such modification for the taxable year in which it first becomes eligible and for the six subsequent, consecutive taxable years, except for any year in which the eligible company’s (i) total, cumulative new capital investment falls below the applicable initial threshold or (ii) number of new jobs falls below the applicable initial threshold.

History. 2015, cc. 92, 237; 2018, cc. 801, 802.

Editor’s note.

Acts 2018, cc. 801 and 802, cl. 2 provides: “That the Virginia Economic Development Partnership Authority shall promulgate guidelines regarding the certification process described in subsection B of § 58.1-405 .1 of the Code of Virginia, as created by this act, and that the Department of Taxation shall promulgate guidelines regarding the modifications to apportionment formulae described in §§ 58.1-405 , 58.1-408 , 58.1-417 , 58.1-418 , 58.1-419 , 58.1-420 , 58.1-422 , 58.1-422 .1, and 58.1-422.2 of the Code of Virginia, as amended by this act.”

Acts 2018, cc. 801 and 802, cl. 3 provides: “That any eligible company, as defined in § 58.1-405.1 of the Code of Virginia, as created by this act, that apportions its income pursuant to the provisions of this act shall include with its income tax return information regarding the modification of its apportionment method pursuant to this act, including the amounts subtracted from the relevant apportionment factors. The Department of Taxation shall use such information to compute the fiscal savings to such companies and shall report annually by the first day of each regular session of the General Assembly to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance the number of returns processed during the prior fiscal year for eligible companies that claimed a modified method of apportionment under this act and the estimated revenue impact of such modified methods of apportionment.”

The 2018 amendments.

The 2018 amendments by cc. 801 and 802 are identical, and added subsection E.

§ 58.1-422.3. Debt buyers; apportionment.

1. As used in this section, “debt buyer” means an entity and its affiliated entities that purchase nonperforming loans from unaffiliated commercial entities that (i) are in default for at least 120 days or (ii) are in bankruptcy proceedings. “Debt buyer” does not include an entity that provides debt collection services for unaffiliated entities.
2. For taxable years beginning on and after January 1, 2019, the Virginia taxable income of a debt buyer, excluding income allocable under § 58.1-407 , shall be apportioned within and without the Commonwealth by multiplying such income by the sales factor. For debt buyers, only money recovered on debt that a debt buyer collected from a person who is a resident of the Commonwealth or an entity that has its commercial domicile in the Commonwealth shall be apportioned to the Commonwealth for income tax purposes.

History. 2018, c. 807.

Editor’s note.

Acts 2018, c. 807, cl. 2 provides: “That the Department of Taxation shall develop and make publicly available guidelines implementing the provisions of this act. In developing such guidelines, the Department of Taxation shall not be subject to the provisions of the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia) for guidelines promulgated on or before December 31, 2021, but shall cooperate with and seek the counsel of interested groups and shall not promulgate any guidelines, preliminary or final, without first seeking such counsel and conducting a public hearing. Preliminary guidelines shall be promulgated and made publicly available no later than December 31, 2018, and final guidelines shall be promulgated and made publicly available no later than December 31, 2019. Subsequent to December 31, 2019, the guidelines shall next be updated by December 31, 2021, under the same procedures as required for the preliminary and final guidelines. After December 31, 2021, the guidelines shall be subject to the Administrative Process Act and accorded the weight of regulations under § 58.1-205 of the Code of Virginia.”

§ 58.1-423. Income tax paid by commercial spaceflight entities.

1. Beginning July 1, 2011, and for fiscal years 2012, 2013, 2014, 2015, and 2016, the portion of the Virginia income tax net revenue generated by qualified corporations or limited liability companies that is attributable to the sale of commercial human spaceflights or commercial spaceflight training (regardless of point of sale, or where space flight takes place), or is incidental to the sale of commercial human spaceflights, shall be transferred to the Virginia Commercial Space Flight Authority, established pursuant to Article 2 (§ 2.2-2201 et seq.) of Chapter 22 of Title 2.2. The Tax Commissioner shall make a written certification to the Comptroller within 15 days of the close of each calendar quarter providing an estimate of the portion of the Virginia income tax net revenue generated during the calendar quarter by the qualified corporations or limited liability companies that is attributable to the sale of commercial human spaceflights or commercial spaceflight training or is incidental to the sale of commercial human spaceflights. Not later than 30 days after the close of each quarter, the Comptroller shall transfer to the Virginia Commercial Space Flight Authority an amount from the general fund that is equal to the estimate provided by the Tax Commissioner.
2. For purposes of this section, a qualified corporation or limited liability company is a corporation or limited liability company that engages in commercial human spaceflights or commercial spaceflight training.

History. 2011, c. 563; 2012, cc. 779, 817; 2015, c. 260.

The 2012 amendments.

The 2012 amendments by cc. 779 and 817 are identical, and in subsection A, inserted “Virginia income tax” twice, “or limited liability companies” twice, and “(regardless of point of sale, or where space flight takes place” and inserted “or limited liability company” twice in subsection B.

The 2015 amendments.

The 2015 amendment by c. 260, in the first sentence of subsection A, deleted “and” following “2014,” and inserted “and 2016.”

Article 12. Reserved.

§ 58.1-430. Repealed by Acts 2001, cc. 292, 300.

Cross references.

For current provisions as to the Neighborhood Assistance Act Tax Credit, see § 58.1-439.18 et seq.

As to grants under the Virginia Caregivers Grant Program, see § 63.2-2200 et seq.

§ 58.1-431. Repealed by Acts 2009, c. 34, cl. 2.

§ 58.1-432. Tax credit for purchase of conservation tillage equipment.

1. For taxable years beginning before January 1, 2021, any corporation shall be allowed a credit against the tax imposed by § 58.1-400 of an amount equaling 25 percent of all expenditures made for the purchase and installation of conservation tillage equipment used in agricultural production by the purchaser. As used in this section, the term “conservation tillage equipment” means a planter, drill, or other equipment used to reduce soil compaction commonly known as a “no-till” planter, drill, or other equipment used to reduce soil compaction including guidance systems to control traffic patterns that are designed to minimize disturbance of the soil in planting crops, including such planters, drills, or other equipment used to reduce soil compaction which may be attached to equipment already owned by the taxpayer.
2. The amount of such credit shall not exceed $4,000 or the total amount of tax imposed by this chapter, whichever is less, in the year of purchase. If the amount of such credit exceeds the taxpayer’s tax liability for such tax year, the amount which exceeds such tax liability may be carried over for credit against income taxes in the next five taxable years until the total amount of the tax credit has been taken.
3. For purposes of this section, the amount of any credit attributable to the purchase and installation of conservation tillage equipment by a partnership or electing small business corporation (S corporation) shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S corporation.

History. 1985, c. 560; 1990, c. 416; 2005, c. 58; 2021, Sp. Sess. I, c. 272.

Editor’s note.

Acts 2005, c. 58, cl. 2 provides: “That the provisions of this act shall be effective for taxable years beginning on or after January 1, 2005.”

Acts 2021, Sp. Sess. I, c. 272, cl. 2 provides: “That the provisions of this act shall become effective only for taxable years beginning on and after January 1, 2021.”

The 2005 amendments.

The 2005 amendment by c. 58, effective for taxable years beginning on or after January 1, 2005, in subsection A, substituted “25” for “twenty-five” in the first sentence; rewrote the last sentence; and substituted, “$4,000” for “$2,500” in the first sentence of subsection B.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 272, effective July 1, 2021, inserted “For taxable years beginning before January 1, 2021,” at the beginning of subsection A. For applicability, see Editor’s note.

Law Review.

For annual survey of Virginia law on taxation, see 40 U. Rich. L. Rev. 291 (2005).

§ 58.1-433. Expired.

Editor’s note.

Acts 1988, c. 730, cls. 2 and 3, as amended by Acts 1995, c. 775, cl. 2, provided that this section, relating to a credit for qualifying cogenerators and small power producers, would be effective for taxable years beginning on and after January 1, 1988, and would expire on December 31, 2001.

§ 58.1-433.1. Virginia Coal Employment and Production Incentive Tax Credit.

1. For taxable years beginning on and after January 1, 2001, but before January 1, 2022, every electricity generator in the Commonwealth shall be allowed a $3-per-ton credit against the tax imposed by § 58.1-400 or 58.1-400.2 for each ton of coal purchased and consumed by such electricity generator, provided such coal was mined in Virginia as certified by such seller. Notwithstanding any other provision of law, no electricity generator shall be allowed more than a $3-per-ton coal tax credit and shall be subject to all limitations set forth in § 58.1-400.2 . In no event shall the credit allowed hereunder exceed the total amount of tax liability of such taxpayer. Any tax credit not usable for the taxable year may be carried over to the extent usable for the next 10 succeeding taxable years or until the full credit is utilized, whichever is sooner. For the purposes of the credit provided by this section, “electricity generator” means any person who produces electricity for self-consumption or for sale.
2. For each such ton of coal described in subsection A that is purchased on or after January 1, 2006, but before January 1, 2022, from any person with an economic interest in coal as defined under § 58.1-439.2 , the $3-per-ton credit allowed under subsection A may be allocated between such electricity generator and such person with an economic interest in coal. The allocation of the $3-per-ton credit may be provided in the contract between such parties for the sale of such coal. Such allocation may be amended by the execution of a written instrument by the parties prior to December 31 of the year of purchase of such coal. Such contracts and written instruments shall be subject to audit by the Department of Taxation to ensure the proper application of credits.In no case shall the credit allocated for each such ton of coal among such electricity generators and such persons with an economic interest in coal exceed $3 per ton.All credits earned on or after January 1, 2006, but before January 1, 2022, that are allocated to persons with an economic interest in coal as provided under this subsection may be used as tax credits by such persons against the tax imposed by § 58.1-400 and any other tax imposed by the Commonwealth. If the credits earned on or after January 1, 2006, but before January 1, 2022, exceed the state tax liability for the applicable taxable year of such person with an economic interest in coal, the excess shall be redeemable by the Tax Commissioner as set forth in subsection D of § 58.1-439.2 , provided that the ability of persons with an economic interest in coal to redeem with the Tax Commissioner credits received pursuant to an allocation under this section shall expire for credits earned under this section on or after July 1, 2016.
3. If tax credits were earned under the provisions of this section prior to January 1, 2022, such credits may continue to be claimed on a return for taxable years on and after January 1, 2022, but only pursuant to the applicable carryover period specified in this section. A taxpayer claiming credits pursuant to the provisions of this subsection shall not claim more than $1 million in credits for a single taxable year. No taxpayer shall amend a return for a taxable year prior to January 1, 2022, to claim more in credits earned under the provisions of this section than such taxpayer stated on such return before amending it.

History. 1999, c. 971; 2000, c. 929; 2006, cc. 788, 803; 2011, cc. 294, 851; 2021, Sp. Sess. I, cc. 553, 554.

Editor’s note.

Acts 2000, c. 929, which inserted “and consumed” after “purchased” in the first sentence, in cl. 2 provides: “That the provisions of this act amending § 58.1-433.1 shall be effective for taxable years beginning on and after January 1, 2001, and the provisions of this act amending § 58.1-2626.1 shall be effective for tax years beginning on and after January 1, 2001. These provisions shall not, however, be applicable to any contracts to purchase coal whose bid closing dates are before the introduction date of this bill.”

Acts 2006, cc. 788 and 803, cl. 2 provides: “That the provisions of this act amending subsection A of § 58.1-433.1 shall be applicable to any tax credit allowed under such section for coal purchased and consumed on or after January 1, 2001.”

Acts 2011, c. 851, cl. 3 provides: “That the provisions of this act are effective for taxable periods on or after January 1, 2011.”

Acts 2021, cc. 553 and 554, cl. 2, effective July 1, 2021, was codified as subsection C of this section at the direction of the Virginia Code Commission.

Acts 2021, cc. 553 and 554, cl. 3 provides: “That the Department of Mines, Minerals and Energy, in coordination with the Virginia Coalfield Economic Development Authority, the Virginia Economic Development Partnership Authority, the Virginia Employment Commission, the Southwest Virginia Workforce Development Board, and the Council on Environmental Justice, shall convene a stakeholder process, which shall include public meetings and public comment opportunities, and provide an interim report to the General Assembly no later than September 1, 2021, and a final report on December 1, 2021, on recommendations for how the Commonwealth can provide economic transition support to the coalfield region, with a particular focus on workforce redevelopment, economic diversification, reclamation of coal-impacted lands and brownfields, community revitalization, infrastructure improvements, and clean energy development.”

The 2000 amendments.

The 2000 amendment by c. 929, effective July 1, 2000 and applicable for taxable years beginning on and after January 1, 2001, inserted “and consumed” following “purchased” in the first sentence.

The 2006 amendments.

The 2006 amendments by cc. 788 and 803 are identical, and inserted the A designation at the beginning of the first paragraph and substituted “10” for “five” preceding “succeeding taxable years” in the fourth sentence of subsection A; and added subsection B. For applicability, see Editor’s note.

The 2011 amendments.

The 2011 amendment by c. 294, in subsection B, in the last sentence of the last paragraph, deleted “and prior to July 1, 2011” following “January 1, 2006,” and added “provided that the ability of persons with an economic interest in coal to redeem with the Tax Commissioner credits received pursuant to an allocation under this section shall expire for credits earned under this section on or after July 1, 2016” at the end.

The 2011 amendment by c. 851, effective for taxable periods on or after January 1, 2011, deleted the former last sentence in subsection A, which read: “However, a cogenerator, as defined in § 58.1-2600 , shall not be allowed to claim the credit provided by this section and the credit provided by § 58.1-433 on the same ton of coal.”

The 2021 Sp. Sess. I amendments.

The 2021 amendments by Sp. Sess. I, cc. 553 and 554, effective July 1, 2021, are identical, and inserted “but before January 1, 2022” throughout the section; substituted “$3-per-ton” for “three-dollar-per-ton” twice in subsection A; and made stylistic changes.

Law Review.

For 2006 survey article, “Taxation,” see 41 U. Rich. L. Rev. 283 (2006).

OPINIONS OF THE ATTORNEY GENERAL

2011 amendment. —

Acts 2011, c. 294, established a sunset date of July 1, 2016, for persons with an economic interest in coal who have received tax credits from an electricity generator to redeem these tax credits. Generators of electricity can continue to rely on the tax credits after July 1, 2016. See opinion of Attorney General to The Honorable Albert C. Pollard, Jr., Member, House of Delegates, 11-022, (4/1/11).

§§ 58.1-434, 58.1-435. Repealed by Acts 2016, c. 305, cl. 2.

Editor’s note.

Acts 2016, c. 305, cl. 3 provides: “That this act shall in no way alter or affect any (i) tax credit or tax benefit or other tax attribute allowed or earned under any section repealed by this act or (ii) tax liability or obligation pursuant to any such section.”

Former § 58.1-434 , pertaining to Telecommunications income tax credit, derived from Acts 1988, c. 899. Former § 58.1-435, pertaining to Low-income housing credit, derived from Acts 1989, c. 280; 1990, c. 830; 1992, cc. 325, 347; 1994, c. 611; 1996, cc. 580, 826; 2001, cc. 293, 299; 2007, c. 778; 2010, cc. 520, 608; 2011, c. 850.

§ 58.1-436. Tax credit for purchase of conservation tillage and precision agricultural application equipment.

1. 1. For taxable years beginning on or after January 1, 2021, but before January 1, 2026, any corporation engaged in agricultural production for market which has in place a soil conservation plan approved by the local soil and water conservation district and is implementing a nutrient management plan developed by a certified nutrient management planner in accordance with § 10.1-104.2 by the required tax return filing date of the corporation shall be allowed a refundable credit against the tax imposed by § 58.1-400 in an amount equaling 25 percent of all expenditures made by such corporation for the purchase of equipment certified by the Virginia Soil and Water Conservation Board as reducing soil compaction such as a “no-till” planter, drill, or other equipment or equipment that provides more precise pesticide and fertilizer application or injection. For purposes of this section, equipment that reduces soil compaction includes equipment utilizing guidance systems to control traffic patterns that are designed to minimize the disturbance of soil in planting crops, including such planters, drills, or other equipment that may be attached to equipment already owned by the taxpayer. A. 1. For taxable years beginning on or after January 1, 2021, but before January 1, 2026, any corporation engaged in agricultural production for market which has in place a soil conservation plan approved by the local soil and water conservation district and is implementing a nutrient management plan developed by a certified nutrient management planner in accordance with § 10.1-104.2 by the required tax return filing date of the corporation shall be allowed a refundable credit against the tax imposed by § 58.1-400 in an amount equaling 25 percent of all expenditures made by such corporation for the purchase of equipment certified by the Virginia Soil and Water Conservation Board as reducing soil compaction such as a “no-till” planter, drill, or other equipment or equipment that provides more precise pesticide and fertilizer application or injection. For purposes of this section, equipment that reduces soil compaction includes equipment utilizing guidance systems to control traffic patterns that are designed to minimize the disturbance of soil in planting crops, including such planters, drills, or other equipment that may be attached to equipment already owned by the taxpayer.
   2. Virginia Polytechnic Institute and State University and Virginia State University shall provide at the request of the Virginia Soil and Water Conservation Board technical assistance in determining appropriate specifications for certified equipment which would provide for more precise pesticide and fertilizer application to reduce the potential for adverse environmental impacts. The equipment shall be divided into the following categories:
      1. Sprayers for pesticides and liquid fertilizers;
      2. Pneumatic fertilizer applicators;
      3. Monitors, computer regulators, and height-adjustable booms for sprayers and liquid fertilizer applicators;
      4. Manure applicators;
      5. Tramline adapters; and
      6. Starter fertilizer banding attachments for planters.
   3. The amount of such credit under this subsection shall not exceed $17,500 in the year of purchase. If the amount of the credit exceeds the taxpayer’s liability for such taxable year, the excess shall be refunded by the Tax Commissioner. Tax credits shall be refunded by the Tax Commissioner on behalf of the Commonwealth for 100 percent of face value. Tax credits shall be refunded within 90 days after the filing date of the income tax return on which the taxpayer applies for the refund.
   4. For purposes of this subsection, the amount of any credit attributable to the purchase of equipment certified by the Virginia Soil and Water Conservation Board as reducing soil compaction or providing more precise pesticide and fertilizer application or injection by a partnership or S corporation shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S corporation.
2. 1. For taxable years beginning before January 1, 2021, any corporation engaged in agricultural production for market which has in place a nutrient management plan approved by the local soil and water conservation district by the required tax return filing date of the corporation shall be allowed a credit against the tax imposed by § 58.1-400 of an amount equaling 25 percent of all expenditures made by such corporation for the purchase of equipment certified by the Virginia Soil and Water Conservation Board as providing more precise pesticide and fertilizer application. Virginia Polytechnic Institute and State University and Virginia State University shall provide at the request of the Virginia Soil and Water Conservation Board technical assistance in determining appropriate specifications for certified equipment which would provide for more precise pesticide and fertilizer application to reduce the potential for adverse environmental impacts. The equipment shall be divided into the following categories: B. 1. For taxable years beginning before January 1, 2021, any corporation engaged in agricultural production for market which has in place a nutrient management plan approved by the local soil and water conservation district by the required tax return filing date of the corporation shall be allowed a credit against the tax imposed by § 58.1-400 of an amount equaling 25 percent of all expenditures made by such corporation for the purchase of equipment certified by the Virginia Soil and Water Conservation Board as providing more precise pesticide and fertilizer application. Virginia Polytechnic Institute and State University and Virginia State University shall provide at the request of the Virginia Soil and Water Conservation Board technical assistance in determining appropriate specifications for certified equipment which would provide for more precise pesticide and fertilizer application to reduce the potential for adverse environmental impacts. The equipment shall be divided into the following categories:
      1. Sprayers for pesticides and liquid fertilizers;
      2. Pneumatic fertilizer applicators;
      3. Monitors, computer regulators, and height adjustable booms for sprayers and liquid fertilizer applicators;
      4. Manure applicators;
      5. Tramline adapters; and
      6. Starter fertilizer banding attachments for planters.
   2. The amount of such credit under subdivision 1 shall not exceed $3,750 or the total amount of the tax imposed by this chapter, whichever is less, in the year of purchase. If the amount of such credit exceeds the taxpayer’s tax liability for such taxable year, the amount which exceeds the tax liability may be carried over for credit against the income taxes of such corporation in the next five taxable years until the total amount of the tax credit has been taken. Credits granted to a partnership or electing small business corporation (S corporation) shall be passed through to the partners or shareholders, respectively.
   3. For purposes of this subsection, the amount of any credit attributable to the purchase of equipment certified by the Virginia Soil and Water Conservation Board as providing more precise pesticide and fertilizer application by a partnership or S corporation shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S corporation.

History. 1990, c. 416; 1996, c. 739; 2021, Sp. Sess. I, c. 272.

Editor’s note.

Acts 2021, Sp. Sess. I, c. 272, cl. 2 provides: “That the provisions of this act shall become effective only for taxable years beginning on and after January 1, 2021.”

Effective date.

This section became effective July 1, 1990, and is applicable for taxable years beginning on or after January 1, 1990.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 272, effective July 1, 2021, added subsection A, redesignated former subsections A through C as subdivisions B 1 through 3, and made related changes; in subdivision B 1, inserted “For taxable years beginning before January 1, 2021”; and in subdivision B 2, inserted “under subdivision 1.” For applicability, see Editor’s note.

§ 58.1-437. Repealed by Acts 1992, c. 394.

Editor’s note.

Acts 1992, c. 394, cl. 2 made the repeal of this section effective July 1, 1992, and applicable for taxable years beginning on and after January 1, 1992.

§ 58.1-438. (Repealed) Not effective.

Editor’s note.

Acts 1992, c. 686, which enacted this section, in cl. 2, provides: “That the provisions of this act shall be effective for taxable years beginning on and after January 1, 1994, provided this act is reenacted by the 1993 Session of the General Assembly, and shall expire for taxable years beginning on and after January 1, 1999.” The 1992 act was not reenacted by the 1993 Session of the General Assembly.

§ 58.1-438.1. Tax credit for vehicle emissions testing equipment, clean-fuel vehicles and certain refueling property.

Any corporation, individual or public service corporation shall be allowed a credit against the income or gross receipts taxes imposed by Subtitle I (§ 58.1-100 et seq.) and Chapter 26 (§ 58.1-2600 et seq.) of Title 58.1 of (i) an amount equal to ten percent of the deduction allowed to such corporation, individual or public service corporation under Section 179A of the Internal Revenue Code for purchases of clean-fuel vehicles principally garaged in Virginia or certain refueling property placed in service in Virginia or ten percent of the costs used to compute the credit under Section 30 of the Internal Revenue Code and (ii) an amount equal to twenty percent of the purchase or lease price paid during the taxable year for equipment certified by the Department of Environmental Quality for vehicle emissions testing, located within, or within any county, city or town adjacent to, any county, city or town wherein implementation of an enhanced vehicle emissions inspection program, as defined in § 46.2-1176 , is required. Credits granted to a partnership or S corporation shall be passed through to the partners or shareholders, respectively. If the credit exceeds the tax liability in a year, the credit may be carried forward up to five succeeding years.

History. 1993, c. 562; 1994, cc. 164, 875; 1995, c. 100; 1997, c. 350; 1998, c. 599.

Editor’s note.

Acts 1997, c. 350, which amended this section, in cl. 2 provides: “That the tax credits created by this act shall be available for any equipment purchased or leased after December 31, 1996.”

Acts 1998, c. 599, which amended this section, in cl. 2 provides: “That the provisions of this act shall be effective for taxable years beginning on and after January 1, 1998.”

Effective date.

Acts 1993, c. 562, cl. 2 provided that this section would be effective for all taxable years beginning on or after January 1, 1993.

§ 58.1-439. Major business facility job tax credit.

1. For taxable years beginning on and after January 1, 1995, but before July 1, 2022, a taxpayer shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.), and 10 (§ 58.1-400 et seq.) of Chapter 3; Chapter 12 (§ 58.1-1200 et seq.); Article 1 (§ 58.1-2500 et seq.) of Chapter 25; or Article 2 (§ 58.1-2620 et seq.) of Chapter 26 as set forth in this section.
2. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
3. A “major business facility” is a company that satisfies the following criteria:
   1. Subject to the provisions of subsections K or L, the establishment or expansion of the company shall result in the creation of at least 50 jobs for qualified full-time employees; the first such 50 jobs shall be referred to as the “threshold amount”; and
   2. The company is engaged in any business in the Commonwealth, except a retail trade business if such trade is the principal activity of an individual facility in the Commonwealth. Examples of types of major business facilities that are eligible for the credit provided under this section include, but are not limited to, a headquarters, or portion of such a facility, where company employees are physically employed, and where the majority of the company’s financial, personnel, legal or planning functions are handled either on a regional or national basis. A company primarily engaged in the Commonwealth in the business of manufacturing or mining; agriculture, forestry or fishing; transportation or communications; or a public utility subject to the corporation income tax shall be deemed to have established or expanded a major business facility in the Commonwealth if it meets the requirements of subdivision 1 during a single taxable year and such facilities are not retail establishments. A major business facility shall also include facilities that perform central management or administrative activities, whether operated as a separate trade or business, or as a separate support operation of another business. Central management or administrative activities include, but are not limited to, general management; accounting; computing; tabulating; purchasing; transportation or shipping; engineering and systems planning; advertising; technical sales and support operations; central administrative offices and warehouses; research, development and testing laboratories; computer-programming, data-processing and other computer-related services facilities; and legal, financial, insurance, and real estate services. The terms used in this subdivision to refer to various types of businesses shall have the same meanings as those terms are commonly defined in the Standard Industrial Classification Manual.
4. For purposes of this section, the “credit year” is the first taxable year following the taxable year in which the major business facility commenced or expanded operations.
5. The Department of Taxation shall make all determinations as to the classification of a major business facility in accordance with the provisions of this section.
6. A “qualified full-time employee” means an employee filling a new, permanent full-time position in a major business facility in the Commonwealth. A “new, permanent full-time position” is a job of an indefinite duration, created by the company as a result of the establishment or expansion of a major business facility in the Commonwealth, requiring a minimum of 35 hours of an employee’s time a week for the entire normal year of the company’s operations, which “normal year” shall consist of at least 48 weeks, or a position of indefinite duration which requires a minimum of 35 hours of an employee’s time a week for the portion of the taxable year in which the employee was initially hired for, or transferred to, the major business facility in the Commonwealth. Seasonal or temporary positions, or a job created when a job function is shifted from an existing location in the Commonwealth to the new major business facility and positions in building and grounds maintenance, security, and other such positions which are ancillary to the principal activities performed by the employees at a major business facility shall not qualify as new, permanent full-time positions.
7. For any major business facility, the amount of credit earned pursuant to this section shall be equal to $1,000 per qualified full-time employee, over the threshold amount, employed during the credit year. The credit shall be allowed ratably, with one-third of the credit amount allowed annually for three years beginning with the credit year. However, for taxable years beginning on or after January 1, 2009, one-half of the credit amount shall be allowed each year for two years. The portion of the $1,000 credit earned with respect to any qualified full-time employee who is employed in the Commonwealth for less than 12 full months during the credit year will be determined by multiplying the credit amount by a fraction, the numerator of which is the number of full months that the qualified full-time employee worked for the major business facility in the Commonwealth during the credit year, and the denominator of which is 12. A separate credit year and a three-year allowance period shall exist for each distinct major business facility of a single taxpayer, except for credits allowed for taxable years beginning on or after January 1, 2009, when a two-year allowance period shall exist for each distinct major business facility of a single taxpayer.
8. The amount of credit allowed pursuant to this section shall not exceed the tax imposed for such taxable year. Any credit not usable for the taxable year the credit was allowed may be, to the extent usable, carried over for the next 10 succeeding taxable years. No credit shall be carried back to a preceding taxable year. In the event that a taxpayer who is subject to the tax limitation imposed pursuant to this subsection is allowed another credit pursuant to any other section of the Code of Virginia, or has a credit carryover from a preceding taxable year, such taxpayer shall be considered to have first utilized any credit allowed which does not have a carryover provision, and then any credit which is carried forward from a preceding taxable year, prior to the utilization of any credit allowed pursuant to this section.
9. No credit shall be earned pursuant to this section for any employee (i) for whom a credit under this section was previously earned by a related party as defined by Internal Revenue Code § 267(b) or a trade or business under common control as defined by Internal Revenue Code § 52(b); (ii) who was previously employed in the same job function in Virginia by a related party as defined by Internal Revenue Code § 267(b) or a trade or business under common control as defined by Internal Revenue Code § 52(b); (iii) whose job function was previously performed at a different location in Virginia by an employee of the taxpayer, a related party as defined by Internal Revenue Code § 267(b), or a trade or business under common control as defined by Internal Revenue Code § 52(b); or (iv) whose job function previously qualified for a credit under this section at a different major business facility on behalf of the taxpayer, a related party as defined by Internal Revenue Code § 267(b), or a trade or business under common control as defined by Internal Revenue Code § 52(b).
10. Subject to the provisions of subsections K or L, recapture of this credit, under the following circumstances, shall be accomplished by increasing the tax in any of the five years succeeding the taxable year in which a credit has been earned pursuant to this section if the number of qualified full-time employees decreases below the average number of qualified full-time employees employed during the credit year. Such tax increase amount shall be determined by (i) recomputing the credit which would have been earned for the original credit year using the decreased number of qualified full-time employees and (ii) subtracting such recomputed credit from the amount of credit previously earned. In the event that the average number of qualifying full-time employees employed at a major business facility falls below the threshold amount in any of the five taxable years succeeding the credit year, all credits earned with respect to such major business facility shall be recaptured. No credit amount will be recaptured more than once pursuant to this subsection. Any recapture pursuant to this section shall reduce credits earned but not yet allowed, and credits allowed but carried forward, before the taxpayer’s tax liability may be increased.
11. In the event that a major business facility is located in an economically distressed area or in an enterprise zone as defined in Chapter 49 (§ 59.1-538 et seq.) of Title 59.1 during a credit year, the threshold amount required to qualify for a credit pursuant to this section and to avoid full recapture shall be reduced from 50 to 25 for purposes of subdivision C 1 and subsection J. An area shall qualify as economically distressed if it is a city or county with an unemployment rate for the preceding year of at least 0.5 percent higher than the average statewide unemployment rate for such year. The Virginia Economic Development Partnership shall identify and publish a list of all economically distressed areas at least annually.
12. For taxable years beginning on or after January 1, 2004, but before January 1, 2006, in the event that a major business facility is located in a severely economically distressed area, the threshold amount required to qualify for a credit pursuant to this section and to avoid full recapture shall be reduced from 100 to 25 for purposes of subdivision C 1 and subsection J. However, the total amount of credit allowable under this subsection shall not exceed $100,000 in aggregate. An area shall qualify as severely economically distressed if it is a city or county with an unemployment rate for the preceding year of at least twice the average statewide unemployment rate for such year. The Virginia Economic Development Partnership shall identify and publish a list of all severely economically distressed areas at least annually.
13. The Tax Commissioner shall promulgate regulations, in accordance with the Administrative Process Act (§ 2.2-4000 et seq.), relating to (i) the computation, carryover, and recapture of the credit provided under this section; (ii) defining criteria for (a) a major business facility, (b) qualifying full-time employees at such facility, and (c) economically distressed areas; and (iii) the computation, carryover, recapture, and redemption of the credit by affiliated companies pursuant to subsection S.
14. The provisions of this section shall apply only in instances where an announcement of intent to establish or expand a major business facility is made on or after January 1, 1994. An announcement of intent to establish or expand a major business facility includes, but is not limited to, a press conference or extensive press coverage, providing information with respect to the impact of the project on the economy of the area where the major business facility is to be established or expanded and the Commonwealth as a whole.
15. The credit allowed pursuant to this section shall be granted to the person who pays taxes for the qualified full-time employees pursuant to Chapter 5 (§ 60.2-500 et seq.) of Title 60.2.
16. No person shall claim a credit allowed pursuant to this section and the credit allowed pursuant to § 58.1-439.2 . Any qualified business firm receiving an enterprise zone job creation grant under § 59.1-547 shall not be eligible to receive a major business facility job tax credit pursuant to this section for any job used to qualify for the enterprise zone job creation grant.
17. No person operating a business in the Commonwealth pursuant to Chapter 29 (§ 59.1-364 et seq.) of Title 59.1 shall claim a credit pursuant to this section.
18. Notwithstanding subsection O, a taxpayer may, for the purpose of determining the number of qualified full-time employees at a major business facility, include the employees of a contractor or a subcontractor if such employees are permanently assigned to the taxpayer’s major business facility. If the taxpayer includes the employees of a contractor or subcontractor in its total of qualified full-time employees, it shall enter into a contractual agreement with the contractor or subcontractor prohibiting the contractor or subcontractor from also claiming these employees in order to receive a credit given under this section. The taxpayer shall provide evidence satisfactory to the Department of Taxation that it has entered into such a contract.
19. For purposes of satisfying the criteria of subdivision C 1, two or more affiliated companies may elect to aggregate the number of jobs created for qualified full-time employees as the result of the establishment or expansion by the individual companies in order to qualify for the credit allowed pursuant to this section. For purposes of this subsection, “affiliated companies” means two or more companies related to each other such that (i) one company owns at least 80 percent of the voting power of the other or others or (ii) at least 80 percent of the voting power of two or more companies is owned by the same interests.
20. The General Assembly of Virginia finds that modern business infrastructure allows businesses to locate their administrative or manufacturing facilities with minimal regard to the location of markets or the transportation of raw materials and finished goods, and that the economic vitality of the Commonwealth would be enhanced if such facilities were established in Virginia. Accordingly, the provisions of this section targeting the credit to major business facilities and limiting the credit to those companies which establish a major business facility in Virginia are integral to the purpose of the credit earned pursuant to this section and shall not be deemed severable.
21. For taxable years beginning on and after January 1, 2019, and notwithstanding the provisions of § 58.1-3 or any other provision of law, the Department of Taxation, in consultation with the Virginia Economic Development Partnership, shall publish the following information by November 1 of each year for the 12-month period ending on the preceding December 31:
    1. The location of sites used for major business facilities for which a credit was claimed;
    2. The North American Industry Classification System codes used for the major business facilities for which a credit was claimed;
    3. The number of qualified full time employees for whom a credit was claimed; and
    4. The total cost to the Commonwealth’s general fund of the credits claimed.Such information shall be published by the Department, regardless of how few taxpayers claimed the tax credit, in a manner that prevents the identification of particular taxpayers, reports, returns, or items.

History. 1994, cc. 750, 768; 1995, c. 365; 1996, c. 874; 1997, cc. 786, 852; 1998, c. 367; 2004, cc. 170, 619; 2005, cc. 863, 884; 2009, c. 753; 2010, cc. 363, 469; 2012, cc. 93, 445, 475; 2015, c. 451; 2019, c. 699.

Cross references.

As to the creation, administration, and management of the Virginia Export Fund, see § 2.2-2309 .

Editor’s note.

Acts 1997, cc. 786 and 852, cl. 2 provides: “That the provisions of this act amending or adding subsections F, O and P [now subsections F, P and Q] of § 58.1-439 of the Code of Virginia shall apply to the establishment or expansion of a major business facility commenced on or after January 1, 1997. The provision of this act adding subsection Q shall be effective for taxable years beginning on or after January 1, 1995; however, in the case of a taxpayer which includes employees of a contractor or subcontractor as qualified full-time employees in computing its credit, any credit which is related to the establishment or expansion of all major business facilities during a twenty-four month period ending between January 1, 1995, and December 31, 1996, shall be limited to $750,000 and shall be further limited to taxpayers which established major business facilities in a city with a population of more than 170,000 and less than 172,000. A taxpayer subject to the foregoing limitation may elect the credit year in which it counts qualified full-time employees for purposes of computing its credit. All other provisions of this act are declaratory of existing law.”

Acts 1998, c. 367, which amended this section, in cl. 2 provides: “That the provisions of this act shall apply to the establishment or expansion of any major business facility established or expanded on or after January 1, 1997.”

Acts 2010, cc. 363 and 469, cl. 2 provides: “That the tax credits pursuant to this act shall only be allowed for qualified full-time employees as defined in § 58.1-439 of the Code of Virginia first hired on or after January 1, 2010.”

Acts 2012, c. 445, cl. 2 provides: “That the amendment to § 58.1-439 of the Code of Virginia pursuant to the provisions of this act shall be effective for taxable years beginning on or after January 1, 2012, and the amendment to § 59.1-547 of the Code of Virginia pursuant to the provisions of this act shall be effective beginning with the 2012 grant year for enterprise zone job creation grants.”

The 2004 amendments.

The 2004 amendment by c. 170 substituted “2010” for “2005” in subsection A; and made stylistic changes throughout.

The 2004 amendment by c. 619 substituted “subsections K or L” for “subsection K” in subdivision C 1 and near the beginning of subsection J; inserted present subsection L, and redesignated the following subsections accordingly, and changed internal references accordingly; and made stylistic changes throughout.

The 2005 amendments.

The 2005 amendments by cc. 863 and 884 are identical, and substituted “the” for “this” throughout subsections F, G and T, and inserted “or in Chapter 49 (§ 59.1-538 et seq.) of Title 59.1” in subsection K.

The 2009 amendments.

The 2009 amendment by c. 753 substituted “January 1, 2020” for “January 1, 2010” in subsection A; and in subsection G, inserted the third sentence and added the language beginning “except for credits allowed” at the end of the last sentence.

The 2010 amendments.

The 2010 amendments by cc. 363 and 469 are identical, and twice substituted “50 jobs” for “100 jobs” in subdivision C 1; twice substituted “December 31, 2012” for “December 31, 2010” in subsection G; and in the first sentence of subsection K, deleted “in § 59.1-271 or” following “defined,” and substituted “50 to 25” for “100 to 50.” For applicabilty, see Editor’s note.

The 2012 amendments.

The 2012 amendments by cc. 93 and 475 are identical, and deleted “of this title” following “Chapter 26” in subsection A; and in subsection G, substituted “December 31, 2014” for “December 31, 2012” in the third and last sentences.

The 2012 amendment by c. 445, effective January 1, 2012, and applicable for taxable years beginning on or after January 1, 2012, deleted “of this title” following “Article 2 (§ 58.1-2620 et seq.) of Chapter 26” in subsection A; and added the last sentence in subsection P.

The 2015 amendments.

The 2015 amendment by c. 451 in subsection G, substituted “on or after January 1, 2009” for “January 1, 2009, through December 31, 2014” twice.

The 2019 amendments.

The 2019 amendment by c. 699, in subsection A, substituted “July 1, 2022” for “January 1, 2020”; and added subsection U.

Law Review.

For an article, “Taxation,” see 31 U. Rich. L. Rev. 1221 (1997).

For 2003/2004 survey of the law of taxation, see 39 U. Rich. L. Rev. 413 (2004).

For article, “Medical Malpractice Law,” see 45 U. Rich. L. Rev. 319 (2010).

For article, “Taxation,” see 45 U. Rich. L. Rev. 377 (2010).

For article, “Taxation,” see 54 U. Rich. L. Rev. 133 (2019).

§ 58.1-439.1. Repealed by Acts 2016, c. 305, cl. 2.

Editor’s note.

Acts 2016, c. 305, cl. 3 provides: “That this act shall in no way alter or affect any (i) tax credit or tax benefit or other tax attribute allowed or earned under any section repealed by this act or (ii) tax liability or obligation pursuant to any such section.”

Former § 58.1-439.1 , pertaining to Clean fuel vehicle and advanced cellulosic biofuels job creation tax credit, derived from Acts 1995, c. 365; 2006, c. 238; 2009, c. 730; 2011, c. 176.

§ 58.1-439.2. Coalfield employment enhancement tax credit.

1. For tax years beginning on and after January 1, 1996, but before January 1, 2017, and on and after January 1, 2018, but before January 1, 2022, any person who has an economic interest in coal mined in the Commonwealth shall be allowed a credit against the tax imposed by § 58.1-400 and any other tax imposed by the Commonwealth in accordance with the following:
   1. For metallurgical coal mined by underground methods, the credit amount shall be based on the seam thickness as follows: Click to viewThe seam thickness shall be based on the weighted average isopach mapping of actual metallurgical coal thickness by mine as certified by a professional engineer. Copies of such certification shall be maintained by the person qualifying for the credit under this section for a period of three years after the credit is applied for and received and shall be available for inspection by the Department of Taxation. The Department of Energy is hereby authorized to audit all information upon which the isopach mapping is based.
   2. For metallurgical coal mined by surface mining methods, a credit in the amount of 40 cents ($0.40) per ton for coal sold in 1996, and each year thereafter.
2. In addition to the credit allowed in subsection A, for tax years beginning on and after January 1, 1996, but before January 1, 2022, any person who is a producer of coalbed methane shall be allowed a credit in the amount of one cent ($0.01) per million BTUs of coalbed methane produced in the Commonwealth against the tax imposed by § 58.1-400 and any other tax imposed by the Commonwealth on such person.
3. For purposes of this section, economic interest is the same as the economic ownership interest required by § 611 of the Internal Revenue Code which was in effect on December 31, 1977. A party who only receives an arm’s length royalty shall not be considered as having an economic interest in coal mined in the Commonwealth.
4. If the credit exceeds the person’s state tax liability for the tax year, the excess shall be redeemable by the Tax Commissioner on behalf of the Commonwealth for 90 percent of the face value within 90 days after filing the return; however, for credit earned in tax years beginning on and after January 1, 2002, but before January 1, 2022, such excess shall be redeemable by the Tax Commissioner on behalf of the Commonwealth for 85 percent of the face value within 90 days after filing the return. The remaining 10 or 15 percent of the value of the credit being redeemed, as applicable for such tax year, shall be deposited by the Commissioner in a regional economic development fund administered by the Virginia Coalfield Economic Development Authority to be used for regional economic diversification in accordance with guidelines developed by the Virginia Coalfield Economic Development Authority and the Virginia Economic Development Partnership.
5. No person may utilize more than one of the credits on a given ton of coal described in subsection A. No person may claim a credit pursuant to this section for any ton of coal for which a credit has been claimed under § 58.1-433.1 or 58.1-2626.1 . Persons who qualify for the credit may not apply such credit to their tax returns prior to January 1, 1999, and only one year of credits shall be allowed annually beginning in 1999.
6. The amount of credit allowed pursuant to subsection A shall be the amount of credit earned multiplied by the person’s employment factor. The person’s employment factor shall be the percentage obtained by dividing the total number of coal mining jobs of the person filing the return, including the jobs of the contract operators of such person, as reflected in the annual tonnage reports filed with the Department of Energy for the year in which the credit was earned by the total number of coal mining jobs of such persons or operators as reflected in the annual tonnage reports for the year immediately prior to the year in which the credit was earned. In no case shall the credit claimed exceed that amount set forth in subsection A.
7. The tax credit allowed under this section shall be claimed in the third taxable year following the taxable year in which the credit was earned and allowed.
8. As used in this section, “metallurgical coal” means bituminous coal used for the manufacture of iron and steel with calorific value of 14,000 BTUs or greater on a moisture and ash free basis.

Seam Thickness Credit per Ton 36´´ and under $2.00 Above 36´´ $1.00

History. 1995, c. 775; 1996, c. 1034; 1999, c. 971; 2000, cc. 91, 1066; 2006, cc. 788, 803; 2011, c. 851; 2012, cc. 309, 649; 2018, cc. 853, 855; 2021, Sp. Sess. I, cc. 532, 553, 554.

The number of this section was assigned by the Virginia Code Commission, the number in the 1995 act having been 58.1-439.1 .

Editor’s note.

Acts 1996, c. 1034, which rewrote this section, provides in cl. 2 that the provisions of the 1996 act shall become applicable for all taxable years beginning on or after January 1, 1996, through December 31, 2001; however, credits earned for such taxable years may continue to be utilized after taxable year 2001 as provided in the 1996 act. However, the amendments by Acts 2000, cc. 91 and 1066, and subsequently by Acts 2006, cc. 788 and 803, extended the sunset provisions in subsection A.

Acts 2011, c. 851, cl. 3 provides: “That the provisions of this act are effective for taxable periods on or after January 1, 2011.”

Acts 2018, cc. 853 and 855, cl. 2 provides: “That the Department of Taxation shall develop and make publicly available guidelines implementing the provisions of this act. In developing such guidelines, the Department shall not be subject to the provisions of the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).”

Acts 2021, Sp. Sess. I, c. 532, cl. 2 provides: “That the provisions of this act shall become effective on October 1, 2021.”

Acts 2021, Sp. Sess. I, cc. 553 and 554, cl. 3 provides: “That the Department of Mines, Minerals and Energy, in coordination with the Virginia Coalfield Economic Development Authority, the Virginia Economic Development Partnership Authority, the Virginia Employment Commission, the Southwest Virginia Workforce Development Board, and the Council on Environmental Justice, shall convene a stakeholder process, which shall include public meetings and public comment opportunities, and provide an interim report to the General Assembly no later than September 1, 2021, and a final report on December 1, 2021, on recommendations for how the Commonwealth can provide economic transition support to the coalfield region, with a particular focus on workforce redevelopment, economic diversification, reclamation of coal-impacted lands and brownfields, community revitalization, infrastructure improvements, and clean energy development.”

The 1999 amendment inserted “58.1-433.1” in subsection E.

The 2000 amendments.

The 2000 amendments by cc. 91 and 1066 are identical, and in the introductory paragraph of subsection A, substituted “2008” for “2002”; in subsection D, added “however, for credit earned in tax years beginning on and after January 1, 2002, such excess shall be redeemable by the Tax Commissioner on behalf of the Commonwealth for eighty-five percent of the face value within ninety days after filing the return” at the end of the first sentence and inserted “or fifteen” and “as applicable for such tax year” in the second sentence; and in subsection G, added subdivisions 7 through 12.

The 2006 amendments.

The 2006 amendments by cc. 788 and 803 are identical, and substituted “January 1, 2015” for “January 1, 2008” in subsection A; and added subdivisions G 13 through G 19.

The 2011 amendments.

The 2011 amendment by c. 851, effective for taxable periods on or after January 1, 2011, in subdivision A 2 and in subsection D, made minor stylistic changes; in subsection E, deleted “§ 58.1-433 ” following “claimed under”; rewrote subsection G, which was a schedule for percentage of credit allowed in tax years 1996 through 2014 and respective claiming years.

The 2012 amendments.

The 2012 amendments by cc. 309 and 649 are identical, and in subsection A, substituted “but before January 1, 2017” for “but before January 1, 2015” in the introductory paragraph and inserted “($0.40)” following “40 cents” in subdivision 2; and inserted “($0.01)” following “one cent” in subsection B.

The 2018 amendments.

The 2018 amendments by cc. 853 and 855 are identical, and in subsection A, inserted “and on and after January 1, 2018, but before January 1, 2023” in subdivisions A 1 and A 2, and inserted “metallurgical” preceding “coal”; in subsection B, inserted “but before January 1, 2023”; in subsection D, substituted “Virginia Coalfield” for “Coalfields”; and added subsection H.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 532, effective October 1, 2021, in subdivision A 1 in the second paragraph and in subsection F, substituted “Department of Energy” for “Department of Mines, Minerals and Energy.”

The 2021 amendment by Sp. Sess. I, cc. 553 and 554, effective July 1, 2021, are identical, and substituted “January 1, 2022” for “January 1, 2023” in the introductory language for subsection A and subsection B; and inserted “but before January 1, 2022” in the first sentence of subsection D.

Law Review.

For 2006 survey article, “Taxation,” see 41 U. Rich. L. Rev. 283 (2006).

§ 58.1-439.3. Repealed by Acts 2009, c. 34, cl. 2.

§ 58.1-439.4. Day-care facility investment tax credit.

1. For taxable years beginning on and after January 1, 1997, any taxpayer shall be allowed a credit against the taxes imposed by § 58.1-320 or 58.1-400 in an amount equal to 25 percent of all expenditures paid or incurred by such taxpayer in such taxable year for planning, site preparation, construction, renovation, or acquisition of facilities for the purpose of establishing a child day-care facility to be used primarily by the children of such taxpayer’s employees, and equipment installed for permanent use within or immediately adjacent to such facility, including kitchen appliances, to the extent that such equipment or appliances are necessary in the use of such facility for purposes of child day-care; however, the amount of credit allowed to any taxpayer under this section shall not exceed $25,000. If two or more taxpayers share in the cost of establishing the child day-care facility for the children of their employees, each such taxpayer shall be allowed such credit in relation to the respective share paid or incurred by such taxpayer, of the total expenditures for the facility in such taxable year.
2. The credits provided under this section shall be allowed only if (i) the child day-care facility shall be operated under the authority of a license issued by the Superintendent of Public Instruction pursuant to § 22.1-289.011, (ii) an application for a building permit for the facility is made after July 1, 1996, and (iii) the Tax Commissioner approves a taxpayer’s application for a credit. Proper applications submitted to the Department for the credit shall be approved in the order received. For each application approved for credit it shall be assumed that the amount of the credit will be $25,000, and the amount of the credit will be taken in the fiscal year in which the application is approved and the following two fiscal years. Approval of applications shall be limited to those that are assumed to result in no more than $100,000 of credits in any fiscal year based on the assumptions set forth in this subsection.
3. Any tax credit not usable for the taxable year may be carried over to the extent usable for the next three taxable years; however, the balance of a credit shall not be claimed for any succeeding taxable year in which the child day-care facility is operated for purposes of child day-care for less than six months.
4. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.

History. 1996, c. 497; 2020, cc. 860, 861.

Editor’s note.

Acts 2020, cc. 860 and 861, cl. 3 provides: “That the provisions of the first and second enactments of this act shall become effective on July 1, 2021, except that § 22.1-289.04 of the Code of Virginia, as created by this act, shall become effective in due course.”

The 2020 amendments.

The 2020 amendments by cc. 860 and 861, effective July 1, 2021, are identical, and substituted “Superintendent of Public Instruction pursuant to § 22.1-289.011” for “Commissioner of Social Services pursuant to § 63.2-1701 ” in subsection B, first sentence, clause (i).

§ 58.1-439.5. Agricultural best management practices tax credit.

1. 1. As used in this section, “agricultural best management practice” means a practice approved by the Virginia Soil and Water Conservation Board that will provide a significant improvement to water quality in the state’s streams and rivers and the Chesapeake Bay and is consistent with other state and federal programs that address agricultural, nonpoint source pollution management.A detailed list of the standards and criteria for agricultural best management practices eligible for credit shall be found in the most recently approved “Virginia Agricultural BMP Implementation Manual” published by the Department of Conservation and Recreation. A. 1. As used in this section, “agricultural best management practice” means a practice approved by the Virginia Soil and Water Conservation Board that will provide a significant improvement to water quality in the state’s streams and rivers and the Chesapeake Bay and is consistent with other state and federal programs that address agricultural, nonpoint source pollution management.A detailed list of the standards and criteria for agricultural best management practices eligible for credit shall be found in the most recently approved “Virginia Agricultural BMP Implementation Manual” published by the Department of Conservation and Recreation.
   2. For all taxable years beginning on and after January 1, 1998, but before January 1, 2025, any corporation engaged in agricultural production for market that has in place a soil conservation plan approved by the local Soil and Water Conservation District (SWCD) shall be allowed a refundable credit against the tax imposed by § 58.1-400 of an amount equaling 25 percent of the first $100,000 expended for agricultural best management practices by the corporation.
   3. For all taxable years beginning on and after January 1, 2021, but before January 1, 2025, any corporation that is engaged in agricultural production for market, or that has equines that create needs for agricultural best management practices to reduce nonpoint source pollutants, and has in place a resource management plan approved by the local SWCD, shall be allowed a refundable credit against the tax imposed by § 58.1-400 in an amount equaling 50 percent of the first $100,000 expended for agricultural best management practices implemented by the corporation on the acreage included in the resource management plan.
2. 1. Any eligible practice approved by the local Soil and Water Conservation District Board shall be completed within the taxable year in which the credit is claimed. After the practice installation has been completed, the local SWCD Board shall certify the practice as approved and completed, and eligible for credit. The applicant shall forward the certification to the Department of Taxation on forms provided by the Department. The credit shall be allowed only for expenditures made by the taxpayer from funds of his own sources. B. 1. Any eligible practice approved by the local Soil and Water Conservation District Board shall be completed within the taxable year in which the credit is claimed. After the practice installation has been completed, the local SWCD Board shall certify the practice as approved and completed, and eligible for credit. The applicant shall forward the certification to the Department of Taxation on forms provided by the Department. The credit shall be allowed only for expenditures made by the taxpayer from funds of his own sources.
   2. To the extent that a taxpayer participates in the Virginia Agricultural Best Management Practices Cost-Share Program, the taxpayer may claim the credit under subdivision A 2 for any remaining liability after such cost-share, but may not claim the credit under subdivision A 3 for any such remaining liability, subject to the other provisions of this section. For purposes of this subdivision, “liability after such cost-share” means the limitation of the tax credits to the total costs incurred by the taxpayer for agricultural best management practices reduced by any funding received by participation in the Virginia Agricultural Best Management Practices Cost-Share Program.
3. 1. The aggregate amount of such credit claimed under subdivisions A 2 and 3 shall not exceed $75,000 or the total amount of the tax imposed by this chapter, whichever is less, in the year the project was completed, as certified by the Board. Any taxpayer claiming a tax credit under this section shall not claim a credit under any similar Virginia law for costs related to the same eligible practices. A taxpayer may not claim credit for the same practice in the same management area under both subdivisions A 2 and A 3. C. 1. The aggregate amount of such credit claimed under subdivisions A 2 and 3 shall not exceed $75,000 or the total amount of the tax imposed by this chapter, whichever is less, in the year the project was completed, as certified by the Board. Any taxpayer claiming a tax credit under this section shall not claim a credit under any similar Virginia law for costs related to the same eligible practices. A taxpayer may not claim credit for the same practice in the same management area under both subdivisions A 2 and A 3.
   2. If the amount of the credit exceeds the taxpayer’s liability for such taxable year, the excess shall be refunded by the Tax Commissioner. Tax credits shall be refunded by the Tax Commissioner on behalf of the Commonwealth for 100 percent of face value. Tax credits shall be refunded within 90 days after the filing date of the income tax return on which the taxpayer applies for the refund.
4. For purposes of this section, the amount of any credit attributable to agricultural best management practices by a partnership or electing small business corporation (S Corporation) shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S Corporation.

History. 1996, c. 629; 2018, c. 556; 2021, Sp. Sess. I, cc. 39, 40.

The number of this section was assigned by the Virginia Code Commission, the number in the 1996 act having been 58.1-439.4

Editor’s note.

Acts 2021, Sp. Sess. I, cc. 39 and 40, cl. 2 provides: “That the provisions of the first enactment of this act shall apply only to taxable years beginning on and after January 1, 2021, and shall not modify any other provisions for prior taxable years.”

Acts 2021, Sp. Sess. I, cc. 39 and 40, cl. 3 provides: “That the total combined amount of credits available pursuant to §§ 58.1-339.3 and 58.1-439.5 of the Code of Virginia, as amended by this act, for fiscal years beginning on and after January 1, 2021, shall not exceed an aggregate of $2 million annually.”

The 2018 amendments.

The 2018 amendment by c. 556 divided former subsection C into subdivisions C 1 and C 2; added the last sentence in subdivision C 1; and in subdivision C 2, substituted “shall be refunded by the Tax Commissioner” for “may be carried over for credit against income taxes in the next five taxable years until the total amount of the tax credit has been taken” and added the last two sentences.

The 2021 Sp. Sess. I amendments.

The 2021 amendments by Sp. Sess. I, cc. 39 and 40, effective July 1, 2021, are identical, and rewrote subsection A as subdivision A 1 and added subdivisions A 2 and 3; redesignated former subsection B as subdivision B 1 and inserted “eligible” in the first sentence; added subdivision B 2; and in subdivision C 1, inserted “aggregate” and “claimed under subdivisions A 2 and 3” and substituted “$75,000 or the total amount” for “$17,500 or the total amount” in the first sentence, and added the last sentence. For applicability, see Editor’s notes.

§ 58.1-439.6. Worker retraining tax credit.

1. As used in this section, unless the context clearly requires otherwise:“Eligible worker retraining” means retraining of a qualified employee that promotes economic development in the form of (i) noncredit courses at any of the Commonwealth’s comprehensive community colleges or a private school or (ii) worker retraining programs undertaken through an apprenticeship agreement approved by the Commissioner of Labor and Industry.“Manufacturing” means processing, manufacturing, refining, mining, or converting products for sale or resale.“Qualified employee” means an employee of an employer eligible for a credit under this section in a full-time position requiring a minimum of 1,680 hours in the entire normal year of the employer’s operations if the standard fringe benefits are paid by the employer for the employee. Employees in seasonal or temporary positions shall not qualify as qualified employees. A qualified employee (i) shall not be a relative of any owner or the employer claiming the credit and (ii) shall not own, directly or indirectly, more than five percent in value of the outstanding stock of a corporation claiming the credit. As used herein, “relative” means a spouse, child, grandchild, parent or sibling of an owner or employer, and “owner” means, in the case of a corporation, any person who owns five percent or more of the corporation’s stock.“STEM or STEAM discipline” means a science, technology, engineering, mathematics, or applied mathematics related discipline as certified by the Virginia Economic Development Partnership Authority in consultation with the Superintendent of Public Instruction. The term shall include a health care-related discipline.
2. 1. For taxable years beginning on and after January 1, 1999, but prior to January 1, 2019, an employer shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.), and 10 (§ 58.1-400 et seq.) of Chapter 3; Chapter 12 (§ 58.1-1200 et seq.); Article 1 (§ 58.1-2500 et seq.) of Chapter 25; or Article 2 (§ 58.1-2620 et seq.) of Chapter 26 in an amount equal to 30 percent of all expenditures paid or incurred by the employer during the taxable year for eligible worker retraining. For taxable years beginning on or after January 1, 2013, but prior to January 1, 2019, if the eligible worker retraining consists of courses conducted at a private school, the credit shall be in an amount equal to the cost per qualified employee, but the amount of the credit shall not exceed $200 per qualified employee annually, or $300 per qualified employee annually if the eligible worker retraining includes retraining in a STEM or STEAM discipline, including but not limited to industry-recognized credentials, certificates, and certifications. B. 1. For taxable years beginning on and after January 1, 1999, but prior to January 1, 2019, an employer shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.), and 10 (§ 58.1-400 et seq.) of Chapter 3; Chapter 12 (§ 58.1-1200 et seq.); Article 1 (§ 58.1-2500 et seq.) of Chapter 25; or Article 2 (§ 58.1-2620 et seq.) of Chapter 26 in an amount equal to 30 percent of all expenditures paid or incurred by the employer during the taxable year for eligible worker retraining. For taxable years beginning on or after January 1, 2013, but prior to January 1, 2019, if the eligible worker retraining consists of courses conducted at a private school, the credit shall be in an amount equal to the cost per qualified employee, but the amount of the credit shall not exceed $200 per qualified employee annually, or $300 per qualified employee annually if the eligible worker retraining includes retraining in a STEM or STEAM discipline, including but not limited to industry-recognized credentials, certificates, and certifications.
   2. For taxable years beginning on and after January 1, 2018, but prior to January 1, 2019, a business primarily engaged in manufacturing shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.) and 10 (§ 58.1-400 et seq.) in an amount equal to 35 percent of its direct costs incurred during the taxable year in conducting orientation, instruction, and training in the Commonwealth relating to the manufacturing activities undertaken by the business. In no event shall the credit allowed to a business under this subdivision exceed $2,000 for any taxable year. The Department shall allow credit only for programs that (i) provide orientation, instruction, and training solely to students in grades six through 12; (ii) are coordinated with the local school division; and (iii) are conducted either at a plant or facility owned, leased, rented, or otherwise used by the business or at a public middle or high school in Virginia. The taxpayer shall include in its direct costs only the following expenditures: (a) salaries or wages paid to instructors and trainers, prorated for the period of instruction or training; (b) costs for orientation, instruction, and training materials; (c) amounts paid for machinery and equipment used primarily for such instruction and training; and (d) the cost of leased or rented space used primarily for conducting the program.
   3. The total amount of tax credits granted under this section for each fiscal year shall not exceed $1 million.
3. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
4. 1. An employer shall be allowed a credit pursuant to subdivision B 1 only for those courses at a comprehensive community college or a private school for which courses have been certified as eligible worker retraining to the Department of Taxation by the Virginia Economic Development Partnership Authority. The Virginia Economic Development Partnership Authority shall review requests for certification submitted by employers and shall advise the Tax Commissioner whether a course or program qualifies as eligible worker retraining and, if it qualifies, whether the course or program is in a STEM or STEAM discipline. D. 1. An employer shall be allowed a credit pursuant to subdivision B 1 only for those courses at a comprehensive community college or a private school for which courses have been certified as eligible worker retraining to the Department of Taxation by the Virginia Economic Development Partnership Authority. The Virginia Economic Development Partnership Authority shall review requests for certification submitted by employers and shall advise the Tax Commissioner whether a course or program qualifies as eligible worker retraining and, if it qualifies, whether the course or program is in a STEM or STEAM discipline.
   2. A business shall be allowed the credit pursuant to subdivision B 2 only for an orientation, instruction, and training program that has been approved by the local school division and certified as eligible by the Virginia Economic Development Partnership Authority. A business seeking a tax credit under subdivision B 2 shall include in its application reviewed by the Virginia Economic Development Partnership Authority an approval from the local school division. The Virginia Economic Development Partnership Authority shall review requests for certification submitted by businesses and shall advise the Tax Commissioner whether an orientation, instruction, and training program qualifies as relating to the manufacturing activities undertaken by the business and meets other applicable requirements.
   3. The Tax Commissioner shall develop guidelines (i) establishing procedures for claiming the credit provided by this section, (ii) defining eligible worker retraining, which shall include only those courses and programs that are substantially related to the duties of a qualified employee or that enhance the qualified employee’s job-related skills, and that promote economic development, and (iii) providing for the allocation of credits among employers and businesses requesting credits in the event that the amount of credits for which requests are made exceeds the available amount of credits in any year. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.).
5. Any credit not usable for the taxable year may be carried over for the next three taxable years. The amount of credit allowed pursuant to this section shall not exceed the tax imposed for such taxable year. No credit shall be carried back to a preceding taxable year. If an employer or business that is subject to the tax limitation imposed pursuant to this subsection is allowed another credit pursuant to any other section of this Code, or has a credit carryover from a preceding taxable year, such employer or business shall be considered to have first utilized any credit allowed which does not have a carryover provision, and then any credit which is carried forward from a preceding taxable year, prior to the utilization of any credit allowed pursuant to this section.
6. No employer or business shall be eligible to claim a credit under this section for worker retraining or manufacturing orientation, instruction, and training undertaken by any program operated, administered, or paid for by the Commonwealth.
7. The Department shall review certifications received from the Virginia Economic Development Partnership Authority pursuant to subsection D and, if it determines a taxpayer meets the applicable requirements, shall issue a credit in the amount specified in subsection B.
8. The Virginia Economic Development Partnership Authority shall report annually to the Chairmen of the House Committee on Finance and the Senate Committee on Finance and Appropriations on the status and implementation of the credit established by this section, including certifications for eligible worker retraining.

History. 1997, c. 726; 2013, cc. 294, 482; 2014, c. 734; 2017, cc. 177, 454; 2018, c. 500; 2019, c. 189.

Editor’s note.

At the direction of the Virginia Code Commission, “comprehensive” was inserted preceding “community colleges” or similar language in the definition of “Eligible worker retraining” in subsection A and in subsection D to conform to Acts 2016, c. 588.

The Virginia Code Commission authorized the substitution of “the Chairmen of the House Committee on Finance and the Senate Committee on Finance and Appropriations” for “the Chairmen of the House Finance and Senate Finance Committees.” March 10, 2021.

The 2013 amendments.

The 2013 amendment by c. 294 added the last paragraph in subsection A; in subsection B, inserted “but prior to January 1, 2018,” in the first sentence and “for taxable years beginning prior to January 1, 2013” near the beginning of the second sentence and added the next-to-last sentence; and added “and, if it qualifies, whether the course or program is in a STEM or STEAM discipline” at the end of the last sentence in subsection D.

The 2013 amendment by c. 482, effective January 1, 2014, in subsection B, deleted “of this title” following “of Chapter 26,” and made a minor stylistic change; substituted “Small Business and Supplier Diversity” for “Business Assistance” twice in subsection D and once in subsection G. At the direction of the Virginia Code Commission, “Small Business and Supplier Diversity” was substituted for “Business Assistance” in the definition of “STEM or STEAM discipline” as added by c. 294 to conform to c. 482.

The 2014 amendments.

The 2014 amendment by c. 734, in the definition of “Eligible worker restraining” in subsection A, substituted “Commissioner of Labor and Industry” for “Virginia Apprenticeship Council.”

The 2017 amendments.

The 2017 amendments by cc. 177 and 454 are nearly identical, and substituted “Virginia Economic Development Partnership Authority” for “Department of Small Business and Supplier Diversity” and “Director of Department of Small Business and Supplier Diversity” throughout the section; and substituted “January 1, 2022” for “January 1, 2018” in the first sentence of subsection B.

The 2018 amendments.

The 2018 amendment by c. 500, in subsection A, added the definition of “Manufacturing,” and in the definition of “STEM or STEAM discipline” substituted “certified” for “determined”; redesignated subsection B as subdivisions B 1 and B 3 and added subdivision B 2; in subdivision B 3, deleted “to employers” following “credits granted” and substituted “$1 million” for “$2,500,000” at the end; rewrote subdivision D 1 and added subdivisions D 2 and D 3; in subsection E, inserted “or business” twice; in subsection F, inserted “or business” and “or manufacturing orientation, instruction, and training”; added subsection G; and made stylistic changes.

The 2019 amendments.

The 2019 amendment by c. 189, in subdivisions B 1 and B 2, substituted “2019” for “2022” in the first sentence; in subdivision B1, deleted the former second sentence, which read: “However, for taxable years beginning prior to January 1, 2013, if the eligible worker retraining consists of courses conducted at a private school, the credit shall be in an amount equal to the cost per qualified employee, but the amount of the credit shall not exceed $100 per qualified employee annually” and inserted “but prior to January 1, 2019,” in the second sentence.

Law Review.

For an article, “Taxation,” see 31 U. Rich. L. Rev. 1221 (1997).

§ 58.1-439.6:1. Worker training tax credit.

1. As used in this section, unless the context requires a different meaning:“Eligible worker training” means the training of a qualified employee or non-highly compensated worker in the form of (i) credit or noncredit courses at any institution recognized on the Eligible Training Provider List that results in the qualified employee or non-highly compensated worker receiving a workforce credential or (ii) instruction or training that is part of an apprenticeship agreement approved by the Commissioner of Labor and Industry.“Industry-recognized” means demonstrating competency or proficiency in the technical and occupational skills identified as necessary for performing functions of an occupation based on standards developed or endorsed by employers or industry organizations.“Manufacturing” means processing, manufacturing, refining, mining, or converting products for sale or resale.“Non-highly compensated worker” means a worker whose income is less than Virginia’s median wage, as reported by the Virginia Employment Commission, in the taxable year prior to applying for the credit. “Non-highly compensated worker” does not include an owner or relative.“Owner” means an individual who owns, directly or indirectly, more than a five percent interest in the business claiming the credit.“Qualified employee” means an employee of a business eligible for a credit under this section in a full-time position requiring a minimum of 1,680 hours in the entire normal year of the business’ operations if the standard fringe benefits are paid by the business for the employee. Employees in seasonal or temporary positions shall not qualify as qualified employees. “Qualified employee” does not include an owner or relative.“Relative” means a spouse, child, grandchild, parent, or sibling of an owner.“Workforce credential” means an industry-recognized (i) certification, (ii) certificate, or (iii) degree.
2. 1. For taxable years beginning on and after January 1, 2019, but prior to July 1, 2022, a business shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.), and 10 (§ 58.1-400 et seq.) of Chapter 3; Chapter 12 (§ 58.1-1200 et seq.); Article 1 (§ 58.1-2500 et seq.) of Chapter 25; or Article 2 (§ 58.1-2620 et seq.) of Chapter 26 in an amount equal to 35 percent of expenses incurred by the business during the taxable year for eligible worker training. If the recipient of the training is a qualified employee, the credit shall not exceed $500 per qualified employee annually. If the recipient of the training is a non-highly compensated worker, the credit shall not exceed $1,000 per non-highly compensated worker annually. B. 1. For taxable years beginning on and after January 1, 2019, but prior to July 1, 2022, a business shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.), and 10 (§ 58.1-400 et seq.) of Chapter 3; Chapter 12 (§ 58.1-1200 et seq.); Article 1 (§ 58.1-2500 et seq.) of Chapter 25; or Article 2 (§ 58.1-2620 et seq.) of Chapter 26 in an amount equal to 35 percent of expenses incurred by the business during the taxable year for eligible worker training. If the recipient of the training is a qualified employee, the credit shall not exceed $500 per qualified employee annually. If the recipient of the training is a non-highly compensated worker, the credit shall not exceed $1,000 per non-highly compensated worker annually.
   2. For taxable years beginning on and after January 1, 2019, but prior to January 1, 2022, a business primarily engaged in manufacturing shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.) and 10 (§ 58.1-400 et seq.) in an amount equal to 35 percent of its direct costs incurred during the taxable year in conducting orientation, instruction, and training in the Commonwealth relating to the manufacturing activities undertaken by the business. In no event shall the credit allowed to a business under this subdivision exceed $2,000 for any taxable year. The Department shall allow credit only for programs that (i) provide orientation, instruction, and training solely to students in grades six through 12; (ii) are coordinated with the local school division; and (iii) are conducted either at a plant or facility owned, leased, rented, or otherwise used by the business or at a public middle or high school in the Commonwealth. The taxpayer shall include in its direct costs only the following expenditures: (a) salaries or wages paid to instructors and trainers, prorated for the period of instruction or training; (b) costs for orientation, instruction, and training materials; (c) amounts paid for machinery and equipment used primarily for such instruction and training; and (d) the cost of leased or rented space used primarily for conducting the program.
   3. The total amount of tax credits granted under this section for each fiscal year shall not exceed $1 million.
3. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
4. 1. A business shall be allowed a credit pursuant to subdivision B 1 only for those programs and providers that have been approved for inclusion in the Commonwealth’s Eligible Training Provider List. The Workforce Innovation Opportunity Act Title 1 Administrator shall provide the Tax Commissioner with the approved list annually. D. 1. A business shall be allowed a credit pursuant to subdivision B 1 only for those programs and providers that have been approved for inclusion in the Commonwealth’s Eligible Training Provider List. The Workforce Innovation Opportunity Act Title 1 Administrator shall provide the Tax Commissioner with the approved list annually.
   2. A business shall be allowed the credit pursuant to subdivision B 2 only for an orientation, instruction, and training program that has been approved by the local school division and certified as eligible by the Department of Education. A business seeking a tax credit under subdivision B 2 shall include in its application reviewed by the Department of Education an approval from the local school division. The Department of Education shall review requests for certification submitted by businesses and shall advise the Tax Commissioner whether an orientation, instruction, and training program qualifies as relating to the manufacturing activities undertaken by the business and meets other applicable requirements.
   3. The Tax Commissioner shall develop guidelines (i) establishing procedures for claiming the credit provided by this section and (ii) providing for the allocation of credits among businesses requesting credits in the event that the amount of credits for which requests are made exceeds the available amount of credits in any year. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.).
5. Any credit not usable for the taxable year may be carried over for the next three taxable years. The amount of credit allowed pursuant to this section shall not exceed the tax imposed for such taxable year. No credit shall be carried back to a preceding taxable year. If a business that is subject to the tax limitation imposed pursuant to this subsection is allowed another credit pursuant to any other section of this Code, or has a credit carryover from a preceding taxable year, such business shall be considered to have first utilized any credit allowed that does not have a carryover provision, and then any credit which is carried forward from a preceding taxable year, prior to the utilization of any credit allowed pursuant to this section.
6. No business shall be eligible to claim a credit under this section for eligible worker training or manufacturing orientation, instruction, and training undertaken by any program operated, administered, or paid for by the Commonwealth.
7. The Tax Commissioner shall report annually to the Chairmen of the House Committee on Finance and the Senate Committee on Finance and Appropriations on the status and implementation of the credit established by this section.

History. 2019, c. 189.

Editor’s note.

The Virginia Code Commission authorized the substitution of “the Chairmen of the House Committee on Finance and the Senate Committee on Finance and Appropriations” for “the Chairmen of the House and Senate Committees on Finance.” March 10, 2021.

§ 58.1-439.7. Tax credit for purchase of machinery and equipment used for advanced recycling and processing recyclable materials.

1. 1. For taxable years beginning on and after January 1, 1999, but before January 1, 2025, a taxpayer shall be allowed a credit against the tax imposed pursuant to Articles 2 (§ 58.1-320 et seq.) and 10 (§ 58.1-400 et seq.) of Chapter 3 of this title, in an amount equal to 20 percent of the purchase price paid during the taxable year for (i) machinery and equipment used predominantly in or on the premises of manufacturing facilities or plant units which manufacture, process, compound, or produce items of tangible personal property from recyclable materials, within the Commonwealth, for sale and (ii) machinery and equipment used predominantly in or on the premises of facilities that are predominantly engaged in advanced recycling. For purposes of determining “purchase price paid” under this section, the taxpayer may use the original total capitalized cost of such machinery and equipment, less capitalized interest. For purposes of this section, “advanced recycling” means the operation of a single-stream or multi-stream recycling plant that converts waste materials into new materials for resale by processing them and breaking them down into their raw constituents. “Advanced recycling” includes the operation of a materials recovery facility or materials reclamation facility that receives, separates, and prepares recyclable materials for sale to end-user manufacturers. A. 1. For taxable years beginning on and after January 1, 1999, but before January 1, 2025, a taxpayer shall be allowed a credit against the tax imposed pursuant to Articles 2 (§ 58.1-320 et seq.) and 10 (§ 58.1-400 et seq.) of Chapter 3 of this title, in an amount equal to 20 percent of the purchase price paid during the taxable year for (i) machinery and equipment used predominantly in or on the premises of manufacturing facilities or plant units which manufacture, process, compound, or produce items of tangible personal property from recyclable materials, within the Commonwealth, for sale and (ii) machinery and equipment used predominantly in or on the premises of facilities that are predominantly engaged in advanced recycling. For purposes of determining “purchase price paid” under this section, the taxpayer may use the original total capitalized cost of such machinery and equipment, less capitalized interest. For purposes of this section, “advanced recycling” means the operation of a single-stream or multi-stream recycling plant that converts waste materials into new materials for resale by processing them and breaking them down into their raw constituents. “Advanced recycling” includes the operation of a materials recovery facility or materials reclamation facility that receives, separates, and prepares recyclable materials for sale to end-user manufacturers.
   2. The Department of Environmental Quality shall certify that such machinery and equipment are integral to the recycling process before the taxpayer shall be allowed the tax credit under this section. The taxpayer shall also submit purchase receipts and invoices as may be necessary to confirm the taxpayer’s statement of purchase price paid, with the income tax return to verify the amount of purchase price paid for the recycling machinery and equipment.
   3. No taxpayer shall be denied the credit under this section based solely on another person’s use of the tangible personal property produced by the taxpayer, provided that the tangible personal property was sold by the taxpayer to an unaffiliated person in an arm’s-length sale.
   4. No credit shall be allowed under this section for machinery and equipment unless the machinery and equipment manufacture, process, compound, or produce items of tangible personal property from recyclable materials.
2. The total credit allowed under this section in any taxable year shall not exceed 40 percent of the Virginia income tax liability of such taxpayer.
3. Any tax credit not used for the taxable year in which the purchase price on recycling machinery and equipment was paid may be carried over for credit against the taxpayer’s income taxes in the 10 succeeding taxable years until the total credit amount is used.
4. The Department of Taxation shall administer the tax credits under this section. Beginning with credits allowable for taxable year 2015, in no case shall the Department issue more than $2 million in tax credits pursuant to this section in any fiscal year of the Commonwealth. A taxpayer shall not be allowed to claim any tax credit unless it has applied to the Department of Environmental Quality for certification as described in subdivision A 2 and the Department of Environmental Quality has issued a written certification stating that the machinery and equipment purchased are integral to the recycling process. If the amount of tax credits approved under this section by the Department of Taxation for any taxable year exceeds $2 million, the Department shall apportion the credits by dividing $2 million by the total amount of tax credits so approved, to determine the percentage of otherwise allowed tax credits each taxpayer shall receive.
5. In the event a corporation converts to a partnership, limited liability company, or electing small business corporation (S corporation), such business entity shall be entitled to any unused credits of the corporation. Credits earned by a partnership, limited liability company, electing small business corporation (S corporation), or a predecessor corporation entitled to such credits, shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership or interest in such business entities.

History. 1998, c. 253; 2001, c. 91; 2004, c. 611; 2007, cc. 529, 593; 2009, c. 34; 2015, cc. 49, 94; 2020, c. 789.

Editor’s note.

Acts 2007, cc. 529 and 593, cl. 2 provides: “That the provisions of this act amending the sunset date shall be effective for taxable years beginning on or after January 1, 2007. The remaining provisions of this act shall be effective for taxable years beginning on or after January 1, 2008.”

Acts 2015, cc. 49 and 94, cl. 2 provides: “That the Department of Taxation, in consultation with the Department of Environmental Quality, shall develop and update as necessary guidelines implementing the provisions of this act. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.).”

Acts 2015, cc. 49 and 94, cl. 3 provides: “That the provisions of this act shall become effective for taxable years beginning on or after January 1, 2015.”

Acts 2020, c. 789, cl. 2 provides: “That the provisions of this act amending § 58.1-439.7 of the Code of Virginia shall apply to taxable years beginning on and after January 1, 2020, and that the provisions of this act amending § 58.1-3507 of the Code of Virginia shall apply to taxable years beginning on and after January 1, 2021.”

The 2007 amendments.

The 2007 amendments by cc. 529 and 593, effective for taxable years beginning on or after January 1, 2007, are identical, and substituted “January 1, 2015” for “January 1, 2007” in the first sentence of subsection A.

The 2007 amendments by cc. 529 and 593, effective for taxable years beginning on or after January 1, 2008, are identical and substituted “taxpayer” for “corporation” throughout the section; substituted “Articles 2 (§ 58.1-320 et seq.) and 10 (§ 58.1-400 et seq.) of Chapter 3 of this title” for “§ 58.1-400 ” in subsection A; substituted “taxpayer’s” for “corporation’s” in subsection C; and added subsection E.

The 2009 amendments.

The 2009 amendment by c. 34 deleted subsection D, which formerly read: “A taxpayer claiming the tax credit provided by § 58.1-439.8 shall not be eligible for the tax credit provided by this section”; and redesignated former subsection E as subsection D.

The 2015 amendments.

The 2015 amendments by cc. 49 and 94, effective for taxable years beginning on or after January 1, 2015, are identical, and added the subdivision 1 and 2 designations in subsection A; in subdivision A 1, substituted “January 1, 2020,” for “January 1, 2015,” “20 percent” for “10 percent” and “predominantly” for “exclusively”; substituted “allowed” for “entitled to,”and substituted “and invoices” for “invoices, and such other documentation” in subdivision A 2; added subdivisions A 3 and A 4 and subsection D; redesignated former subsection D as subsection E.

The 2020 amendments.

The 2020 amendment by c. 789, in subdivision A 1, substituted “2025” for “2020” and “for (i) machinery” for “for machinery” and added “and (ii) machinery and equipment used predominantly in or on the premises of facilities that are predominantly engaged in advanced recycling” in the first sentence and added the last two sentences.

Law Review.

For 2003/2004 survey of the law of taxation, see 39 U. Rich. L. Rev. 413 (2004).

For annual survey of Virginia law article, “Taxation,” see 47 U. Rich. L. Rev. 307 (2012).

§ 58.1-439.8. Repealed by Acts 2009, c. 34, cl. 2.

§ 58.1-439.9. Tax credit for certain employers hiring recipients of Temporary Assistance for Needy Families.

1. As used in this section:“Qualified business employer” means an employer whose business employed not more than 100 employees at the time that the employer first hired a qualified employee.“Qualified employee” means an employee who is a Virginia resident and is a recipient of Temporary Assistance for Needy Families (TANF) in accordance with the provisions of Chapter 6 (§ 63.2-600 et seq.) of Title 63.2.
2. For taxable years beginning on and after January 1, 1999, a qualified business employer shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.), and 10 (§ 58.1-400 et seq.) of Chapter 3 of this title in an amount equal to five percent of the annual salary actually paid during the taxable year to a qualified employee. However, the annual amount of the credit shall not exceed $750 per qualified employee. Qualified business employers entitled to the credit pursuant to this section shall provide written evidence, satisfactory to the Tax Commissioner, of employing such qualified employee for the taxable year in which the credit is claimed.
3. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
4. Any credit not usable for the taxable year may be carried over for the next three taxable years. The amount of credit allowed pursuant to this section shall not exceed the tax imposed for such taxable year. No credit shall be carried back to a preceding taxable year. If a qualified business employer that is subject to the tax limitation imposed pursuant to this subsection is allowed another credit pursuant to any other section of this Code, or has a credit carryover from a preceding taxable year, such employer shall be considered to have first utilized any credit allowed which does not have a carryover provision, and then any credit which is carried forward from a preceding taxable year, prior to the utilization of any credit allowed pursuant to this section.
5. The amount of tax credits available under this section in any fiscal year shall not exceed the amount appropriated  for such year as provided in the general appropriation act.
6. The State Board of Social Services shall promulgate regulations in accordance with the Administrative Process Act (§ 2.2-4000 et seq.) establishing procedures for claiming the tax credit provided by this section.

History. 1998, c. 486; 2002, c. 747.

The number of this section was assigned by the Virginia Code Commission, the number in the 1998 act having been 58.1-439.7 .

The 2002 amendments.

The 2002 amendment by c. 747, effective October 1, 2002, in the definition of “Qualified employee,” substituted “for Needy Families” for “to Needy Families” and substituted “(§ 63.2-600 et seq.) of Title 63.2” for “(§ 63.1-86 et seq.) of Title 63.1”; in subsection E, deleted “when added to the amount of grants made to employers under the Virginia Targeted Jobs Grant Program established under § 63.1-25.3 in such year” following “fiscal year” and deleted “to the Virginia Targeted Jobs Grant Fund” following “amount appropriated”; in subsection F, deleted “Prior to December 31, 1998” at the beginning, deleted the clause (i) designation preceding “establishing,” and deleted “and (ii) providing for the allocation of tax credits among taxpayers requesting credits and employers claiming grants under the Virginia Targeted Jobs Grant Program, on a pro rata basis, in the event the amount of credits and grants for which requests are made exceeds the available amount of funds appropriated to the Virginia Targeted Jobs Grant Fund for any fiscal year” at the end; and deleted subsection G, which read: “No qualified business employer shall be eligible to claim a credit under this section for any taxable year such employer is the recipient of a grant for the same qualified employee under the Virginia Targeted Jobs Grant Program (§ 63.1-25.3).”

§ 58.1-439.10. Tax credit for purchase of waste motor oil burning equipment.

1. For taxable years beginning on and after January 1, 1999, a taxpayer who operates a business facility within the Commonwealth which accepts waste motor oil from the public shall be allowed a credit against the taxes imposed pursuant to Articles 2 (§ 58.1-320 et seq.) and 10 (§ 58.1-400 et seq.) of this chapter in an amount equal to fifty percent of the purchase price paid during the taxable year for equipment used exclusively for burning waste motor oil at the business facility. The total credit allowed to any taxpayer under this section in any taxable year shall not exceed $5,000.
2. The Department of Environmental Quality shall certify that such equipment is used to burn waste motor oil at a business facility within the Commonwealth which accepts waste motor oil from the public before the taxpayer shall be entitled to the tax credit under this section. The taxpayer shall also submit with his income tax return such receipts, invoices, and other documentation as may be necessary to confirm the taxpayer’s statement of the purchase price paid for the waste motor oil burning equipment. Any tax credit under this section shall be used only for the taxable year in which the purchase price of the waste motor oil burning equipment was paid.
3. For purposes of this section, the amount of any credit attributable to the purchase of equipment used exclusively for burning waste motor oil by a partnership or electing small business corporation (S corporation) shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S corporation.

History. 1998, c. 896.

The number of this section was assigned by the Virginia Code Commission, the number in the 1998 act having been 58.1-439.7 .

Law Review.

For article on recent developments in the law affecting Virginia taxation, see 43 U. Rich. L. Rev. 405 (2008).

§ 58.1-439.11. Repealed by Acts 2016, c. 305, cl. 2.

Editor’s note.

Acts 2016, c. 305, cl. 3 provides: “That this act shall in no way alter or affect any (i) tax credit or tax benefit or other tax attribute allowed or earned under any section repealed by this act or (ii) tax liability or obligation pursuant to any such section.”

Former § 58.1-439.11 , pertaining to Employees with disabilities tax credit, derived from Acts 1999, c. 304; 2012, cc. 803, 835.

§ 58.1-439.12. Riparian forest buffer protection for waterways tax credit.

1. For all taxable years beginning on or after January 1, 2000, any corporation that owns land abutting a waterway on which timber is harvested, and that forbears harvesting timber on certain portions of the land near the waterway, shall be allowed a credit against the tax imposed by § 58.1-400 as set forth in this section. For purposes of this section, “waterway” means any perennial or intermittent stream of water depicted on the then most current United States Geological Survey topographical map.
2. The State Forester shall develop guidelines setting forth the general requirements of qualifying for the credit, including the land for which credit is eligible. To qualify for the credit the corporation must comply with an individualized Forest Stewardship Plan to be certified by the State Forester. In no event shall the distance from such waterway to the far end of the timber buffer, on which the tax credit is based, be less than thirty-five feet or more than three hundred feet. The minimum duration for the buffer shall be fifteen years. The State Forester shall check each certified buffer annually to verify its continued compliance with the taxpayer’s Forest Stewardship Plan. If the State Forester discovers that the timber in that portion of the land retained as a buffer has been harvested prior to the end of the required term, written notification of such noncompliance shall be delivered to the taxpayer by the State Forester.
3. The tax credit shall be an amount equal to twenty-five percent of the value of timber in that portion of land retained as a buffer. The amount of such credit shall not exceed $17,500 or the total amount of the tax imposed by this chapter, whichever is less, in the year that the timber outside the buffer was harvested. If the amount of the credit exceeds the taxpayer’s liability for such taxable year, the excess may be carried over for credit against income taxes in the next five taxable years until the total amount of the tax credit has been taken. The land which is the subject of a tax credit under this section cannot again be the subject of a tax credit under this section for at least fifteen years.
4. To claim the credit authorized under this section, the taxpayer shall apply to the State Forester, who shall determine the amount of credit, using the assessed value of the timber in that portion of land retained as a buffer, and issue a certificate thereof to the taxpayer. The taxpayer shall attach the certificate to the Virginia tax return on which the credit is claimed. In the event the timber in that portion of land retained as a buffer is harvested by the taxpayer or any other person prior to the end of the term originally established in the taxpayer’s individualized Forest Stewardship Plan, the taxpayer shall repay the tax credit claimed. Within sixty days after receiving written notification from the State Forester that the taxpayer’s plan no longer qualifies for the credit, repayment shall be made to the Department of Taxation. If repayment is not made within the sixty-day period, the State Forester shall notify the locality’s Commonwealth Attorney for assistance in collecting the funds from the taxpayer.

History. 2000, cc. 568, 607.

§ 58.1-439.12:01. Credit for cigarettes manufactured and exported.

1. For purposes of this section:“Base year export volume” means the number of cigarettes manufactured by a corporation, which cigarettes were also exported by such manufacturer during its taxable year beginning in calendar year 2004.“Cigarette or cigarettes” means the same as that term is defined in § 58.1-1031 .“Current year export volume” means the number of cigarettes manufactured by a corporation, which cigarettes were also exported by such manufacturer in the taxable year for which credit under this section is claimed. The term shall only apply for taxable years beginning on and after January 1, 2006.“Exported” or “exports” means the shipment of cigarettes to a foreign country.“Manufactured” or “manufactures” means manufactured in Virginia.
2. For taxable years beginning on and after January 1, 2006, but before January 1, 2016, any corporation that manufactures cigarettes in Virginia, which cigarettes are exported by such manufacturer, shall be allowed a credit against the tax imposed by § 58.1-400 for such exported cigarettes as follows:
   1. If the current year export volume of the corporation is less than 50 percent of the base year export volume for the corporation, no credit shall be allowed for the taxable year.
   2. If the current year export volume of the corporation is at least 50 percent but less than 60 percent of the base year export volume for the corporation, the credit allowed shall equal $0.20 per 1,000 cigarettes of the current year export volume.
   3. If the current year export volume of the corporation is at least 60 percent but less than 80 percent of the base year export volume for the corporation, the credit allowed shall equal $0.25 per 1,000 cigarettes of the current year export volume.
   4. If the current year export volume of the corporation is at least 80 percent but less than 100 percent of the base year export volume for the corporation, the credit allowed shall equal $0.30 per 1,000 cigarettes of the current year export volume.
   5. If the current year export volume of the corporation is at least 100 percent but less than 120 percent of the base year export volume for the corporation, the credit allowed shall equal $0.35 per 1,000 cigarettes of the current year export volume.
   6. If the current year export volume of the corporation is at least 120 percent of the base year export volume for the corporation, the credit allowed shall equal $0.40 per 1,000 cigarettes of the current year export volume.
3. In no event shall the credit allowed under this section for any taxable year to any corporation exceed the lesser of $6 million or 50 percent of the corporation’s income tax liability to the Commonwealth for such taxable year.
4. The total amount of tax credits granted under this section for each fiscal year of the Commonwealth shall not exceed $6 million. A corporation meeting the requirements of this section shall be eligible to receive a tax credit to the extent the corporation reserves such tax credit through the Department as provided herein.The Department shall establish policies and procedures for the reservation of tax credits by eligible corporations. Such policies and procedures shall provide (i) requirements for applying for reservations of tax credits; (ii) a system for allocating the available amount of tax credits among eligible corporations; (iii) a method for the issuance of reservations to eligible corporations that did not initially receive a reservation in any year, if the Department determines that tax credit reservations were issued to other corporations that did not use, or were determined to be wholly or partially ineligible for, a reserved tax credit; and (iv) a procedure for the cancellation and reallocation of tax credit reservations allocated to eligible corporations that, after reserving tax credits, have been determined to be ineligible for all or a portion of the tax credits reserved. In no case shall a corporation be allowed to carry over any tax credit to be applied against any income tax for taxable years subsequent to the taxable year of export.Actions of the Department relating to the approval or denial of applications for reservations for tax credits pursuant to this section shall be exempt from the provisions of the Administrative Process Act pursuant (§ 2.2-4000 et seq.).
5. A corporation claiming the credit under this section for a taxable year shall submit with its application for reservation of tax credits and its state income tax return a written statement certifying its base year export volume and current year export volume. It shall also submit with such application and return a listing of its export volumes as reported on its monthly reports to the Bureau of Alcohol, Tobacco and Firearms of the United States Department of the Treasury for each month of the taxable year and a listing for each month of the taxable year of its export volumes.

History. 2004, Sp. Sess. I, c. 4; 2005, c. 951; 2006, Sp. Sess. I, c. 2.

Editor’s note.

Acts 2004, Sp. Sess. I, c. 4, cl. 3, as amended by Acts 2005, c. 951, and 2006, Sp. Sess. I, c. 2, provides: “That the Tax Commissioner shall develop and publish guidelines for purposes of implementing the provisions of the second enactment of this act in regard to the tax credit for the manufacturer and export of cigarettes, including guidelines addressing an adjustment to the credit allowed pursuant to such second enactment for cigarettes that are exported but later returned to the manufacturer. The development of such guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.) of the Code of Virginia.”

Acts 2006, Sp. Sess. I, c. 2, reenacted § 58.1-439.12:01 as enacted by Acts 2004, Sp. Sess. I, c. 4, cl. 2, and amended by Acts 2005, c. 951, without change.

Effective date.

This section became effective July 1, 2004.

§ 58.1-439.12:02. Biodiesel and green diesel fuels producers tax credit.

1. For purposes of this section:“Biodiesel fuel” means a fuel composed of mono-alkyl esters of long-chain fatty acids derived from vegetable oils or animal fats, designated B100, and meeting the requirements of ASTM D6751.“Green diesel fuel” means a fuel produced from nonfossil renewable resources including agricultural or silvicultural plants, animal fats, residue and waste generated from the production, processing, and marketing of agricultural products, silvicultural products, and other renewable resources, and meeting applicable ASTM specifications.“Feedstock” means the agricultural or other renewable resources, whether plant or animal derived, used to produce biodiesel or green diesel fuels.“Producer” means any person, entity, or agricultural cooperative association, as defined in the Agricultural Cooperative Association Act (§ 13.1-312 et seq.) that, in a calendar year, produces in the Commonwealth up to two million gallons of biodiesel or green diesel fuels using feedstock originating domestically within the United States.
2. For taxable years beginning on or after January 1, 2008, any taxpayer who is a biodiesel fuel or green diesel fuel producer shall be entitled to a nonrefundable credit against the taxes imposed by § 58.1-320 or 58.1-400 in an amount equal to $0.01 per gallon of biodiesel or green diesel fuels produced by such taxpayer. However, the annual amount of the credit shall not exceed $5,000. The taxpayer shall be eligible for the credit during the first three years of production of biodiesel or green diesel fuels.Any taxpayer entitled to a credit under this section may transfer unused but otherwise allowable credits for use by another taxpayer on Virginia income tax returns. A taxpayer who transfers any amount of the credit in accordance with this section shall file a notification of such transfer to the Department of Taxation in accordance with procedures and forms prescribed by the Tax Commissioner.
3. The Department of Energy shall certify that the biodiesel or green diesel fuels producer has satisfied the requirements of this section for the taxable year in which the credit is allowed. In addition, the taxpayer shall submit with his income tax return all documentation as required by the Department of Taxation. Any credit not usable for the taxable year may be carried over the next three taxable years. The amount of the credit allowed pursuant to this section shall not exceed the tax imposed for such taxable year.
4. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entity.

History. 2008, c. 482; 2021, Sp. Sess. I, c. 532.

Editor’s note.

Acts 2021, Sp. Sess. I, c. 532, cl. 2 provides: “That the provisions of this act shall become effective on October 1, 2021.”

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 532, effective October 1, 2021, substituted “Department of Energy” for “Department of Mines, Minerals and Energy” in subsection C.

Law Review.

For article on recent developments in the law affecting Virginia taxation, see 43 U. Rich. L. Rev. 405 (2008).

§ 58.1-439.12:03. Motion picture production tax credit.

1. For taxable years beginning on and after January 1, 2011, but prior to January 1, 2027, any motion picture production company with qualifying expenses of at least $250,000 with respect to a motion picture production filmed in Virginia shall be allowed a refundable credit against the taxes imposed by § 58.1-320 or 58.1-400 in an amount equal to 15 percent of the production company’s qualifying expenses or 20 percent of such expenses if the production is filmed in an economically distressed area of the Commonwealth. The Virginia Economic Development Partnership Authority shall designate which areas of the Commonwealth are deemed to be economically distressed areas. The credit shall be computed based on all of the taxpayer’s qualifying expenses incurred with respect to the production, not just the qualifying expenses incurred during the taxable year. The refundable tax credits allowed under this section are for one tax year only. Where a motion picture production continues for more than one year, a separate application for each tax year the production continues must be made. The grant of a refundable tax credit for a motion picture film production does not create a presumption that the production will receive a refundable tax credit for subsequent tax years. Effective on January 1, 2013, for purposes of eligibility for refundable tax credits, a motion picture film production shall include digital interactive media production.“Qualifying expenses” means the sum of the following amounts spent in the Commonwealth by a production company in connection with the production of a motion picture filmed in the Commonwealth:
   1. Goods and services leased or purchased. For goods with a purchase price of $25,000 or more, the amount included in qualifying expenses is the purchase price less the fair market value of the good at the time the production is completed.
   2. Compensation and wages, except in the case of each individual who directly or indirectly receives compensation in excess of $1 million for personal services with respect to a single production. In such a case, only the first $1 million of salary shall be considered a qualifying expense. An individual is deemed to receive compensation indirectly when a production company pays a personal service company or an employee leasing company that pays the individual.
2. 1. In addition to the refundable credit authorized under subsection A, such production company shall be allowed an additional refundable credit equal to 10 percent of the total aggregate payroll for Virginia residents employed in connection with the production of a film in the Commonwealth when total production costs in the Commonwealth are at least $250,000 but not more than $1 million. This additional credit shall be equal to 20 percent of the total aggregate payroll for Virginia residents employed in connection with such production when total production costs in the Commonwealth exceed $1 million. B. 1. In addition to the refundable credit authorized under subsection A, such production company shall be allowed an additional refundable credit equal to 10 percent of the total aggregate payroll for Virginia residents employed in connection with the production of a film in the Commonwealth when total production costs in the Commonwealth are at least $250,000 but not more than $1 million. This additional credit shall be equal to 20 percent of the total aggregate payroll for Virginia residents employed in connection with such production when total production costs in the Commonwealth exceed $1 million.
   2. In addition to the credits authorized under subsection A and subdivision B 1, such production company shall be allowed an additional refundable credit equal to 10 percent of the total aggregate payroll for Virginia residents employed for the first time as actors or members of a production crew in connection with the production of a film in the Commonwealth.
3. 1. For purposes of this section, in the case of an episodic television series, an entire season of episodes shall be deemed to be one production. C. 1. For purposes of this section, in the case of an episodic television series, an entire season of episodes shall be deemed to be one production.
   2. No credit shall be allowed under this section for any production that (i) is political advertising, (ii) is a television production of a news program or live sporting event, (iii) contains obscene material, or (iv) is a reality television production.
4. 1. The issuance of refundable tax credits under this section shall be in accordance with procedures, qualifying criteria, and deadlines established by the Department and the Virginia Tourism Authority. The qualifying criteria established by the Virginia Tourism Authority shall take into account whether the production involves physical production within the Commonwealth of Virginia, the number of residents of Virginia that will be employed in the production and the level of compensation they will be paid, the extent to which the production will contribute to the support and expansion of existing production companies in Virginia, the extent to which the production will impact existing local businesses and the local economy, the extent to which the production will involve existing and new companies located in Virginia, and other relevant considerations. The taxpayer shall apply for a credit by submitting such forms as prescribed by the Virginia Tourism Authority, prior to the start of production in Virginia. D. 1. The issuance of refundable tax credits under this section shall be in accordance with procedures, qualifying criteria, and deadlines established by the Department and the Virginia Tourism Authority. The qualifying criteria established by the Virginia Tourism Authority shall take into account whether the production involves physical production within the Commonwealth of Virginia, the number of residents of Virginia that will be employed in the production and the level of compensation they will be paid, the extent to which the production will contribute to the support and expansion of existing production companies in Virginia, the extent to which the production will impact existing local businesses and the local economy, the extent to which the production will involve existing and new companies located in Virginia, and other relevant considerations. The taxpayer shall apply for a credit by submitting such forms as prescribed by the Virginia Tourism Authority, prior to the start of production in Virginia.
   2. Any taxpayer seeking credits under this section must enter into a memorandum of understanding with the Virginia Tourism Authority that at a minimum provides the requirements that the taxpayer must meet in order to receive the credits, including but not limited to the estimated amount of money to be spent in Virginia, the timeline for completing production in Virginia, and the maximum amount of credits allocated to the taxpayer.
   3. Once the taxpayer has satisfied all of the requirements in the memorandum of understanding to the satisfaction of the Virginia Tourism Authority and completed production in Virginia, the Virginia Tourism Authority shall certify the final tax credit amount to the taxpayer and to the Tax Commissioner. In addition, such certificate shall specify the fiscal year in which such tax credit may be refunded by the Department of Taxation. The tax return filed for the taxable year in which the Virginia production activities are completed shall contain information specifying the amount of tax credit and shall specify the fiscal year in which such tax credit may be refunded. The return must state the name of the production, provide a description of the production, and include a detailed accounting of the qualifying expenses with respect to which a credit is claimed.
   4. The Virginia Tourism Authority shall report to the Tax Commissioner on an annual basis the amount of tax credits that have been authorized for each fiscal year and the amount of tax credits that may be claimed for the current fiscal year by each taxpayer.
   5. No interest shall be paid pursuant to § 58.1-1833 on any tax credit issued by the Department under this section.
5. A taxpayer allowed a credit under this section must maintain and make available for inspection any information or records required by the Tax Commissioner. The taxpayer has the burden of proving eligibility for a credit and the amount of the credit. The Tax Commissioner shall consult with the Virginia Tourism Authority in order to determine the amount of qualifying expenses.
6. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company may be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
7. The total amount of credits allocated to all taxpayers under this section shall not exceed $2.5 million in the 2010-2012 biennium, $5 million in the 2012-2014 biennium, and $6.5 million in fiscal year 2015 and each fiscal year thereafter.
8. The Department of Taxation, in consultation with the Virginia Tourism Authority, must publish by November 1 of each year for the 12-month period ending the preceding December 31 the following information:
   1. Location of sites used in a production for which a credit was claimed;
   2. Qualifying expenses for which a credit was claimed, classified by whether the expenses were for goods, services, or compensation paid by the production company;
   3. Number of people employed in the Commonwealth with respect to credits claimed; and
   4. Total cost to the Commonwealth’s general fund of the credits claimed.Notwithstanding any provision of § 58.1-3 or any other law, such information shall be published by the Department, even if such information is not classified, so as to prevent the identification of particular taxpayers, reports, or returns and items.
9. The Tax Commissioner shall develop guidelines implementing the provisions of this section, including but not limited to the definition of “qualifying expenses” and setting forth the recordkeeping requirements applicable to production companies claiming this credit. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.).

History. 2010, cc. 419, 599; 2014, c. 730; 2017, cc. 108, 425; 2020, cc. 966, 967.

Editor’s note.

Acts 2010, cc. 419 and 599, cl. 2 provides: “That the General Assembly of Virginia finds that modern motion picture productions may be located within a state with minimal regard to the location of such state, and that the economic vitality of the Commonwealth may be enhanced if such productions are filmed in the Commonwealth. Accordingly, the provisions of this act targeting the credit to expenditures made in the Commonwealth and to the employment of Virginia residents and limiting the credit to those companies that meet those criteria are integral to the purpose of the credit earned pursuant to this act and shall not be deemed severable.”

The 2014 amendments.

The 2014 amendment by c. 730, in subsection A, inserted “but prior to January, 2019”; in subsection G inserted “$5 million in the 2012-2014 biennium,” substituted “$6.5 million in fiscal year 2015 and each fiscal year” for “$5 million in any biennium” and made a minor stylistic change; and added the paragraph following subdivision H 4.

The 2017 amendments.

The 2017 amendments by cc. 108 and 425 are identical, and substituted “prior to January 1, 2022” for “prior to January 1, 2019” in the first sentence of subsection A.

The 2020 amendments.

The 2020 amendments by cc. 966 and 967 are identical, and in subdivisions D 1 and D 2 and subsections E and H, substituted “Virginia Tourism Authority” for “Virginia Film Office”; rewrote subdivision D 3, first sentence (currently rewritten as three sentences), “Once the taxpayer has satisfied all of the requirements in the memorandum of understanding to the satisfaction of the Virginia Film Office and completed production in Virginia, the taxpayer may claim the applicable amount of credits up to the amount that has been allocated by the Virginia Film Office on a return filed for the taxable year in which the Virginia production activities are completed” and added subdivisions D 4 and D 5.

Law Review.

For article, “Medical Malpractice Law,” see 45 U. Rich. L. Rev. 319 (2010).

§ 58.1-439.12:04. Tax credit for participating landlords.

1. As used in this section, unless the context clearly shows otherwise, the term or phrase:“Dwelling unit” means an individual housing unit in an apartment building, an individual housing unit in multifamily residential housing, a single-family residence, or any similar individual housing unit.“Eligible census tract” means a census tract in Virginia in which less than 10 percent of the residents live below the poverty level, as defined by the United States government and determined by the most recent United States census.“Eligible housing area” means an eligible census tract in (i) the Richmond Metropolitan Statistical Area, (ii) the Washington-Arlington-Alexandria Metropolitan Statistical Area, or (iii) the Virginia Beach-Norfolk-Newport News Metropolitan Statistical Area.“Housing authority” means a housing authority created under Article 1 (§ 36-1 et seq.) of Chapter 1 of Title 36 or other government agency that is authorized by the United States government under the United States Housing Act of 1937 (42 U.S.C. § 1437 et seq.) to administer a housing choice voucher program, or the authorized agent of such a housing authority that is authorized to act upon that authority’s behalf. The term shall also include the Virginia Housing Development Authority.“Housing choice voucher” means tenant-based assistance by a housing authority pursuant to 42 U.S.C. § 1437f et seq.“Participating landlord” means any person engaged in the business of the rental of dwelling units who is (i) subject to the Virginia Residential Landlord and Tenant Act (§ 55.1-1200 et seq.) and (ii) performing obligations under a contract with a housing authority relating to the rental of qualified housing units.“Qualified housing unit’ means a dwelling unit that is located in an eligible housing area for which a portion of the rent is paid by a housing authority, which payment is pursuant to a housing choice voucher program.
2. For taxable years beginning on or after January 1, 2010, but before January 1, 2025, a participating landlord renting a qualified housing unit shall be eligible for a credit against the tax levied pursuant to § 58.1-320 or 58.1-400 in an amount equal to 10 percent of the fair market value of the rent for the unit, computed for that portion of the taxable year in which the unit was rented by such landlord to a tenant participating in a housing choice voucher program. The Department of Housing and Community Development shall administer and issue the tax credit under this section. If (i) the same parcel of real property contains four or more dwelling units and (ii) the total number of qualified housing units on the parcel in the relevant taxable year exceeds 25 percent of the total dwelling units on the parcel, then the tax credit under this section shall apply only to a limited number of qualified housing units with regard to such parcel of real property, with the limited number being equal to 25 percent of the total dwelling units on such parcel of real property in the taxable year.
3. The Department of Housing and Community Development shall issue tax credits under this section on a fiscal year basis. The maximum amount of tax credits that may be issued under this section in each fiscal year shall be $250,000.
4. Participating landlords shall apply to the Department of Housing and Community Development for tax credits under this section. The Department of Housing and Community Development shall determine the credit amount allowable to the participating landlord for the taxable year and shall also determine the fair market value of the rent for the qualified housing unit based on the fair market rent approved by the United States Department of Housing and Urban Development as the basis for the tenant-based assistance provided through the housing choice voucher program for the qualified housing unit. In issuing tax credits under this section, the Department of Housing and Community Development shall provide a written certification to the participating landlord, which certification shall report the amount of the tax credit approved by the Department. The participating landlord shall attach the certification to the applicable income tax return.
5. The Board of Housing and Community Development shall establish and issue guidelines for purposes of implementing the provisions of this section. The guidelines shall provide for the allocation of tax credits among participating landlords requesting credits. The guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.).
6. In no case shall the amount of credit taken by a participating landlord for any taxable year exceed the total amount of tax imposed by this chapter for the taxable year. If the amount of credit issued by the Department of Housing and Community Development for a taxable year exceeds the landlord’s tax liability imposed by this chapter for such taxable year, then the amount that exceeds the tax liability may be carried over for credit against the income taxes of the participating landlord in the next five taxable years or until the total amount of the tax credit issued has been taken, whichever is sooner. Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership or interest in such business entities.
7. In the event that the amount of the qualified requests for tax credits for participating landlords in the fiscal year exceeds $250,000, the Department of Housing and Community Development shall pro rate the tax credits among the qualified applicants.

History. 2010, cc. 520, 608; 2013, cc. 23, 374; 2016, c. 305; 2019, cc. 19, 272; 2020, cc. 430, 1032.

The number of this section was assigned by the Virginia Code Commission, the number in the 2010 acts having been § 58.1-439.12:03 .

Editor’s note.

Acts 2016, c. 305, cl. 3 provides: “That this act shall in no way alter or affect any (i) tax credit or tax benefit or other tax attribute allowed or earned under any section repealed by this act or (ii) tax liability or obligation pursuant to any such section.”

At the direction of the Virginia Code Commission, substituted “Tax credit for participating landlords” for “Tax Credits for Technology Industries Grants for Investment and Research and Development in Tobacco-Dependent Localities” in the section heading.

To conform to the recodification of Title 55 by Acts 2019, c. 712, effective October 1, 2019, the following substitution was made at the direction of the Virginia Code Commission: substituted “55.1-1200” for “55-248.2.”

The 2013 amendments.

The 2013 amendments by cc. 23 and 374 are identical, and substituted “$250,000” for “$450,000” at the end of subsection C and in subsection H.

The 2016 amendments.

The 2016 amendment by c. 305 deleted subsection G, which read “No person shall be allowed a tax credit under § 58.1-339.9 and this section for the rental of the same dwelling unit in a taxable year”; and renumbered former subsection H as subsection G.

The 2019 amendments.

The 2019 amendments by cc. 19 and 272 are identical, and inserted “or the Virginia Beach-Norfolk-Newport News Metropolitan Statistical Area” in the definition of “Eligible housing area” in subdivision A and made stylistic changes.

The 2020 amendments.

The 2020 amendments by cc. 430 and 1032 are identical, and in subsection A, added the definition for “Eligible census tract” and rewrote the definition for “Eligible housing area,” which had read, “ ‘Eligible housing area’ means a census tract in the Richmond Metropolitan Statistical Area or the Virginia Beach-Norfolk-Newport News Metropolitan Statistical Area in which less than 10 percent of the residents live below the poverty level, as defined by the United States government and determined by the most recent United States census”; and in subsection B, added “but before January 1, 2025” in the first sentence.

§ 58.1-439.12:05. Green job creation tax credit.

1. For taxable years beginning on or after January 1, 2010, but before January 1, 2025, a taxpayer shall be allowed a credit against the tax levied pursuant to § 58.1-320 or 58.1-400 for each new green job created within the Commonwealth by the taxpayer. The amount of the annual credit for each new green job shall be $500 for each annual salary that is $50,000 or more. The credit shall be first allowed for the taxable year in which the job has been filled for at least one year and for each of the four succeeding taxable years provided the job is continuously filled during the respective taxable year. Each taxpayer qualifying under this section shall be allowed the credit for up to 350 green jobs.
2. As used in this section:“Green job” means employment in industries relating to the field of renewable, alternative energies, including the manufacture and operation of products used to generate electricity and other forms of energy from alternative sources that include hydrogen and fuel cell technology, landfill gas, geothermal heating systems, solar heating systems, hydropower systems, wind systems, and biomass and biofuel systems. The Secretary of Commerce and Trade shall develop a detailed definition and list of jobs that qualify for the credit provided in this section and shall post them on his website.“Job” means employment of an indefinite duration of an individual whose primary work activity is related directly to the field of renewable, alternative energies and for which the standard fringe benefits are paid by the taxpayer, requiring a minimum of either (i) 35 hours of an employee’s time per week for the entire normal year of such taxpayer’s operations, which “normal year” must consist of at least 48 weeks, or (ii) 1,680 hours per year. Positions created when a job function is shifted from an existing location in the Commonwealth shall not qualify as a job under this section.
3. To qualify for the tax credit provided in subsection A, a taxpayer shall demonstrate that the green job was created by the taxpayer, and that such job was continuously filled in the Commonwealth during the respective taxable year.
4. The amount of the credit that may be claimed in any single taxable year shall not exceed the taxpayer’s liability for taxes imposed by this chapter for that taxable year. If the amount of credit allowed under this section exceeds the taxpayer’s tax liability for the taxable year in which the green job was continuously filled, the amount that exceeds the tax liability may be carried over for credit against the income taxes of the taxpayer in the next five taxable years or until the total amount of the tax credit has been taken, whichever is sooner.
5. Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership or interest in such business entities.
6. If the taxpayer is eligible for the tax credits under this section and creates green jobs in an enterprise zone, as defined in § 59.1-539, such taxpayer may also qualify for the benefits under the Enterprise Zone Grant Program (§ 59.1-538 et seq.).
7. A taxpayer shall not be allowed a tax credit pursuant to this section for any green job for which the taxpayer is allowed (i) a major business facility job tax credit pursuant to § 58.1-439 or (ii) a federal tax credit for investments in manufacturing facilities for clean energy technologies that would foster investment and job creation in clean energy manufacturing.

History. 2010, cc. 722, 727; 2015, cc. 249, 486; 2018, cc. 346, 347; 2020, c. 429.

The number of this section was assigned by the Virginia Code Commission, the number in the 2010 acts having been § 58.1-439.12:03 .

The 2015 amendments.

The 2015 amendments by cc. 249 and 486 are identical, and substituted “January 1, 2018,” for “January 1, 2015,” in subsection A.

The 2018 amendments.

The 2018 amendments by cc. 346 and 347 are identical, and substituted “January 1, 2021” for “January 1, 2018” in subsection A.

The 2020 amendments.

The 2020 amendment by c. 429, in subsection A, substituted “2025” for “2021” and rewrote subsection D, which read: “The amount of the credit shall not exceed the total amount of tax imposed by this chapter for the taxable year in which the green job was continuously filled. If the amount of credit allowed exceeds the taxpayer’s tax liability for such taxable year, the amount that exceeds the tax liability may be carried over for credit against the income taxes of the taxpayer in the next five taxable years or until the total amount of the tax credit has been taken, whichever is sooner.”

Law Review.

For article, “Medical Malpractice Law,” see 45 U. Rich. L. Rev. 319 (2010).

For article, “Taxation,” see 45 U. Rich. L. Rev. 377 (2010).

§ 58.1-439.12:06. International trade facility tax credit.

1. As used in this section, unless the context requires a different meaning:“Affiliated companies” means two or more companies related to each other so that (i) one company owns at least 80 percent of the voting power of the other or others or (ii) the same interest owns at least 80 percent of the voting power of two or more companies.“Capital investment” means the amount properly chargeable to a capital account for improvements to rehabilitate or expand depreciable real property placed in service during the taxable year and the cost of machinery, tools, and equipment used in an international trade facility directly related to the movement of cargo. Capital investment includes expenditures associated with any exterior, structural, mechanical, or electrical improvements necessary to expand or rehabilitate a building for commercial or industrial use and excavations, grading, paving, driveways, roads, sidewalks, landscaping, or other land improvements. For purposes of this section, machinery, tools, and equipment shall be deemed to include only that property placed in service by the international trade facility on and after January 1, 2011. Machinery, tools, and equipment excludes property (i) for which a credit under this section was previously granted; (ii) placed in service by the taxpayer, a related party as defined in § 267(b) of the Internal Revenue Code, as amended, or by a trade or business under common control as defined in § 52(b) of the Internal Revenue Code, as amended; or (iii) previously in service in the Commonwealth that has a basis in the hands of the person acquiring it, determined in whole or in part by reference to the basis of such property in the hands of the person from whom acquired or § 1014(a) of the Internal Revenue Code, as amended.“Capital investment” shall not include:
   1. The cost of acquiring any real property or building;
   2. The cost of furnishings;
   3. Any expenditure associated with appraisal, architectural, engineering, or interior design fees;
   4. Loan fees, points, or capitalized interest;
   5. Legal, accounting, realtor, sales and marketing, or other professional fees;
   6. Closing costs, permit fees, user fees, zoning fees, impact fees, and inspection fees;
   7. Bids, insurance, signage, utilities, bonding, copying, rent loss, or temporary facilities costs incurred during construction;
   8. Utility hook-up or access fees;
   9. Outbuildings; or
   10. The cost of any well or septic system.“Credit year” means the first taxable year following the taxable year in which the international trade facility commenced or expanded its operations. A separate credit year and a three-year allowance shall exist for each distinct international trade facility of a single taxpayer.“International trade facility” means a company that:
2. For taxable years beginning on and after January 1, 2011, but before January 1, 2025, a taxpayer satisfying the requirements of this section shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.) and 10 (§ 58.1-400 et seq.). The amount of the credit earned pursuant to this section shall be equal to either (i) $3,500 per qualified full-time employee that results from increased qualified trade activities by the taxpayer or (ii) an amount equal to two percent of the capital investment made by the taxpayer to facilitate the increased qualified trade activities. The election of which tax credit amount to claim shall be the responsibility of the taxpayer. Both tax credits shall not be claimed for the same activities that occur in a calendar year. The portion of the $3,500 credit earned with respect to any qualified full-time employee who works in the Commonwealth for less than 12 full months during the credit year shall be determined by multiplying the credit amount by a fraction, the numerator of which is the number of full months such employee worked for the international trade facility in the Commonwealth during the credit year and the denominator of which is 12.
3. The Tax Commissioner shall issue tax credits under this section, and in no case shall the Tax Commissioner issue more than $1,250,000 in tax credits pursuant to this section in any fiscal year of the Commonwealth. If the amount of tax credits requested under this section for any taxable year exceeds $1,250,000, such credits shall be allocated proportionately among all qualified taxpayers. The Tax Commissioner shall not issue tax credits under this section subsequent to the Commonwealth’s fiscal year ending on June 30, 2025. The taxpayer shall not be allowed to claim any tax credit under this section unless it has applied to the Department for the tax credit and the Department has approved the credit. The Department shall determine the credit amount allowable for the taxable year and shall provide a written certification to the taxpayer, which certification shall report the amount of the tax credit approved by the Department. The taxpayer shall attach the certification to the applicable income tax return.
4. The amount of the credit allowed pursuant to this section shall not exceed 50 percent of the tax imposed for the taxable year. Any remaining credit amount may be carried forward for the next 10 taxable years. In the event a taxpayer who is subject to the limitation imposed pursuant to this subsection is allowed a different tax credit pursuant to another section of the Code, or has a credit carry forward from a preceding taxable year, such taxpayer shall be considered to have first utilized any credit that does not have a carry forward provision, and then any credit carried forward from a preceding taxable year, before using any of the credit allowed pursuant to this section.
5. No credit shall be earned for any employee (i) for whom a credit under this section was previously earned by a related party as defined in § 267(b) of the Internal Revenue Code, as amended, or a trade or business under common control as defined in § 52(b) of the Internal Revenue Code, as amended; (ii) who was previously employed in the same job function in Virginia by a related party as defined in § 267(b) of the Internal Revenue Code, as amended, or a trade or business under common control as defined in § 52(b) of the Internal Revenue Code, as amended; (iii) whose job function was previously performed at a different location in Virginia by an employee of the taxpayer, by a related party as defined in § 267(b) of the Internal Revenue Code, as amended, or by a trade or business under common control as defined in § 52(b) of the Internal Revenue Code, as amended; or (iv) whose job function previously qualified for a credit under this section at a different major business facility, as defined in subsection C of § 58.1-439 , on behalf of the taxpayer, by a related party as defined in § 267(b) of the Internal Revenue Code, as amended, or a trade or business under common control as defined in § 52(b) of the Internal Revenue Code, as amended.
6. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
7. For purposes of this section, two or more affiliated companies may elect to aggregate the number of jobs created for qualified full-time employees or the amounts of capital investments as the result of the establishment or expansion by the individual companies in order to qualify for the credit allowed herein.
8. Recapture of the credit amount, under the following circumstances, shall be accomplished by increasing the tax in any of the five years succeeding the taxable year in which a credit has been earned pursuant to this section if the number of qualified full-time employees falls below the average number of qualified full-time employees during the taxable year. The tax increase amount shall be determined by (i) recalculating the credit that would have been earned for the original taxable year using the decreased number of qualified full-time employees and (ii) subtracting the recalculated credit amount from the amount previously earned. In the event that the average number of qualified full-time employees employed at an international trade facility falls below the number employed by the taxpayer prior to claiming any credits pursuant to this section in any of the five taxable years succeeding the year in which the credits were earned, all credits earned with respect to the international trade facility shall be recaptured. No credit amount shall be recaptured more than once pursuant to this subsection. Any recapture pursuant to this subsection shall reduce credits earned but not yet allowed, and credits allowed but carried forward, before the taxpayer’s tax liability is increased.
9. Notwithstanding the provisions of § 58.1-3 , the Department of Taxation shall annually provide information to the Virginia Port Authority related to tax credits issued pursuant to this section.
10. The Tax Commissioner shall issue guidelines that are necessary and desirable to carry out the provisions of this section, including (i) the computation, carryover, and recapture of the credits provided under this section; (ii) the establishment of criteria for (a) international trade facilities, (b) qualified full-time employees at such facilities, and (c) capital investments; and (iii) the computation, carryover, recapture, and redemption of the credit by affiliated companies. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.).

1. Is engaged in port-related activities, including, but not limited to, warehousing, distribution, freight forwarding and handling, and goods processing;

2. Uses maritime port facilities located in the Commonwealth; and

3. Transports at least five percent more cargo through maritime port facilities in the Commonwealth during the taxable year than was transported by the company through such facilities during the preceding taxable year. “New, permanent full-time position” means a job of indefinite duration, created by the company after establishing or expanding an international trade facility in the Commonwealth, requiring a minimum of 35 hours of employment per week for each employee for the entire normal year of the company’s operations, or a position of indefinite duration that requires a minimum of 35 hours of employment per week for each employee for the portion of the taxable year in which the employee was initially hired for, or transferred to, the international trade facility in the Commonwealth. Seasonal or temporary positions, or a job created when a job function is shifted from an existing location in the Commonwealth to the international trade facility, and positions in building and grounds maintenance, security, and other such positions that are ancillary to the principal activities performed by the employees at the international trade facility shall not qualify as new, permanent full-time positions. “Normal year” means at least 48 weeks in a calendar year. “Qualified full-time employee” means an employee filling a new, permanent full-time position in an international trade facility in the Commonwealth. “Qualified trade activities” means the completed exportation or importation of at least (i) one International Organization for Standardization ocean container with a minimum 20-foot length, (ii) 16 tons of noncontainerized cargo, or (iii) one unit of roll-on/roll-off cargo through any publicly or privately owned cargo facility located within the Commonwealth through which cargo is transported. Export cargo must be loaded on a barge or ocean-going vessel and import cargo must be discharged from a barge or ocean-going vessel at such facility.

History. 2011, c. 49; 2012, cc. 846, 849; 2014, c. 423; 2016, c. 69; 2021, Sp. Sess. I, c. 373.

Editor’s note.

Acts 2012, cc. 846 and 849, cl. 2 provides: “That the Department of Taxation shall submit a report concerning the tax credits set forth in §§ 58.1-439.12:06 , 58.1-439.12:09 , and 58.1-439.12:10 of the Code of Virginia to the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance no later than November 15 of the year immediately preceding any taxable year or calendar year in which the credit is due to expire. Such report shall include (i) the number of persons, corporations, or other classes of taxpayers claiming the credit in each of the immediately preceding five years, (ii) the aggregate amount of credits claimed in each of the preceding five years by each class of taxpayers, (iii) the average amount of the credit claimed by each class of taxpayers in each of the preceding five years, (iv) the average amount of taxes paid, after claiming any credits or deductions, by each class of taxpayers claiming the tax credit in each of the preceding five years, (v) any noted trends in the use of the tax credit, and (vi) any other information deemed relevant by the Department of Taxation. All other agencies of the Commonwealth involved in the administration of the tax credit shall provide any information requested by the Department of Taxation to assist in the formulation of the report.”

Acts 2012, cc. 846 and 849, cl. 3 provides: “That the Office of the Governor shall report to the General Assembly on recommendations regarding the establishment of an economic development zone and incentives to attract the distribution, manufacturing, warehousing, intermodal, and other support facilities needed for the Port of Virginia to realize the projected growth spanning from the Panama Canal Expansion Project. Such recommendations shall focus on implementing an economic development zone and incentive program comparable to those offered in states with competing ports. The recommendations shall be provided to the Chairmen of the House Appropriations Committee, the House Transportation Committee, the Senate Finance Committee, and the Senate Transportation Committee not later than December 1, 2012.”

Acts 2014, c. 423, cl. 2 provides: “That the provisions of this act shall be applicable to taxable years beginning on or after January 1, 2014, to the Commonwealth’s 2014-2015 fiscal year, and to all fiscal years thereafter.”

The 2012 amendments.

The 2012 amendments by cc. 846 and 849 are identical, and in subsection B, substituted “January 1, 2017” for “January 1, 2015” in the first sentence, and “$3,500” for “$3,000” in clause (i) of the second sentence and near the beginning of the fourth sentence; and substituted “June 30, 2017” for “June 30, 2015” at the end of the third sentence of subsection C.

The 2014 amendments.

The 2014 amendment by c. 423, in subsection A, under the definition of “International trade facility” in subdivision 3, substituted “five” for “10” and deleted “measured in 20-foot equivalent marine containers” following “cargo”; in the definition of “Qualified trade activities” inserted “(i),” substituted “(ii) 16 tons of noncontainerized cargo, or (iii) one unit of roll-on/roll-off cargo through any publicly or privately owned cargo facility located within the Commonwealth through which cargo is transported” for “through a Virginia Port Authority operated cargo facility,” “Export cargo” for “An export container” in the first sentence and “import cargo” for “an import container” in the second sentence; in subsection C substituted “$1,250,000” for “$250,000” twice; and rewrote subsection I. For applicability, see Editor’s note.

The 2016 amendments.

The 2016 amendment by c. 69 substituted “2022” for “2017” in subsections B and C.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 373, effective July 1, 2021, substituted “January 1, 2025” for “January 1, 2022” in subsection B; and substituted “June 30, 2025” for “June 30, 2022” in subsection C.

Law Review.

For annual survey article, “Taxation,” see 46 U. Rich. L. Rev. 203 (2011).

§ 58.1-439.12:07. Telework expenses tax credit.

1. As used in this section, unless the context requires a different meaning:“Eligible telework expenses” means expenses incurred during the taxable year pursuant to a telework agreement, in an amount up to $1,200 for each participating employee, that enable a participating employee to begin to telework, which expenses are not otherwise the subject of a deduction from income claimed by the employer in any tax year. Such expenses include, but are not limited to, expenses paid or incurred to purchase computers, computer-related hardware and software, modems, data processing equipment, telecommunications equipment, high-speed Internet connectivity equipment, computer security software and devices, and all related delivery, installation, and maintenance fees. Such expenses do not include replacement costs for computers, computer-related hardware and software, modems, data processing equipment, telecommunications equipment, or computer security software and devices at the principal place of business when that equipment is relocated to the telework site. Eligible telework expenses may also include up to a maximum of $20,000 for conducting a telework assessment on or after January 1, 2012. Such costs shall be ineligible for this credit if they are otherwise taken as a deduction by the employer from income in any taxable year. The costs included and allowed to be taken as a credit include program planning costs, which may include direct program development and training costs, raw labor costs, and professional consulting fees. Such costs shall not include those for which a credit is claimed under any other provision of this chapter. The credit for conducting a telework assessment shall be allowed once for each employer meeting the requirements herein.“Employer” means any employer subject to the income tax imposed by this chapter.“Participating employee” means an employee who has entered into a telework agreement with his employer on or after July 1, 2012, in accordance with policies set by the Virginia Department of Rail and Public Transportation. The term shall not include an individual who is self-employed or an individual who ordinarily spends a majority of the workday at a location other than the place where his duties are normally performed.“Telework” means the performance of normal and regular work functions on a workday at a location different from the place where work functions are normally performed and that is within or closer to the participating employee’s residence. The term shall not include home-based businesses, extensions of the workday, or work performed on a weekend or holiday.“Telework agreement” means an agreement signed by the employer and the participating employee, on or after July 1, 2012, but before January 1, 2019, that defines the terms of a telework arrangement, including the number of days per month the participating employee will telework in order to qualify for the credit, and any restrictions on the location from which the employee will telework.“Telework assessment” means an optional assessment leading to the development of policies and procedures necessary to implement a formal telework program that would qualify the employer for the credit provided in this section, including but not limited to a workforce profile; a telework program business case and plan; a detailed accounting of the purpose, goals, and operating procedures of the telework program; methodologies for measuring telework program activities and success; and a deployment schedule for increasing telework activity.
2. For taxable years beginning on or after January 1, 2012, but before January 1, 2019, an employer shall be allowed a credit against the taxes imposed pursuant to Articles 2 (§ 58.1-320 et seq.) and 10 (§ 58.1-400 et seq.) for eligible telework expenses incurred during the calendar year that ends during the taxable year. The amount of the credit shall not exceed $50,000 per employer for each calendar year.Such expenses may be incurred (i) only once per participating employee and (ii) directly by the employer on behalf of the participating employee or directly by the participating employee and reimbursed by the employer.
3. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
4. The amount of tax credits available to any employer under this section in any taxable year shall not exceed the employer’s tax liability. No unused tax credit shall be carried forward or carried back against the employer’s tax liability. An employer shall be ineligible for a tax credit pursuant to this section if such employer claims a credit based on the jobs, wages, or other expenses for the same employee under any other provision of this chapter.
5. An employer seeking to claim a tax credit provided herein shall submit a reservation application to the Tax Commissioner for tentative approval of the credit between September 1 and October 31 of the year preceding the calendar year in which the eligible telework expenses will be incurred. The Tax Commissioner shall establish policies and procedures for the reservation of tax credits by eligible employers. Such policies and procedures shall provide (i) requirements for applying for reservations of tax credits; (ii) a system for allocating the available amount of tax credits among eligible employers; and (iii) a procedure for the cancellation and reallocation of tax credit reservations allocated to eligible employers that, after reserving tax credits, have been determined to be ineligible for all or a portion of the tax credits reserved. Such application shall certify that the employer would not have incurred the eligible telework expenses for which the credit is sought but for the availability of such credit. The Tax Commissioner shall provide tentative approval of the applications no later than December 31 of the year in which the applications are received. When the application and amount of tax credits have been approved and the employer applicant notified, such employer may make purchases approved for the tax credits during the immediately following taxable year or lose the right to such credits.
6. In no event shall the aggregate amount of tax credits approved by the Tax Commissioner exceed $1 million annually. In the event the credit amounts on the applications filed with the Tax Commissioner exceed the maximum aggregate amount of tax credits, then the tax credits shall be allocated on a pro rata basis based on the amounts allowed by subsection B among the eligible employers who filed timely applications.
7. Actions of the Tax Commissioner relating to the approval or denial of applications for reservations of tax credits pursuant to this section shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.).

History. 2011, cc. 409, 417; 2012, cc. 327, 341; 2017, cc. 177, 454; 2019, c. 21.

The number of this section was assigned by the Virginia Code Commission, the number in the 2011 acts having been 58.1-439.12:06 .

The 2012 amendments.

The 2012 amendments by cc. 327 and 341, effective for taxable years beginning on or after January 1, 2012, are identical, and in subsection A, inserted “for conducting a telework assessment” near the beginning of the last sentence of the paragraph defining “Eligible telework expenses,” and substituted “January 1, 2017” for “January 1, 2014” in the paragraph defining “Telework agreement”; in subsection B, substituted “January 1, 2017” for “January 1, 2014” near the beginning, and “during the calendar year that ends during the taxable year” for “during the 2012 and 2013 calendar years” at the end, of the first sentence, and substituted “for each calendar year” for “for the 2012 and 2013 calenar years” at the end of the second sentence; in the third sentence of subsection D, inserted “based on the jobs, wages, or other expenses for the same employee” and substituted “other provision of this chapter” for “other provisions of this chapter”; in subsection E, substituted “preceding the calendar year in which the eligible telework expenses will be incurred” for “preceding the taxable year for which the tax credit is to be earned” at the end of the first sentence; and in subsection F, deleted “for credits earned in taxable years 2012 and 2013” at the end of the first sentence.

The 2017 amendments.

The 2017 amendments by cc. 177 and 454 are identical, and substituted “January 1, 2022” for “January 1, 2017” in the definition for “Telework agreement” in subsection A and in subsection B.

The 2019 amendments.

The 2019 amendment by c. 21 substituted “January 1, 2019” for “January 1, 2022” in the definition of “Telework agreement” in subsection A and in subsection B; and made stylistic changes.

§ 58.1-439.12:08. Research and development expenses tax credit.

1. As used in this section, unless the context requires a different meaning:“Virginia base amount” means the base amount as defined in § 41(c) of the Internal Revenue Code, as amended, that is attributable to Virginia, determined by (i) substituting “Virginia qualified research and development expense” for “qualified research expense”; (ii) substituting “Virginia qualified research” for “qualified research”; and (iii) instead of “fixed base percentage,” using:
   1. The percentage that the Virginia qualified research and development expense for the three taxable years immediately preceding the current taxable year in which the expense is incurred is of the taxpayer’s total gross receipts for such years; or
   2. The percentage that the Virginia qualified research and development expense for the applicable number of taxable years immediately preceding the current taxable year in which the expense is incurred is of the taxpayer’s total gross receipts for such years, for the taxpayer that has fewer than three but at least one prior taxable year.“Virginia gross receipts” means the same as “gross receipts” as defined in § 58.1-3700.1 .“Virginia qualified research” means qualified research, as defined in § 41(d) of the Internal Revenue Code, as amended, that is conducted in the Commonwealth.“Virginia qualified research and development expenses” means qualified research expenses, as defined in § 41(b) of the Internal Revenue Code, as amended, incurred for Virginia qualified research.
2. 1. For taxable years beginning on or after January 1, 2011, but before January 1, 2021, a taxpayer shall be allowed a credit against the tax levied pursuant to § 58.1-320 or 58.1-400 in an amount equal to (i) 15 percent of the first $300,000 in Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year or (ii) 20 percent of the first $300,000 in Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year if the Virginia qualified research was conducted in conjunction with a public or private institution of higher education in the Commonwealth, to the extent the expenses exceed the Virginia base amount for the taxpayer. B. 1. For taxable years beginning on or after January 1, 2011, but before January 1, 2021, a taxpayer shall be allowed a credit against the tax levied pursuant to § 58.1-320 or 58.1-400 in an amount equal to (i) 15 percent of the first $300,000 in Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year or (ii) 20 percent of the first $300,000 in Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year if the Virginia qualified research was conducted in conjunction with a public or private institution of higher education in the Commonwealth, to the extent the expenses exceed the Virginia base amount for the taxpayer.
   2. For taxable years beginning on or after January 1, 2021, but before January 1, 2025, a taxpayer shall be allowed a credit against the tax levied pursuant to § 58.1-320, 58.1-400 , or 58.1-1202 in an amount equal to (i) 15 percent of the first $300,000 in Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year or (ii) 20 percent of the first $300,000 in Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year if the Virginia qualified research was conducted in conjunction with a public or private institution of higher education in the Commonwealth, to the extent the expenses exceed the Virginia base amount for the taxpayer.
3. 1. Effective for taxable years beginning on or after January 1, 2016, at the election of the taxpayer, the credit otherwise allowed under this section shall be computed under this subsection and shall equal 10 percent of the difference of (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined. If the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year. C. 1. Effective for taxable years beginning on or after January 1, 2016, at the election of the taxpayer, the credit otherwise allowed under this section shall be computed under this subsection and shall equal 10 percent of the difference of (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined. If the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year.
   2. The aggregate amount of credits allowed to each taxpayer under this subsection shall not exceed $45,000 for the taxable year, except that the aggregate amount of credits allowed to each taxpayer shall not exceed $60,000 for the taxable year if the Virginia qualified research was conducted in conjunction with a public institution of higher education in the Commonwealth or a private institution of higher education in the Commonwealth.
4. The aggregate amount of credits available under this section for each fiscal year of the Commonwealth shall be as follows:
   1. For taxable years beginning on and after January 1, 2014, but before January 1, 2016, the total amount of credits granted for each of fiscal years 2015 and 2016 shall not exceed $6 million.
   2. For taxable years beginning on and after January 1, 2016, but before January 1, 2021, the total amount of credits granted for each fiscal year of the Commonwealth beginning with fiscal year 2017 shall not exceed $7 million.
   3. For taxable years beginning on and after January 1, 2021, the total amount of credits granted for each fiscal year of the Commonwealth beginning with fiscal year 2022 shall not exceed $7.77 million.
5. A taxpayer meeting the requirements of this section shall be eligible to receive a tax credit as provided herein. The Department shall develop and publish guidelines for applications and such guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.). Applications must be received by the Department no later than September 1 of the calendar year following the close of the taxable year in which the expenses were paid or incurred. In the event that approved applications for the tax credits allowed under this section exceed the amount of credits specified in subsection D for the taxable year, the Department shall apportion the credits by dividing the amount of credits specified in subsection D by the total amount of tax credits approved, to determine the percentage of allowed tax credits each taxpayer shall receive. In the event that the total amount of approved tax credits under this section for all applications for any taxable year is less than the maximum amount of credits for the year as specified in subsection D, the Department shall allocate credits up to the maximum amount as specified in subsection D, on a pro rata basis, to taxpayers who are already approved for the tax credit for the taxable year, in the following amounts:
   1. If the taxpayer computed the credit pursuant to subsection B, in an amount equal to 15 percent of the second $300,000 in qualified research expenses during the taxable year or 20 percent of the second $300,000 in qualified research expenses if the Virginia qualified research was conducted in conjunction with a public institution of higher education in the Commonwealth or a private institution of higher education in the Commonwealth; or
   2. If the taxpayer computed the credit under subdivision C 1, in an amount equal to the excess of the limitation set forth in subdivision C 2, up to an additional $45,000 per taxpayer, or $60,000 per taxpayer if the Virginia qualified research was conducted in conjunction with a public institution of higher education in the Commonwealth or a private institution of higher education in the Commonwealth.
6. If the amount of the credit allowed exceeds the taxpayer’s tax liability for the taxable year, the amount that exceeds the tax liability shall be refunded to the taxpayer, subject to the limitations set forth in the guidelines developed by the Department.
7. Any taxpayer who claims the tax credit for Virginia qualified research and development expenses pursuant to this section shall not use such expenses as the basis for claiming any other credit provided under the Code of Virginia.
8. Effective for taxable years beginning on or after January 1, 2016, no taxpayer with Virginia qualified research and development expenses in excess of $5 million for the taxable year shall claim both the credit allowed pursuant to this section and the credit allowed under § 58.1-439.12:11 for such year.
9. Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership interests in such entities or in accordance with a written agreement entered into by such individual partners, members, or shareholders, unless the partnership, limited liability company, or electing small business corporation (S corporation) elects for such credits not to be so allocated but to be received and claimed at the entity level by the partnership, limited liability company, or electing small business corporation (S corporation) pursuant to guidelines that shall be issued by the Department for purposes of such election.
10. The Department shall adopt guidelines to prescribe standards for determining when research and development is considered conducted in the Commonwealth for purposes of allowing the credit under this section. In adopting guidelines, the Department may consider (i) the location where the research and development is performed; (ii) the residence or business location of the taxpayer or taxpayers conducting the research and development; (iii) the location where supplies used in the research and development are consumed; and (iv) any other factors that the Department deems to be relevant.
11. The Tax Commissioner’s annual report to the Governor on revenue collections by tax source shall include (i) the total number of applicants approved for tax credits pursuant to this section for the applicable tax year and (ii) the total amount of such tax credits approved for the applicable tax year.
12. The Department shall require taxpayers applying for the credit to provide information including (i) the number of full-time employees employed by the taxpayer in the Commonwealth during the taxable year for which the credit is sought; (ii) the taxpayer’s sector or sectors according to the 2012 edition of the North American Industry Classification System (NAICS) as published by the United States Census Bureau; (iii) a brief description of the area, discipline, or field of Virginia qualified research performed by the taxpayer; (iv) the total gross receipts or anticipated total gross receipts of the taxpayer for the taxable year for which the credit is sought; and (v) whether the Virginia qualified research was conducted in conjunction with a Virginia public or private college or university. The Department shall aggregate and summarize the information collected and make it available to the Governor and any member of the General Assembly upon request, regardless of the number of taxpayers applying for the credit.
13. No tax credit shall be allowed pursuant to this section if the otherwise qualified research and development expenses are paid for or incurred by a taxpayer for research conducted in the Commonwealth on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos. The foregoing provision shall not apply to research conducted using stem cells other than embryonic stem cells.

History. 2011, cc. 742, 745; 2014, cc. 227, 306; 2016, cc. 300, 433, 661; 2020, cc. 469, 470; 2021, Sp. Sess. I, cc. 47, 48.

The number of this section was assigned by the Virginia Code Commission, the number in the 2011 acts having been 58.1-439.12:06 .

Editor’s note.

Acts 2011, cc. 742 and 745, cl. 3 provides: “That the guidelines developed by the Department of Taxation pursuant to § 58.1-439.12:08 shall specify that the tax credit authorized pursuant to § 58.1-439.12:08 shall not be refundable if the taxpayer conducts research in the Commonwealth on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos. The foregoing provision shall not apply to research conducted using stem cells other than embryonic stem cells.”

Acts 2014, cc. 227 and 306, cl. 2 provides: “That the provisions of this act shall become effective for taxable years beginning on or after January 1, 2014, except that the provisions of this act increasing the aggregate amount of tax credits that can be granted each fiscal year under § 58.1-439.12:08 of the Code of Virginia from $5 million to $6 million shall become effective for fiscal years of the Commonwealth beginning on or after July 1, 2014.”

Acts 2014, cc. 227 and 306, cl. 3 provides: “Notwithstanding the provisions of § 58.1-3 of the Code of Virginia or any other law, and regardless of how few taxpayers take the credit under § 58.1-439.12:08 of the Code of Virginia or any other circumstances, the Department, upon request by the General Assembly or any duly constituted committee of the General Assembly, shall disclose the total aggregate amount of credits under § 58.1-439.12:08 taken by all taxpayers.”

At the August 1, 2016, Virginia Code Commission meeting, the Commission voted to codify Acts 2011, ch. 742, cl. 2, as subsection M of this section.

At the direction of the Virginia Code Commission, the following changes were made to conform to Acts 2016, c. 588: in subsection B, substituted “public or private institution of higher education in the Commonwealth” for “Virginia public or private college or university”; in subdivision C 2, substituted “public institution of higher education in the Commonwealth or a private institution of higher education in the Commonwealth” for “Virginia public or private college or university”; in subdivisions E 1 and 2, substituted “public institution of higher education in the Commonwealth or a private institution of higher education” for “public or private college or university located”; and made minor stylistic changes.

The 2014 amendments.

The 2014 amendments by cc. 227 and 306 are identical, and in subsection B, substituted “2019” for “2016” and $234,000” for “$167,000” in clause (i) and “$234,000” for “$175,000” in (ii) in the first paragraph and “$6” for “$5” in the second paragraph; in subsection C, substituted “$6 million” for “$5 million” twice in the third and fourth sentences and substituted “$234,000” for “$167,000” and “$175,000,” respectively, in the fourth paragraph; at the end of subsection F, inserted the language beginning “unless the partnership, limited liability company” and added subsection I. For applicability, see Editor’s note.

The 2016 amendments.

The 2016 amendments by cc. 300 and 661 are identical, and added subsections C, D and H and redesignated the remaining subsections accordingly; in subsection B, substituted “2022” for “2019” and “$300,000” for “$234,000” twice in the first paragraph and deleted the second paragraph, which read “The total amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $6 million.”; and rewrote subsection E.

The 2016 amendment by c. 433, in subsection A, deleted the definition of “Partnership”; in subsection H, substituted “Tax Commissioner’s annual report to the Governor on revenue collections by tax source” for “Partnership shall include the tax credits approved in accordance with the provisions of this section in the Annual Report on Business Incentives compiled by the Secretary of Commerce and Trade. Such report”; and “amount of such” for “number of.”

The 2020 amendments.

The 2020 amendments by cc. 469 and 470 are identical, and substituted “January 1, 2025” for “January 1, 2022” in subsection A; in subdivision D 1, substituted “and” for “or” and “before” for “prior to,” in subdivision D 2, substituted “and” for “or” and inserted “but before January 1, 2021,” added subdivision D 3, in subsection E, substituted “September 1” for “July 1” in the first sentence and inserted “that” in the second sentence.

The 2021 Sp. Sess. I amendments.

The 2021 amendments by Sp. Sess. I, cc. 47 and 48, effective July 1, 2021, are identical, and redesignated former subsection B as subdivision B 1 and added subdivision B 2; and substituted “January 1, 2021” for “January 1, 2025” in subdivision B 1.

Law Review.

For annual survey article, “Taxation,” see 46 U. Rich. L. Rev. 203 (2011).

§ 58.1-439.12:09. Barge and rail usage tax credit.

1. As used in this section:“International trade facility” means a company that:
   1. Is doing business in the Commonwealth and engaged in port-related activities, including but not limited to warehousing, distribution, freight forwarding and handling, and goods processing;
   2. Has the sole discretion and authority to move cargo originating or terminating in the Commonwealth;
   3. Uses maritime port facilities located in the Commonwealth; and
   4. Uses barges and rail systems to move cargo through port facilities in the Commonwealth rather than trucks or other motor vehicles on the Commonwealth’s highways.
2. For taxable years beginning on and after January 1, 2011, but before January 1, 2025, a company that is an international trade facility shall be allowed a credit against the taxes imposed by Articles 2 (§ 58.1-320 et seq.), 6 (§ 58.1-360 et seq.), and 10 (§ 58.1-400 et seq.); Chapter 12 (§ 58.1-1200 et seq.); Article 1 (§ 58.1-2500 et seq.) of Chapter 25; or Article 2 (§ 58.1-2620 et seq.) of Chapter 26. The amount of the credit shall be $25 per 20-foot equivalent unit (TEU), 16 tons of noncontainerized cargo, or one unit of roll-on/roll-off cargo moved by barge or rail rather than by trucks or other motor vehicles on the Commonwealth’s highways.
3. The Tax Commissioner shall issue tax credits under this section, and in no case shall the Tax Commissioner issue more than $500,000 in tax credits pursuant to this section in any fiscal year of the Commonwealth. In addition, the Tax Commissioner shall not issue tax credits under this section subsequent to the Commonwealth’s fiscal year ending on June 30, 2025. The international trade facility shall not be allowed to claim any tax credit under this section unless it has applied to the Department for the tax credit and the Department has approved the credit. The Department shall determine the credit amount allowable for the year and shall provide a written certification to the international trade facility, which certification shall report the amount of the tax credit approved by the Department. The international trade facility shall attach the certification to the applicable tax return.
4. For purposes of this section, the amount of any credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, respectively, in proportion to their ownership or interest in such business entities.
5. Any credit not usable for the taxable year may be carried over for the next five taxable years or until such credit is fully taken, whichever occurs first. The amount of the credit allowed pursuant to this section shall not exceed the tax imposed for such taxable year. No credit shall be carried back to a preceding taxable year. If a taxpayer that is subject to the tax limitation imposed pursuant to this subsection is allowed another credit pursuant to any other section of this Code or has a credit carryover from a preceding taxable year, such taxpayer shall be considered to have first utilized any credit allowed that does not have a carryover provision, and then any credit that is carried forward from a preceding taxable year, before using any credit allowed pursuant to this section.
6. Notwithstanding the provisions of § 58.1-3 , the Department of Taxation shall annually provide information to the Virginia Port Authority related to tax credits issued pursuant to this section.
7. The Tax Commissioner shall issue guidelines that are necessary and desirable to carry out the provisions of this section, including (i) the computation and carryover of the credits provided under this section and (ii) the establishment of criteria for international trade facilities. Such guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.).

History. 2011, cc. 820, 861; 2012, cc. 846, 849; 2014, c. 423; 2016, c. 69; 2021, Sp. Sess. I, c. 373.

The number of this section was assigned by the Virginia Code Commission, the number in the 2011 acts having been 58.1-439.12:06 .

Editor’s note.

Acts 2012, cc. 846 and 849, cl. 2 provides: “That the Department of Taxation shall submit a report concerning the tax credits set forth in §§ 58.1-439.12:06 , 58.1-439.12:09 , and 58.1-439.12:10 of the Code of Virginia to the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance no later than November 15 of the year immediately preceding any taxable year or calendar year in which the credit is due to expire. Such report shall include (i) the number of persons, corporations, or other classes of taxpayers claiming the credit in each of the immediately preceding five years, (ii) the aggregate amount of credits claimed in each of the preceding five years by each class of taxpayers, (iii) the average amount of the credit claimed by each class of taxpayers in each of the preceding five years, (iv) the average amount of taxes paid, after claiming any credits or deductions, by each class of taxpayers claiming the tax credit in each of the preceding five years, (v) any noted trends in the use of the tax credit, and (vi) any other information deemed relevant by the Department of Taxation. All other agencies of the Commonwealth involved in the administration of the tax credit shall provide any information requested by the Department of Taxation to assist in the formulation of the report.”

Acts 2012, cc. 846 and 849, cl. 3 provides: “That the Office of the Governor shall report to the General Assembly on recommendations regarding the establishment of an economic development zone and incentives to attract the distribution, manufacturing, warehousing, intermodal, and other support facilities needed for the Port of Virginia to realize the projected growth spanning from the Panama Canal Expansion Project. Such recommendations shall focus on implementing an economic development zone and incentive program comparable to those offered in states with competing ports. The recommendations shall be provided to the Chairmen of the House Appropriations Committee, the House Transportation Committee, the Senate Finance Committee, and the Senate Transportation Committee not later than December 1, 2012.

Acts 2014, c. 423, cl. 2 provides: “That the provisions of this act shall be applicable to taxable years beginning on or after January 1, 2014, to the Commonwealth’s 2014-2015 fiscal year, and to all fiscal years thereafter.”

The 2012 amendments.

The 2012 amendments by cc. 846 and 849 are identical, and in subsection B, substituted “January 1, 2017” for “January 1, 2015” and deleted “of this chapter” following “(§ 58.1-400 et seq.)” in the first sentence and inserted “or 16 tons of noncontainerized cargo” in the second sentence.

The 2014 amendments.

The 2014 amendment by c. 423, in subdivision A 2, deleted “in containers” following “cargo”; in subdivision A 4, deleted “containers” following “cargo”; in subsection B, inserted “or one unit of roll-on/roll-off cargo”; in subsection C, substituted “$500,000” for “$1.5 million”; added subsection F, and redesignated former subsection F as subsection G. For applicability, see Editor’s note.

The 2016 amendments.

The 2016 amendment by c. 69 substituted “2022” for “2017” in subsections B and C.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 373, effective July 1, 2021, substituted “January 1, 2025” for “January 1, 2022” in subsection B; and substituted “June 30, 2025” for “June 30, 2022” in subsection C.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 373, effective July 1, 2021, substituted “January 1, 2025” for “January 1, 2022” in subsection B; and substituted “June 30, 2025” for “June 30, 2022” in subsection C.

Law Review.

For annual survey article, “Taxation,” see 46 U. Rich. L. Rev. 203 (2011).

§ 58.1-439.12:10. Virginia port volume increase tax credit.

1. As used in this section, unless the context indicates otherwise:“Agricultural entity” means a person engaged in growing or producing wheat, grains, fruits, nuts, crops; tobacco, nursery, or floral products; forestry products excluding raw wood fiber or wood fiber processed or manufactured for use as fuel for the generation of electricity; or seafood, meat, dairy, or poultry products.“Base year port cargo volume” means the total amount of (i) net tons of noncontainerized cargo, (ii) TEUs of cargo, or (iii) units of roll-on/roll-off cargo actually transported by way of a waterborne ship or vehicle through a port facility during the period from (i) January 1, 2010, through December 31, 2010, for manufacturing-related entities or (ii) January 1, 2012, through December 31, 2012, for agricultural entities and mineral and gas entities. Base year port cargo volume must be at least 75 net tons of noncontainerized cargo, 10 loaded TEUs, or 10 units of roll-on/roll-off cargo for a taxpayer to be eligible for the credits provided in this section. For a taxpayer that does not ship that amount in the year ending December 31, 2010, or December 31, 2012, as applicable, including a taxpayer who locates in Virginia after such periods, its base cargo volume will be measured by the initial January 1 through December 31 calendar year in which it meets the requirements of 75 net tons of noncontainerized cargo, 10 loaded TEUs, or 10 units of roll-on/roll-off cargo. Base year port cargo volume must be recalculated each calendar year after the initial base year.“Major facility” means a new facility to be located in Virginia that is projected to import or export cargo through a port in excess of 25,000 TEUs in its first calendar year.“Manufacturing-related entity” means a person engaged in the manufacturing of goods or the distribution of manufactured goods.“Mineral and gas entity” means a person engaged in severing minerals or gases from the earth.“Port cargo volume” means the total amount of net tons of noncontainerized cargo, net units of roll-on/roll-off cargo, or containers measured in TEUs of cargo transported by way of a waterborne ship or vehicle through a port facility.“Port facility” means any publicly or privately owned facility located within the Commonwealth through which cargo is transported by way of a waterborne ship or vehicle to or from destinations outside the Commonwealth and which handles cargo owned by third parties in addition to cargo owned by the port facility’s owner.“TEU” or “20-foot equivalent unit” means a volumetric measure based on the size of a container that is 20 feet long by eight feet wide by eight feet, six inches high.
2. 1. For taxable years beginning on and after January 1, 2011, but before January 1, 2025, a taxpayer that is an agricultural entity, manufacturing-related entity, or mineral and gas entity that uses port facilities in the Commonwealth and increases its port cargo volume at these facilities by a minimum of five percent in a single calendar year over its base year port cargo volume is eligible to claim a credit against the tax levied pursuant to §§ 58.1-320 and 58.1-400 in an amount determined by the Virginia Port Authority. The Virginia Port Authority may waive the requirement that port cargo volume be increased by a minimum of five percent over base year port cargo volume for any taxpayer that qualifies as a major facility. B. 1. For taxable years beginning on and after January 1, 2011, but before January 1, 2025, a taxpayer that is an agricultural entity, manufacturing-related entity, or mineral and gas entity that uses port facilities in the Commonwealth and increases its port cargo volume at these facilities by a minimum of five percent in a single calendar year over its base year port cargo volume is eligible to claim a credit against the tax levied pursuant to §§ 58.1-320 and 58.1-400 in an amount determined by the Virginia Port Authority. The Virginia Port Authority may waive the requirement that port cargo volume be increased by a minimum of five percent over base year port cargo volume for any taxpayer that qualifies as a major facility.
   2. Qualifying taxpayers that increase their port cargo volume by a minimum of five percent in a qualifying calendar year shall receive a $50 credit against the tax levied pursuant to §§ 58.1-320 and 58.1-400 for each TEU, unit of roll-on/roll-off cargo, or 16 net tons of noncontainerized cargo, as applicable, above the base year port cargo volume. A qualifying taxpayer that is a major facility as defined in this section shall receive a $50 credit against the tax levied pursuant to §§ 58.1-320 and 58.1-400 for each TEU, unit of roll-on/roll-off cargo, or 16 net tons of noncontainerized cargo, as applicable, transported through a port facility during the major facility’s first calendar year. A qualifying taxpayer may not receive more than $250,000 for each calendar year except as provided for in subdivision C 2. The maximum amount of credits allowed for all qualifying taxpayers pursuant to this section shall not exceed $3.2 million for each calendar year. The Virginia Port Authority shall allocate the credits pursuant to the provisions in subdivisions C 1 and C 2.
   3. If the credit exceeds the taxpayer’s tax liability for the taxable year, the excess amount may be carried forward and claimed against income taxes in the next five succeeding taxable years.
   4. The credit may be claimed by the taxpayer as provided in subdivision 1 only if the taxpayer owns the cargo at the time the port facilities are used.
3. 1. For every year in which a taxpayer claims the credit, the taxpayer shall submit an application to the Virginia Port Authority by March 1 of the calendar year after the calendar year in which the increase in port cargo volume occurs. The taxpayer shall attach a schedule to the taxpayer’s application to the Virginia Port Authority with the following information and any other information requested by the Virginia Port Authority or the Department: C. 1. For every year in which a taxpayer claims the credit, the taxpayer shall submit an application to the Virginia Port Authority by March 1 of the calendar year after the calendar year in which the increase in port cargo volume occurs. The taxpayer shall attach a schedule to the taxpayer’s application to the Virginia Port Authority with the following information and any other information requested by the Virginia Port Authority or the Department:
      1. A description of how the base year port cargo volume and the increase in port cargo volume were determined;
      2. The amount of the base year port cargo volume;
      3. The amount of the increase in port cargo volume for the taxable year stated both as a percentage increase and as a total increase in net tons of noncontainerized cargo, TEUs of cargo, and units of roll-on/roll-off cargo, as applicable, including information that demonstrates an increase in port cargo volume in excess of the minimum amount required to claim the tax credits pursuant to this section;
      4. Any tax credit utilized by the taxpayer in prior years; and
      5. The amount of tax credit carried over from prior years.
   2. If on March 15 of each year the $3.2 million amount of credit is not fully allocated among qualifying taxpayers, then those taxpayers who have been allocated a credit for the prior year shall be allowed a pro rata share of the remaining allocated credit up to $3.2 million. If on March 15 of each year, the cumulative amount of tax credits requested by qualifying taxpayers for the prior year exceeds $3.2 million, then the $3.2 million in credits shall be prorated among the qualifying taxpayers who requested the credit.
   3. The taxpayer shall claim the credit on its income tax return in a manner prescribed by the Department. The Department may require a copy of the certification form issued by the Virginia Port Authority be attached to the return or otherwise provided. Qualifying taxpayers may also claim the credit pursuant to § 58.1-439.12:09 for the same containers, noncontainerized cargo, or roll-on/roll-off units of cargo for which a credit is claimed under this section provided such taxpayer meets the applicable criteria set forth therein.
4. 1. Any taxpayer holding a credit under this section may transfer unused but otherwise allowable credit for use by another taxpayer on Virginia income tax returns. A taxpayer who transfers any amount of credit under this section shall file a notification of such transfer to the Department in accordance with procedures and forms prescribed by the Tax Commissioner. The transferred credits may be retroactively applied from the date such credits were originally issued, and the transferee may file an amended return under this chapter to claim such transferred credit for a prior tax year. However, nothing in this section shall be construed to extend the statute of limitations for filing an amended return under § 58.1-1823 or any other provision of law. D. 1. Any taxpayer holding a credit under this section may transfer unused but otherwise allowable credit for use by another taxpayer on Virginia income tax returns. A taxpayer who transfers any amount of credit under this section shall file a notification of such transfer to the Department in accordance with procedures and forms prescribed by the Tax Commissioner. The transferred credits may be retroactively applied from the date such credits were originally issued, and the transferee may file an amended return under this chapter to claim such transferred credit for a prior tax year. However, nothing in this section shall be construed to extend the statute of limitations for filing an amended return under § 58.1-1823 or any other provision of law.
   2. No transfer of tax credits pursuant to the provisions of this subsection shall be allowed unless such transfer occurs within one calendar year of the credit holder earning such credit.
   3. Only tax credits issued in taxable years beginning on and after January 1, 2018, but before January 1, 2025, shall be transferable pursuant to the provisions of this subsection.
5. Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership interests in such business entities.

History. 2011, cc. 831, 872; 2012, cc. 846, 849; 2013, c. 744; 2014, c. 423; 2016, c. 69; 2019, c. 759; 2021, Sp. Sess. I, c. 373.

The number of this section was assigned by the Virginia Code Commission, the number in the 2011 acts having been 58.1-439.12:06 .

Editor’s note.

Acts 2011, cc. 831 and 872, cl. 2 provides: “That the credit allowed through the provisions of this act shall be effective for taxable years beginning on and after January 1, 2011, but before January 1, 2016.”

Acts 2012, cc. 846 and 849, cl. 2 provides: “That the Department of Taxation shall submit a report concerning the tax credits set forth in §§ 58.1-439.12:06 , 58.1-439.12:09 , and 58.1-439.12:10 of the Code of Virginia to the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance no later than November 15 of the year immediately preceding any taxable year or calendar year in which the credit is due to expire. Such report shall include (i) the number of persons, corporations, or other classes of taxpayers claiming the credit in each of the immediately preceding five years, (ii) the aggregate amount of credits claimed in each of the preceding five years by each class of taxpayers, (iii) the average amount of the credit claimed by each class of taxpayers in each of the preceding five years, (iv) the average amount of taxes paid, after claiming any credits or deductions, by each class of taxpayers claiming the tax credit in each of the preceding five years, (v) any noted trends in the use of the tax credit, and (vi) any other information deemed relevant by the Department of Taxation. All other agencies of the Commonwealth involved in the administration of the tax credit shall provide any information requested by the Department of Taxation to assist in the formulation of the report.”

Acts 2012, cc. 846 and 849, cl. 3 provides: “That the Office of the Governor shall report to the General Assembly on recommendations regarding the establishment of an economic development zone and incentives to attract the distribution, manufacturing, warehousing, intermodal, and other support facilities needed for the Port of Virginia to realize the projected growth spanning from the Panama Canal Expansion Project. Such recommendations shall focus on implementing an economic development zone and incentive program comparable to those offered in states with competing ports. The recommendations shall be provided to the Chairmen of the House Appropriations Committee, the House Transportation Committee, the Senate Finance Committee, and the Senate Transportation Committee not later than December 1, 2012.”

Acts 2014, c. 423, cl. 2 provides: “That the provisions of this act shall be applicable to taxable years beginning on or after January 1, 2014, to the Commonwealth’s 2014-2015 fiscal year, and to all fiscal years thereafter.”

The 2012 amendments.

The 2012 amendments by cc. 846 and 849 are identical, and substituted “January 1, 2017” for “January 1, 2016” in subdivision B 1; and made a minor stylistic change.

The 2013 amendments.

The 2013 amendment by c. 744, effective for taxable years beginning on or after January 1, 2013, in subsection A, inserted the paragraphs defining “Agricultural entity,” “Manufacturing-related entity” and “Mineral and gas entity,” and in the paragraph defining “Base year port cargo volume,” inserted the clause (i) designator and “for manufacturing-related entities or (ii) January 1, 2012, through December 31, 2012, for agricultural entities and mineral and gas entities” in the first sentence, and inserted “or December 31, 2012, as applicable” and substituted “after such periods” for “after December 31, 2010” in the third sentence; and in subdivision B 1, substituted “a taxpayer that is an agricultural entity, manufacturing-related entity, or mineral and gas entity” for “a taxpayer engaged in the manufacturing of goods or the distribution of manufactured goods” in the first sentence.

The 2014 amendments.

The 2014 amendment by c. 423, in subsection A, in the definition of “Base year port cargo volume,” inserted the first clause (i) and clause (ii) designations and added clause (iii) in the first sentence and inserted “10 units of roll-on/roll-off cargo” in the second and third sentences; in the definition of “Port cargo volume,” inserted “net units of roll-on/roll-off cargo”; in subdivision B 2, inserted “unit of roll-on/roll-off cargo, or 16 net tons of noncontainerized cargo, as applicable” twice; in subdivision C 1 c, inserted “and units of roll-on/roll-off cargo, as applicable”; and in subdivision C 3, added the last sentence. For applicability, see Editor’s note.

The 2016 amendments.

The 2016 amendment by c. 69 substituted “January 1, 2022” for “January 1, 2017” in subdivision B 1.

The 2019 amendments.

The 2019 amendment by c. 759 added subsection D; and redesignated former subsection D as E.

The 2021 Sp. Sess. I amendments.

The 2021 amendment by Sp. Sess. I, c. 373, effective July 1, 2021, substituted “January 1, 2025” for “January 1, 2022” in subdivisions B 1 and D 3.

Law Review.

For annual survey article, “Taxation,” see 46 U. Rich. L. Rev. 203 (2011).

§ 58.1-439.12:11. Major research and development expenses tax credit.

1. As used in this section, unless the context requires a different meaning:“Virginia qualified research” means qualified research, as defined in § 41(d) of the Internal Revenue Code, as amended, that is conducted in the Commonwealth.“Virginia qualified research and development expenses” means qualified research expenses, as defined in § 41(b) of the Internal Revenue Code, as amended, incurred for Virginia qualified research.
2. 1. For taxable years beginning on or after January 1, 2016, but before January 1, 2021, a taxpayer with Virginia qualified research and development expenses for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to § 58.1-320 or 58.1-400 in an amount equal to 10 percent of the difference between (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined. If the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year. B. 1. For taxable years beginning on or after January 1, 2016, but before January 1, 2021, a taxpayer with Virginia qualified research and development expenses for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to § 58.1-320 or 58.1-400 in an amount equal to 10 percent of the difference between (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined. If the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year.
   2. For taxable years beginning on or after January 1, 2021, but before January 1, 2025, a taxpayer with Virginia qualified research and development expenses for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to § 58.1-320, 58.1-400 , or 58.1-1202 in an amount equal to 10 percent of the difference between (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined. If the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year.
3. 1. For taxable years beginning before January 1, 2021, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $20 million. C. 1. For taxable years beginning before January 1, 2021, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $20 million.
   2. For taxable years beginning on and after January 1, 2021, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $24 million.
4. In the event that approved applications for the tax credits allowed under this section exceed the limit described in subsection C for any taxable year, the Department shall apportion the credits by dividing such limit by the total amount of tax credits approved, to determine the percentage of allowed tax credits each taxpayer shall receive.
5. The amount of the credit claimed for the taxable year shall not exceed 75 percent of the total amount of tax imposed by this chapter upon the taxpayer for the taxable year. Any credit not usable for the taxable year for which the credit was first allowed may be carried over for credit against the income taxes of the taxpayer in the next 10 succeeding taxable years or until the total amount of the tax credit has been taken, whichever is sooner.
6. Any taxpayer who claims the tax credit for Virginia qualified research and development expenses pursuant to this section shall not use such expenses as the basis for claiming any other credit provided under the Code of Virginia.
7. Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership interests in such entities or in accordance with a written agreement entered into by such individual partners, members, or shareholders.
8. The Department shall develop and publish guidelines under this section including guidelines for applying for the tax credit. Such guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.). Applications for the tax credit must be received by the Department no later than September 1 of the calendar year following the close of the taxable year in which the expenses were paid or incurred.The Department shall also adopt guidelines to prescribe standards for determining when research and development is considered conducted in the Commonwealth for purposes of allowing the credit under this section. In adopting guidelines, the Department may consider (i) the location where the research and development is performed; (ii) the residence or business location of the taxpayer or taxpayers conducting the research and development; (iii) the location where supplies used in the research and development are consumed; and (iv) any other factors that the Department deems to be relevant.
9. No tax credit shall be allowed pursuant to this section, if the otherwise qualified research and development expenses are paid for or incurred by a taxpayer for research conducted in the Commonwealth on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos. The foregoing provision shall not apply to research conducted using stem cells other than embryonic stem cells.

History. 2016, cc. 300, 661; 2020, cc. 469, 470; 2021, Sp. Sess. I, cc. 47, 48.

Editor’s note.

Acts 2016, cc. 300 and 661, cl. 2 was codified as subsection I of this section at the direction of the Virginia Code Commission.

The 2020 amendments.

The 2020 amendments by cc. 469 and 470 are identical, and in subsection B, substituted “January 1, 2025” for “January 1, 2022”; in subsection C, inserted the subdivision 1 designator and “For taxable years beginning before January 1, 2021,” and added subdivision 2; in subsection D, inserted “that” in the first sentence, substituted “the limit described in subsection C” for “20 million,” and substituted “such limit” for “$20 million”; in subsection H, substituted “September 1” for “July 1” in the second sentence.

The 2021 Sp. Sess. I amendments.

The 2021 amendments by Sp. Sess. I, cc. 47 and 48, effective July 1, 2021, are identical, and redesignated former subsection B as subdivision B 1 and added subdivision B 2; and substituted “January 1, 2021” for “January 1, 2025” in subdivision B 1.

§ 58.1-439.12:12. Food crop donation tax credit.

1. As used in this section, unless the context requires a different meaning:“Food crops” means grains, fruits, nuts, or vegetables.“Nonprofit food bank” means an entity located in the Commonwealth that is exempt from taxation under § 501(c)(3) of the Internal Revenue Code, as amended or renumbered, and organized with a principal purpose of providing food to the needy.
2. For taxable years beginning on or after January 1, 2016, but before January 1, 2022, any person engaged in the business of farming as defined under 26 C.F.R. § 1.175-3 that donates food crops grown by the person in the Commonwealth to a nonprofit food bank shall be allowed a credit against the tax levied pursuant to § 58.1-320 or 58.1-400 for the taxable year of the donation. The person shall be allowed a credit in an amount equal to 30 percent of the fair market value of such food crops donated by the person to a nonprofit food bank during the taxable year but not to exceed an aggregate credit of $5,000 for all such donations made by the person during such year.
3. Credit shall be allowed under this section only if (i) the use of the donated food crops by the donee nonprofit food bank is related to providing food to the needy, (ii) the donated food crops are not transferred for use outside the Commonwealth or used by the donee nonprofit food bank as consideration for services performed or personal property purchased, and (iii) the donated food crops, if sold by the donee nonprofit food bank, are sold to the needy, other nonprofit food banks, or organizations that intend to use the food crops to provide food to the needy.
4. The Tax Commissioner shall issue tax credits under this section, and in no case shall the Tax Commissioner issue more than $250,000 in tax credits pursuant to this section in any fiscal year of the Commonwealth. For every taxable year for which a person seeks the tax credit under this section, the person shall submit an application to the Department in accordance with the forms, instructions, dates, and procedures prescribed by the Department. In order to claim any credit, for each donation made that is approved by the Department for tax credit, the person making the donation shall attach to the person’s income tax return a written certification prepared by the donee nonprofit food bank. The written certification prepared by the donee nonprofit food bank shall identify the donee nonprofit food bank, the person donating food crops to it, the date of the donation, the number of pounds of food crops donated, and the fair market value of the food crops donated. The certification shall also include a statement by the donee nonprofit food bank that its use and disposition of the food crops complies with the requirements under subsection C.
5. The amount of the credit claimed shall not exceed the total amount of tax imposed by this chapter upon the person for the taxable year. Any credit not usable for the taxable year for which the credit was first allowed may be carried over for credit against the income taxes of the person in the next five succeeding taxable years or until the total amount of the tax credit has been taken, whichever is sooner.
6. Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership or interest in such business entities.
7. The Tax Commissioner shall develop guidelines implementing the provisions of this section. The guidelines shall include procedures for the allocation of tax credits among participating taxpayers. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.).

History. 2016, cc. 304, 391.

The number of this section was assigned by the Virginia Code Commission, the number in the 2016 acts having been 58.1-439.12:11 .

§§ 58.1-439.13 through 58.1-439.16. Repealed by Acts 2016, c. 305, cl. 2.

Editor’s note.

Acts 2016, c. 305, cl. 3 provides: “That this act shall in no way alter or affect any (i) tax credit or tax benefit or other tax attribute allowed or earned under any section repealed by this act or (ii) tax liability or obligation pursuant to any such section.”

Former § 58.1-439.15, was also amended by Acts 2016, c. 69, to delete an obsolete reference.

Former § 58.1-439.13 , pertaining to Tax credit for investing in technology industries in tobacco-dependent localities, derived from Acts 2000, c. 1042. Former § 58.1-439.14, pertaining to Tax credit for research and development activity occurring in tobacco-dependent localities, derived from Acts 2000, c. 1042. Former § 58.1-439.15, pertaining to Technology Initiative in Tobacco-Dependent Localities Fund, derived from Acts 2000, c. 1042; 2011, c. 49. Former § 58.1-439.15:01, pertaining to Tax incentives for use of domestic tobacco, derived from Acts 2005, cc. 899, 901. Former § 58.1-439.16, pertaining to Tax Commissioner to promulgate regulations, derived from 2000, c. 1042.

§ 58.1-439.17. Grants in lieu of or in addition to tax credits.

The Tobacco Region Revitalization Commission created under § 3.2-3101 may establish a grant program for purposes of encouraging qualified investments and eligible research and development activities in tobacco-dependent localities. If the Commission elects to establish such a program, the program may be in addition to the tax credit programs allowed under former §§ 58.1-439.13 and 58.1-439.14. The criteria to receive grants shall be the same as the criteria for the tax credits allowed under former §§ 58.1-439.13 and 58.1-439.14 as they were in effect on December 31, 2009. In any case where a grant is awarded for any investment or for eligible research and development activity, the person receiving the grant may not use such investment or research and development activity as the basis for claiming any credit provided under the Code of Virginia.

History. 2000, c. 1042; 2016, c. 305.

The number of this section was assigned by the Virginia Code Commission, the number in the 2000 act having been 58.1-439.16.

Cross references.

As to the Tobacco Indemnification and Community Revitalization Fund, see § 3.2-3106.

Editor’s note.

At the direction of the Virginia Code Commission, the reference to “Tobacco Region Revitalization Commission” was substituted for “Tobacco Indemnification and Community Revitalization Commission” to conform to Acts 2015, cc. 399 and 433.

Acts 2016, c. 305, cl. 3 provides: “That this act shall in no way alter or affect any (i) tax credit or tax benefit or other tax attribute allowed or earned under any section repealed by this act or (ii) tax liability or obligation pursuant to any such section.”

The 2016 amendments.

The 2016 amendment by c. 305 rewrote the section, which read “Notwithstanding any provision of this article, the Tobacco Region Revitalization Commission may establish a grant program for purposes of encouraging qualified investments and eligible research and development activities in tobacco-dependent localities. If the Commission elects to establish such a program, the program may replace or may be in addition to the tax credits established under this article. The criteria for taxpayers to receive grants shall be the same as the criteria for taxpayers to be allowed tax credits under §§ 58.1-439.13 and 58.1-439.14. In any case where a grant is awarded to a taxpayer for any investment under § 58.1-439.13 or for eligible research and development activity under § 58.1-439.14, such taxpayer may not use such investment or research and development activity as the basis for claiming any credit provided under the Code of Virginia.”

§ 58.1-439.18. Definitions.

As used in this article:

“Affiliate” means with respect to any person, any other person directly or indirectly controlling, controlled by, or under common control with such person. For purposes of this definition, “control” (including controlled by and under common control with) shall mean the power, directly or indirectly, to direct or cause the direction of the management and policies of such person whether through ownership or voting securities or by contract or otherwise.

“Business firm” means any corporation, partnership, electing small business (Subchapter S) corporation, limited liability company, or sole proprietorship authorized to do business in this Commonwealth subject to tax imposed by Articles 2 (§ 58.1-320 et seq.) and 10 (§ 58.1-400 et seq.) of Chapter 3, Chapter 12 (§ 58.1-1200 et seq.), Article 1 (§ 58.1-2500 et seq.) of Chapter 25, or Article 2 (§ 58.1-2620 et seq.) of Chapter 26. “Business firm” also means any trust or fiduciary for a trust subject to tax imposed by Article 6 (§ 58.1-360 et seq.) of Chapter 3.

“Commissioner of Social Services” means the Commissioner of Social Services or his designee.

“Community services” means any type of counseling and advice, emergency assistance, medical care, provision of basic necessities, or services designed to minimize the effects of poverty, furnished primarily to low-income persons.

“Contracting services” means the provision, by a business firm licensed by the Commonwealth as a contractor under Chapter 11 (§ 54.1-1100 et seq.) of Title 54.1, of labor or technical advice to aid in the development, construction, renovation, or repair of (i) homes of low-income persons or (ii) buildings used by neighborhood organizations.

“Education” means any type of scholastic instruction or scholastic assistance to a low-income person or an eligible student with a disability.

“Eligible student with a disability” means a student (i) for whom an individualized educational program has been written and finalized in accordance with the federal Individuals with Disabilities Education Act (IDEA), regulations promulgated pursuant to IDEA, and regulations of the Board of Education and (ii) whose family’s annual household income is not in excess of 400 percent of the current poverty guidelines.

“Housing assistance” means furnishing financial assistance, labor, material, or technical advice to aid the physical improvement of the homes of low-income persons.

“Job training” means any type of instruction to an individual who is a low-income person that enables him to acquire vocational skills so that he can become employable or able to seek a higher grade of employment.

“Low-income person” means an individual whose family’s annual household income is not in excess of 300 percent of the current poverty guidelines.

“Neighborhood assistance” means providing community services, education, housing assistance, or job training.

“Neighborhood organization” means any local, regional or statewide organization whose primary function is providing neighborhood assistance and holding a ruling from the Internal Revenue Service of the United States Department of the Treasury that the organization is exempt from income taxation under the provisions of §§ 501(c)(3) and 501(c)(4) of the Internal Revenue Code of 1986, as amended from time to time, or any organization defined as a community action agency in the Economic Opportunity Act of 1964 (42 U.S.C. § 2701 et seq.), or any housing authority as defined in § 36-3 .

“Poverty guidelines” means the poverty guidelines for the 48 contiguous states and the District of Columbia updated annually in the Federal Register by the U.S. Department of Health and Human Services under the authority of § 673(2) of the Omnibus Budget Reconciliation Act of 1981.

“Professional services” means any type of personal service to the public that requires as a condition precedent to the rendering of such service the obtaining of a license or other legal authorization and shall include, but shall not be limited to, the personal services rendered by medical doctors, dentists, architects, professional engineers, certified public accountants, attorneys-at-law, and veterinarians.

“Scholastic assistance” means (i) counseling or supportive services to elementary school, middle school, secondary school, or postsecondary school students or their parents in developing a postsecondary academic or vocational education plan, including college financing options for such students or their parents, or (ii) scholarships.

History. 1981, c. 629, § 63.1-321; 1982, c. 178; 1984, c. 720; 1989, c. 310; 1996, c. 77; 1997, c. 640; 1999, cc. 890, 909; 2002, c. 747, § 63.2-2000 ; 2008, c. 585; 2009, cc. 10, 851; 2010, c. 164; 2011, cc. 312, 370; 2012, cc. 731, 842; 2016, c. 426.

Cross references.

As to July 1, 2028, expiration of tax credits under this article, see § 58.1-439.20:2 .

Editor’s note.

Acts 2008, c. 585, cl. 2 provides: “That any business firm that has pledged in writing on or before January 1, 2006, to a neighborhood organization to make a donation to such organization shall be eligible to receive a tax credit equal to 45 percent of the value of any qualifying donation that is covered under such writing, provided that the donation is made on or before January 1, 2013. Nothing in this enactment shall be interpreted or construed as affecting any other provision of the Neighborhood Assistance Act (§ 58.1-439.18 et seq.) of the Code of Virginia. For purposes of this enactment, the terms ‘business firm’ and ‘neighborhood organization’ shall mean the same as those terms are defined in § 58.1-439.18 of the Code of Virginia.”

Acts 2008, c. 585, cl. 3 provides: “That the provisions of this act shall in no way affect any tax credit issued prior to July 1, 2008, under the Neighborhood Assistance Act (§ 63.2-2000 et seq.) of the Code of Virginia.”

Acts 2008, c. 585, cl. 4 provides: “That the provisions of this act shall become effective in due course. In addition, the provision in subsection B of § 58.1-439.21 of the Code of Virginia providing that the value of a motor vehicle donated by a business firm for a program approved pursuant to § 58.1-439.20 of the Code of Virginia shall be such value as determined for federal income tax purposes shall become effective for such donations made on or after July 1, 2008.”

Acts 2009, c. 851, cl. 2 provides: “That the Department of Education shall establish and make publicly available guidelines for purposes of implementing the provisions of the Neighborhood Assistance Act Tax Credit (§ 58.1-439.18 et seq.) of the Code of Virginia that relate to tax credits allocated for education proposals. The guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.) of the Code of Virginia.”

Acts 2009, c. 851, cl. 3 was repealed by Acts 2012, c. 842. For current provisions see Acts 2012, c. 842, cl. 3, noted under this section.

Acts 2012, c. 731, cl. 3 provides: “That the Department of Taxation shall submit a report concerning the tax credits set forth in Article 13.2 (§ 58.1-439.18 et seq.) and Article 13.3 (§ 58.1-439.25 et seq.) of Chapter 3 of Title 58.1 of the Code of Virginia to the House Committee on Appropriations, the House Committee on Finance, and the Senate Committee on Finance no later than November 15 of the year immediately preceding any taxable year or calendar year in which the credit is due to expire. Such report shall include (i) the number of persons, corporations, or other classes of taxpayers claiming the tax credit in each of the immediately preceding five years, (ii) the aggregate amount of credits claimed in each of the preceding five years by each class of taxpayers, (iii) the average amount of the credit claimed by each class of taxpayers in each of the preceding five years, (iv) the average amount of taxes paid, after claiming any credits or deductions, by each class of taxpayers claiming the tax credit in each of the preceding five years, (v) any noted trends in the use of the tax credit, and (vi) any other information deemed relevant by the Department of Taxation. For purposes of the tax credit set forth under Article 13.3 (§ 58.1-439.25 et seq.) of Chapter 3 of Title 58.1 such information in clauses (i) through (vi) shall be provided for all immediately preceding years in which the tax credit was in effect. All other agencies of the Commonwealth involved in the administration of the tax credit shall provide any information requested by the Department of Taxation to assist in the formulation of the report.”

Acts 2012, c. 842, cl. 3 provides: “That the provisions of this act providing that a grouping of neighborhood organization affiliates shall not be approved for more than an aggregate of $0.825 million in neighborhood assistance tax credits for all education proposals in any fiscal year shall not be applicable to any grouping of neighborhood organization affiliates that was approved for more than an aggregate of $0.5 million in neighborhood assistance tax credits for education proposals in any fiscal year of the Commonwealth that ended prior to January 1, 2010.”

Acts 2017, c. 317, cl. 1 provides: “That any neighborhood organization, as that term is defined in § 58.1-439.18 of the Code of Virginia, submitting a proposal to the Superintendent of Public Instruction for an allocation of tax credits pursuant to § 58.1-439.20 of the Code of Virginia for the program year beginning July 1, 2017, shall include with its proposal a list of all localities in the Commonwealth in which the neighborhood organization provided services during the program year beginning July 1, 2016. The Department of Education shall aggregate the information received pursuant to this act and submit it to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, the Senate Committee on Finance, and the Joint Subcommittee to Evaluate Tax Preferences no later than December 1, 2017.”

The 2009 amendments.

The 2009 amendment by c. 10, in the definition of “Professional services,” added “veterinarians” at the end and made related changes.

The 2009 amendment by c. 851 added the definitions of “Affiliate,” “Poverty guidelines” and “Scholastic assistance”; and rewrote the definition of “Impoverished people.”

The 2010 amendments.

The 2010 amendment by c. 164 substituted “200 percent” for “180 percent” preceding “of the current poverty guidelines” in the first sentence in the definition of “Improverished people.”

The 2011 amendments.

The 2011 amendment by c. 312 substituted “proposals submitted by a nonprofit entity requesting an allocation of tax credits under this article” for “education proposals submitted to the Superintendent of Public Instruction requesting an allocation of tax credits under this article. For other than education proposals, impoverished people means individuals with family annual income not in excess of 150 percent of the current poverty guidelines” in the definition of “Impoverished people.”

The 2011 amendment by c. 370 added the last sentence in the definition of “Business firm.”

The 2012 amendments.

The 2012 amendments by cc. 731 and 842 are identical, and substituted “low-income persons” for “impoverished people” at the end of the paragraph defining “Community services” and in clause (i) of the paragraph defining “Contracting services”; substituted “a low-income person or an eligible student with a disability” for “an individual who is impoverished” at the end of the paragraph defining “Education”; added the paragraphs defining “Eligible student with a disability” and “Low-income person”; deleted the former paragraph defining “Impoverished people” which read: “ ‘Impoverished people’ means individuals with family annual income not in excess of 200 percent of the current poverty guidelines for proposals submitted by a nonprofit entity requesting an allocation of tax credits under this article”; substituted “a low-income person” for “impoverished” in the paragraph defining “Job training”; and deleted “for impoverished people,” following “neighborhood assistance” in the paragraph defining “Neighborhood organization.”

The 2016 amendments.

The 2016 amendment by c. 426 twice substituted “Commissioner of Social Services” for “Commissioner of the State Department of Social Services.”

§ 58.1-439.19. Public policy; business firms; donations.

It is hereby declared to be public policy of the Commonwealth to encourage business firms to make donations to neighborhood organizations for the benefit of low-income persons.

History. 1981, c. 629, § 63.1-322; 1997, c. 640; 2002, c. 747, § 63.2-2001; 2008, c. 585; 2012, cc. 731, 842.

Cross references.

As to July 1, 2028, expiration of tax credits under this article, see § 58.1-439.20:2 .

The 2012 amendments.

The 2012 amendments by cc. 731 and 842 are identical, and substituted “low-income persons” for “impoverished people.”

§ 58.1-439.20. Proposals to the State Board of Social Services; regulations; tax credits authorized.

1. Any neighborhood organization may submit a proposal, other than education proposals which shall be applied for and allocated pursuant to the provisions of § 58.1-439.20:1 , to the Commissioner of Social Services requesting an allocation of tax credits for use by business firms making donations to the neighborhood organization.The proposal shall set forth the program to be conducted by the neighborhood organization, the low-income persons to be assisted, the estimated amount to be donated to the program, and the plans for implementing the program.
2. 1. The State Board of Social Services is hereby authorized to adopt regulations for the approval or disapproval of such proposals by neighborhood organizations and for determining the value of the donations. B. 1. The State Board of Social Services is hereby authorized to adopt regulations for the approval or disapproval of such proposals by neighborhood organizations and for determining the value of the donations.
   2. In order to be eligible to receive an allocation of tax credits pursuant to this article, a neighborhood organization shall have been in existence for at least one year. As a prerequisite for approval, neighborhood organizations with total revenues of (i) more than $100,000 shall provide to the Commissioner of Social Services an audit or review for the most recent year or (ii) $100,000 or less shall provide to the Commissioner of Social Services a compilation for the most recent year. Such audit, review, or compilation shall be performed by an independent certified public accountant. For purposes of this subdivision, “total revenues” means all revenues, including the value of all donations, for the organization’s most recent year. No proposal for an allocation of tax credits shall be untimely filed solely because such audit, review, or compilation was not submitted by the neighborhood organization by the proposal filing deadline, provided that the audit, review, or compilation is submitted to the Commissioner of Social Services within the 30-day period immediately following such deadline.
   3. In order to be eligible to receive an allocation of credits pursuant to this article, at least 50 percent of the persons served by the neighborhood organization shall be low-income persons, and at least 50 percent of the neighborhood organization’s revenues shall be used to provide services to low-income persons.
   4. In order for a proposal to be approved, an applicant neighborhood organization and any of its affiliates shall meet the requirements of this section and the application regulations.However, beginning with tax credit allocations for fiscal year 2016-2017 and thereafter, such requirement for a proposal submitted by a neighborhood organization to the Commissioner of Social Services shall not apply in determining the eligibility of the neighborhood organization submitting a proposal, provided that (i) the neighborhood organization otherwise meets all statutory requirements and regulations, (ii) the neighborhood organization received a fiscal year 2013-2014 allocation of neighborhood assistance tax credits, and (iii) no affiliate of the neighborhood organization submits a proposal for or receives an allocation of tax credits pursuant to this article for the program year for which the neighborhood organization has submitted its proposal.
   5. The regulations shall provide for the equitable allocation of the available amount of tax credits among the approved proposals submitted by neighborhood organizations. In allocating credits, the Commissioner of Social Services or the Superintendent of Public Instruction shall consider the past performance of neighborhood organizations that have received allocations of credits, including review of performance metrics, success in reaching targeted goals, or other measures of accountability that may be established by regulations or guidelines.
   6. The regulations or guidelines shall provide that in any year in which the available amount of tax credits exceeds the previous year’s available amount, at least 10 percent of the excess amount shall be allocated to qualified programs proposed by neighborhood organizations that did not receive any allocations in the preceding year. If the amount of tax credits requested by such neighborhood organizations is less than 10 percent of the  excess amount, the unallocated portion of such 10 percent shall be allocated to qualified programs proposed by other neighborhood organizations.
3. 1. If the Commissioner of Social Services approves a proposal submitted by a neighborhood organization, the organization shall make the allocated tax credit amounts available to business firms making donations to the approved program. A neighborhood organization shall not assign or transfer an allocation of tax credits to another neighborhood organization without the approval of the Commissioner of Social Services. C. 1. If the Commissioner of Social Services approves a proposal submitted by a neighborhood organization, the organization shall make the allocated tax credit amounts available to business firms making donations to the approved program. A neighborhood organization shall not assign or transfer an allocation of tax credits to another neighborhood organization without the approval of the Commissioner of Social Services.
   2. Notwithstanding any other provision of law, no more than an aggregate of $0.5 million in tax credits shall be approved in a fiscal year to a neighborhood organization or to a grouping of neighborhood organization affiliates for all other proposals combined.
   3. If, after the initial allocation of credits to approved proposals, the State Department of Social Services has a balance of tax credits remaining for the fiscal year that can be used or allocated by a neighborhood organization for a proposal that had been approved for tax credits during the initial allocation, then the Commissioner of Social Services shall reallocate the remaining balance of tax credits to such previously approved proposals to the extent that a neighborhood organization can use or allocate additional tax credits for the previously approved proposal. The $0.5 million annual limitations for tax credits approved to a grouping of neighborhood organization affiliates shall be inapplicable for such reallocation of any balance of tax credits. The balance of tax credits remaining for reallocation shall include the amount of any tax credits that have been granted for a proposal approved during the initial allocation but for which the Commissioner of Social Services received notice from the neighborhood organization that it will not be able to use or allocate such amount for the approved proposal.
4. The total amount of tax credits granted for programs approved by the Commissioner of Social Services under this article for each fiscal year shall not exceed $8 million for fiscal year 2015-2016 and each fiscal year thereafter.The Commissioner of Social Services shall work cooperatively with the Superintendent of Public Instruction for purposes of ensuring that neighborhood organization proposals are submitted to the proper state agency pursuant to this section and § 58.1-439.20:1 . The Commissioner of Social Services may request the assistance of the Department of Taxation for purposes of determining whether or not anticipated donations for which tax credits are requested by a neighborhood organization likely qualify as a charitable donation under federal tax laws and regulations.
5. Actions of the State Department of Social Services, or the Commissioner of the same, relating to the review of neighborhood organization proposals and the allocation of tax credits to proposals shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.). Decisions of the State Department of Social Services, or the Commissioner of the same, shall be final and not subject to review or appeal.

History. 2008, c. 585; 2009, cc. 10, 502, 851; 2011, c. 317; 2012, cc. 731, 837, 842; 2013, cc. 713, 716, 802; 2014, cc. 47, 189, 416, 712; 2016, c. 426; 2017, cc. 147, 723, 724.

Cross references.

As to July 1, 2028, expiration of tax credits under this article, see § 58.1-439.20:2 .

Editor’s note.

Acts 2008, c. 585, cl. 4 provides: “That the provisions of this act shall become effective in due course. In addition, the provision in subsection B of § 58.1-439.21 of the Code of Virginia providing that the value of a motor vehicle donated by a business firm for a program approved pursuant to § 58.1-439.20 of the Code of Virginia shall be such value as determined for federal income tax purposes shall become effective for such donations made on or after July 1, 2008.”

Acts 2009, c. 851, cl. 2 provides: “That the Department of Education shall establish and make publicly available guidelines for purposes of implementing the provisions of the Neighborhood Assistance Act Tax Credit (§ 58.1-439.18 et seq.) of the Code of Virginia that relate to tax credits allocated for education proposals. The guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.) of the Code of Virginia.”

Acts 2009, c. 851, cl. 3 was repealed by Acts 2012, c. 842. For current provisions, see Acts 2012, c. 842, cl. 3.

Acts 2012, c. 842, cl. 3 provides: “That the provisions of this act providing that a grouping of neighborhood organization affiliates shall not be approved for more than an aggregate of $0.825 million in neighborhood assistance tax credits for all education proposals in any fiscal year shall not be applicable to any grouping of neighborhood organization affiliates that was approved for more than an aggregate of $0.5 million in neighborhood assistance tax credits for education proposals in any fiscal year of the Commonwealth that ended prior to January 1, 2010.”

2017, c, 317, cl. 1 provides: “That any neighborhood organization, as that term is defined in § 58.1-439.18 of the Code of Virginia, submitting a proposal to the Superintendent of Public Instruction for an allocation of tax credits pursuant to § 58.1-439.20 of the Code of Virginia for the program year beginning July 1, 2017, shall include with its proposal a list of all localities in the Commonwealth in which the neighborhood organization provided services during the program year beginning July 1, 2016. The Department of Education shall aggregate the information received pursuant to this act and submit it to the Chairmen of the House Committee on Appropriations, the House Committee on Finance, the Senate Committee on Finance, and the Joint Subcommittee to Evaluate Tax Preferences no later than December 1, 2017.”

The 2009 amendments.

The 2009 amendments by cc. 10 and 502 are identical, and substituted “2011” for “2009” at the end of the last sentence of subsection F.

The 2009 amendment by c. 851, in the first paragraph of subsection A, inserted “other than education proposals” in the first sentence and added the last sentence; in subsection B, inserted “or guidelines” in four places, substituted “and the Board of Education are” for “is” and inserted “(or, alternatively, guidelines in the case of the Board of Education)” in the first sentence, and inserted “review, or compilation . . . to nonprofit organizations” in the second sentence; in subsection C, inserted “or the Superintendent of Public Instruction” in the first sentence, added “or the Superintendent of Public Instruction, as applicable” at the end of the last sentence and added the last paragraph; rewrote subsection D; added subsection E; and redesignated the last sentence of former subsection D as subsection F and substituted “2011” for “2009” in subsection F. For applicability, see Editor’s notes.

The 2011 amendments.

The 2011 amendment by c. 317, rewrote subsection F, which read: “Tax credits shall not be authorized after fiscal year 2011.”

The 2012 amendments.

The 2012 amendments by cc. 731 and 842 are almost identical, and substituted “low-income persons or eligible students with disabilities” for “impoverished people” in the second paragraph of subsection A and in the third sentence of subsection B; added the second and third sentences of the second paragraph of subsection C where the text of c. 842 has been set out in (b) to include “$0.825 and”; in subsection D, substituted “shall not exceed $15 million allocated as follows: $8 million for” for “shall not exceed $11.9 million allocated as follows: $4.9 million for” in the first sentence, and deleted the former second sentence, which read: “If the amount of tax credits requested by neighborhood organizations and approved by the Superintendent for education proposals is less than $4.9 million, then the balance of such amount shall be allocated to programs for approval by the Commissioner of the State Department of Social Services.”; and substituted “2017” for “2014” at the end of subsection F.

The 2012 amendment by c. 837 rewrote the third sentence of subsection B, which read: “Such regulations or guidelines shall also provide that at least 50 percent of the persons served by the neighborhood organization are impoverished people as defined in § 58.1-439.18 .”

The 2013 amendments.

The 2013 amendments by cc. 713 and 716, in the first paragraph of subsection B, substituted “Department” for “Board” preceding “Education” twice in the first sentence, and rewrote the second sentence, which formerly read: “Such regulations or guidelines shall contain a requirement that an annual audit, review, or compilation as required by OMB Circular No. A-133 as may be applicable to nonprofit organizations be provided by the neighborhood organization as a prerequisite for approval.” In addition, in subsection F, c. 716 added “Notwithstanding the provisions of § 30-19.1:11,” at the beginning, and substituted “2028” for “2017” at the end, thereof.

The 2013 amendment by c. 802, in subsection B, substituted “Department” for “Board” twice in the first sentence, and in the first sentence in the second paragraph; and rewrote the last sentence which read: “Such regulations or guidelines shall contain a requirement that an annual audit, review, or compilation as required by OMB Circular No. A-133 as may be applicable to nonprofit organizations be provided by the neighborhood organization as a prerequisite for approval”; in the second paragraph, substituted “and that at least 50 percent of the neighborhood organization’s revenues are used to provide services to low-income persons or to eligible students with disabilities. Such” for “as defined in § 58.1-439.18 and such” and added the third sentence.

The 2014 amendments.

The 2014 amendments by c. 47, effective February 27, 2014, and c. 189, effective March 5, 2014, are identical and in subsection B, added the last sentence in the first paragraph.

The 2014 amendment by c. 416, in the second paragraph of subsection B, substituted “50” for “40” in the second sentence.

The 2014 amendment by c. 712, in the second paragraph of subsection B, added the last sentence; and in subsection D, substituted “the following:” for “$15 million allocated as follows: $8 million,” inserted “$8 million for fiscal year 2013-2014, $8.5 million for fiscal year 2014-2015, and $9 million for fiscal year 2015-2016 and each fiscal year thereafter,” deleted “$7 million” preceding “for all other proposals” and inserted “$7 million for fiscal year 2013-2014, $7.5 million for fiscal year 2014-2015, and $8 million for fiscal year 2015-2016 and each fiscal year thereafter” and made minor stylistic changes.

The 2016 amendments.

The 2016 amendment by c. 426 substituted “Commissioner of Social Services” for “Commissioner of the State Department of Social Services” throughout; in subsection B, added subdivision 1, 2, and 4 designations and added subdivision B 3; in subdivision B 2, substituted clause (i) and (ii) designations for clause (a) and (b) designations, substituted clause (a) through (d) designations for clause (1) through (4) designations, and substituted “the program year” for “any program year” in clause (d); in subsections D and E, substituted “Superintendent of Public Instruction” for “Superintendent”; and made minor stylistic changes.

The 2017 amendments.

The 2017 amendment by c. 147, effective February 23, 2017, divided and rewrote the former second sentence in subdivision B 5, which read “The regulations or guidelines shall also provide that at least 10 percent of the available amount of tax credits each year shall be allocated to qualified programs proposed by neighborhood organizations not receiving allocations in the preceding year; however, if the amount of tax credits for qualified programs requested by such neighborhood organizations is less than 10 percent of the available amount of tax credits, the unallocated portion of such 10 percent of the available amount of tax credits shall be allocated to qualified programs proposed by other neighborhood organizations.”

The 2017 amendment by c. 723, in subdivision B 5, added the last sentence, and designated the last paragraph as subdivision B 6; in subdivision B 6, deleted “also” following “guidelines shall.”

The 2017 amendment by c. 724 rewrote the section.