GENERAL PROVISIONS OF TITLE 58.1.

Article 1. In General.

§ 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.

CASE NOTES

Editor’s note.

Many of the cases cited in the notes under sections of this title were decided under corresponding provisions of former Title 58 and earlier statutes.

Scope of title. —

The title of the Tax Code, from which this title was mainly derived, clearly indicated that all of the statutes relating to listing, assessing and taxing all subjects of taxation were to be found within that Code. Anderson v. Commonwealth, 182 Va. 560 , 29 S.E.2d 838, 1944 Va. LEXIS 204 (1944) (decided under prior law).

This title of the Code deals with the revenue. City of Portsmouth v. Fred C. Gardner Co., 215 Va. 491 , 211 S.E.2d 259, 1975 Va. LEXIS 177 (1975) (decided under prior law).

“Tax year” and “taxable year” distinguished. —

This title recognizes the distinction between “tax year” and “taxable year.” Hunton v. Commonwealth, 166 Va. 229 , 183 S.E. 873 , 1936 Va. LEXIS 184 (1936) (decided under prior law).

One who engages in a regulated business or profession must comply with both the regulatory statutes and the revenue statutes. City of Portsmouth v. Fred C. Gardner Co., 215 Va. 491 , 211 S.E.2d 259, 1975 Va. LEXIS 177 (1975) (decided under prior law).

§ 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.
    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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

CASE NOTES

Members of private firm may not be appointed to conduct audits. —

Given the confidentiality provisions of this section, it can not be perceived that the general assembly intended to allow a commissioner of revenue to overcome the lack of authority to hire a private accounting firm by appointing the members of such a firm as deputy commissioners to conduct confidential tax audits. Clinchfield Coal Co. v. Robbins, 261 Va. 12 , 541 S.E.2d 289, 2001 Va. LEXIS 4 (2001).

City treasurer could not rely on this section to deny a request for estate tax information where such information was fully covered by the exceptions in subdivisions A 1 and A 4. Associated Tax Serv., Inc. v. Fitzpatrick, 236 Va. 181 , 372 S.E.2d 625, 5 Va. Law Rep. 613, 1988 Va. LEXIS 133 (1988).

OPINIONS OF THE ATTORNEY GENERAL

Dissemination of confidential information to county treasurer is allowed to enable collection of meals taxes. —

To the extent such information is necessary for a county treasurer to fulfill his duty to collect meals taxes, the dissemination to him or his employees of otherwise confidential taxpayer information is allowable under the statute. See opinion of Attorney General to The Honorable Geraldine M. Whiting, Commissioner of the Revenue for Arlington County, 01-043 (8/24/01).

Confidential tax information disseminated to the treasurer to allow him to collect business license taxes. —

To the extent that confidential tax information maintained by a commissioner of the revenue is necessary for the treasurer to fulfill his duty to collect business license taxes, the dissemination to him or his employees of otherwise confidential taxpayer information is allowable. See opinion of Attorney General to The Honorable Geraldine M. Whiting, Commissioner of the Revenue for Arlington County, 01-115 (3/5/02).

Commissioner of Revenue may submit any required information to county attorney. —

Subdivision A 2 of § 58.1-3 authorizes a county commissioner of the revenue to supply to the attorney for his county any information that is necessary to enable the attorney to make an informed decision as to whether to consent to the commissioner of the revenue’s determination. See opinion of Attorney General to The Honorable Deborah F. Williams, Spotsylvania County Commissioner of the Revenue, 10-094, (12/22/10).

Release of names and addresses of businesses. —

A commissioner of the revenue may release the names and addresses of licensed businesses within his locality to be used for solicitation purposes. See opinion of Attorney General to The Honorable Gene R. Ergenbright, Commissioner of the Revenue for the City of Staunton, 02-113 (12/19/02).

Release of delinquent tax information. —

A county attorney in possession of delinquent tax information that is not excluded from disclosure under the Virginia Freedom of Information Act is responsible for producing such information pursuant to a relevant Freedom of Information Act request, except as provided for in § 58.1-3 . See opinion of Attorney General to the Honorable Dana T. Bundick, Treasurer, County of Accomack, 12-052, (7/26/13).

Bank selected as depository by local treasurer. —

A bank selected as a depository by a local treasurer is authorized to receive payments due to a county, and its knowledge of proprietary information related thereto, if any, is not tantamount to a violation of § 58.1-3 . See opinion of Attorney General to The Honorable Geraldine M. Whiting, Commissioner of the Revenue for Arlington County, 01-043 (8/24/01).

Assumed or fictitious name. —

A business is considered to be trading under an assumed or fictitious name, for the purposes of this section, when an assumed or fictitious name certificate is filed as required by subsection A of § 59.1-69. See opinion of Attorney General to The Honorable Gene R. Ergenbright, Commissioner of the Revenue for the City of Staunton, 02-113 (12/19/02).

Disclosure of confidential tax information to the federal government. —

Local revenue officials may assert a qualified privilege to disclose confidential tax information to the federal government in response to a federal grand jury subpoena or an administrative subpoena or summons issued pursuant to § 7602 of the Internal Revenue Code. See opinion of Attorney General to The Honorable Philip J. Kellam, Commissioner of the Revenue for the City of Virginia Beach, 03-065 (9/25/03).

Design of secure data processing system. —

The design, establishment, and maintenance of a secure data processing system containing confidential taxpayer information primarily is a question of fact to be determined by the local commissioner of the revenue. See opinion of Attorney General to Mr. Ray Ergenbright, Commissioner of the Revenue for the City of Staunton, 05-021 (6/14/05).

Design and construction of a data processing system containing confidential taxpayer information without access to the data is not necessarily subject to the secrecy provisions of this section, which prohibits a commissioner from divulging certain information obtained in the performance of his duties. See opinion of Attorney General to The Honorable Ray Ergenbright, Commissioner of the Revenue for the City of Staunton, 05-021 (6/14/05).

§ 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.

CASE NOTES

Conduct of business. —

Whether a taxpayer’s activities are considered as two separate businesses for tax purposes is not determined by the formal structure of the taxpayer’s functions or the taxpayer’s relation to its franchisor; rather, that issue is determined by the manner in which the taxpayer actually conducts its business. Coca-Cola Bottling Co. of Roanoke, Inc. v. County of Botetourt, 259 Va. 559 , 526 S.E.2d 746, 2000 Va. LEXIS 30 (2000).

§ 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.

CASE NOTES

The city’s efforts to collect the business license taxes overpayments must fail because the city is unable to put its finger upon any statute which confers such authority. “It is well established in Virginia that a municipal corporation, such as [a city], can only derive its taxing power through positive grants of authority from the General Assembly.” Hampton Nissan Ltd. Partnership v. City of Hampton, 251 Va. 100 , 466 S.E.2d 95, 1996 Va. LEXIS 13 (1996).

§ 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.”

Article 2. Responsibility of Fiduciaries in Tax Matters.

§ 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.

Subtitle I. Taxes Administered by the Department of Taxation.

Chapter 1. General Provisions.

§ 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).

CASE NOTES

Editor’s note.

The cases annotated below were decided under prior law.

The reservation to the state “of all other classes of property” not specifically enumerated in § 58.1-3000 , is not a reservation “of all other subjects of taxation,” a much broader term. C & P Tel. Co. v. City of Newport News, 196 Va. 627 , 85 S.E.2d 345, 1955 Va. LEXIS 133 (1955).

Excise and privilege taxes are not property taxes and hence are not included in the general reservation to the state. C & P Tel. Co. v. City of Newport News, 196 Va. 627 , 85 S.E.2d 345, 1955 Va. LEXIS 133 (1955).

Taxation of transportation companies. —

Under Virginia’s system of segregation of property for state and local taxation the Commonwealth is not limited, in taxing transportation companies, to cash on hand and on deposit and rolling stock. The Commonwealth (as contrasted from the local) government also has the power to tax the “going concern” value of all of such a company’s Virginia property, as well as its other intangible property rights such as express privileges. Railway Express Agency, Inc. v. Virginia, 358 U.S. 434, 79 S. Ct. 411, 3 L. Ed. 2d 450, 1959 U.S. LEXIS 1487 (1959).

As to former statute imposing tax on rolling stock of railroads, see B & O.R.R. v. Allen, 17 F. 171, 1883 U.S. App. LEXIS 1853 (C.C.D. Va. 1883), aff'd, 114 U.S. 311, 5 S. Ct. 925, 29 L. Ed. 200, 1885 U.S. LEXIS 1762 (1885); B & O.R.R. v. Allen, 22 F. 376, 1884 U.S. App. LEXIS 2531 (C.C.D. Va. 1884), aff'd, 127 U.S. 117, 8 S. Ct. 1037, 32 L. Ed. 94, 1888 U.S. LEXIS 1971 (1888).

As to tax on bank stock, see City of Richmond v. Merchants Nat'l Bank, 124 Va. 522 , 98 S.E. 643 , 1919 Va. LEXIS 144 (1919), rev'd, 256 U.S. 635, 41 S. Ct. 619, 65 L. Ed. 1135, 1921 U.S. LEXIS 1547 (1921).

§ 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.

CASE NOTES

Motion for disclosure denied. —

Court denied government’s motion for the disclosure of confidential tax return information from the Virginia Department of Taxation pursuant to a federal grand jury subpoena issued in connection with a criminal investigation where the government did not demonstrate reasonable cause under 26 U.S.C.S. § 6103(i)(1)(B) or show compliance with § 58.1-109 . In re Grand Jury Subpoena Dated April 18, 2007, 485 F. Supp. 2d 709, 2007 U.S. Dist. LEXIS 66390 (E.D. Va. 2007).

OPINIONS OF THE ATTORNEY GENERAL

Disclosure of confidential tax information to the federal government. —

Local revenue officials may assert a qualified privilege to disclose confidential tax information to the federal government in response to a federal grand jury subpoena or an administrative subpoena or summons issued pursuant to § 7602 of the Internal Revenue Code. See opinion of Attorney General to The Honorable Philip J. Kellam, Commissioner of the Revenue for the City of Virginia Beach, 03-065 (9/25/03).

§ 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.

Chapter 2. Department of Taxation.

§ 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.

CASE NOTES

Circuit court did not err in refusing to defer to Tax Commissioner’s interpretation. —

Circuit court did not err in refusing to defer to the Tax Commissioner’s interpretation of Va. Code Ann. § 58.1-3732 (B)(2) because it was unambiguous, and thus, the Tax Commissioner’s interpretation of that statute was not entitled to great weight; a court never defers to the Tax Commissioner’s interpretation of a statute. Nielsen Co. (US), LLC v. County Bd. of Arlington County, 289 Va. 79 , 767 S.E.2d 1, 2015 Va. LEXIS 6 (2015).

OPINIONS OF THE ATTORNEY GENERAL

Department of Taxation discretion. —

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).

§ 58.1-202.1. 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).

CASE NOTES

Weight accorded construction by tax officials. —

Although the construction of a tax statute by a state official charged with its administration is not binding upon the Supreme Court, it is entitled to great weight. Commonwealth, Dep't of Taxation v. Wellmore Coal Corp., 228 Va. 149 , 320 S.E.2d 509, 1984 Va. LEXIS 183 (1984) (decided under former § 58-48.6).

OPINIONS OF THE ATTORNEY GENERAL

Recordation tax based on amount of indebtedness. —

When the amount secured by a deed of trust is known, the clerk of court should calculate the recordation tax based on the amount of indebtedness rather than the fair market value of the encumbered property. See opinion of Attorney General to The Honorable Yvonne G. Smith, Clerk of the Circuit Court of Henrico County, 11-073, (5/27/11).

§ 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.

CASE NOTES

Prior rulings afforded no deference. —

Circuit court did not err in refusing to defer to the Tax Commissioner’s ruling simply because the Tax Commissioner had issued prior rulings pertaining to the issue since those prior rulings were not expressed in regulations and were, therefore, afforded no deference and entitled to no weight. Nielsen Co. (US), LLC v. County Bd. of Arlington County, 289 Va. 79 , 767 S.E.2d 1, 2015 Va. LEXIS 6 (2015).

CIRCUIT COURT OPINIONS

Assessments prima facie correct. —

When a taxpayer contested an assessment on assets it purchased from an entity at a foreclosure sale, for taxes due from that entity, the Commonwealth Department of Taxation did not have the burden of proving the taxpayer did not withhold required funds from the assets’ purchase price because: (1) by its plain language, § 58.1-629 imposed a withholding requirement of the taxpayer until the previous owner provided a receipt showing that taxes on the assets had been paid or were no longer due; (2) § 58.1-205 stated that assessments by the Department of Taxation were prima facie correct; (3) subsection D of § 58.1-1825 put the burden of proof on a taxpayer wishing to contest an assessment; and (4) the taxpayer was in control of the documents proving whether a withholding from the purchase price required by § 58.1-629 was made. GFT, Inc. v. Dep't of Taxation, 73 Va. Cir. 269, 2007 Va. Cir. LEXIS 66 (Richmond Apr. 16, 2007).

§ 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.

Chapter 3. Income Tax.

Article 1. General Provisions.

§ 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).

CASE NOTES

Where taxpayers elected to include their children’s unearned income on their federal tax return, they could not change that election in computing their state taxable income. Commonwealth, Dep't of Taxation v. Davenport, 253 Va. 228 , 482 S.E.2d 808, 1997 Va. LEXIS 35 (1997).

§ 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).

CASE NOTES

Editor’s note.

The cases below were decided under prior law.

Constitutionality. —

Evolving principles of federalism have made it clear that the present Virginia income tax laws, as applied to interstate commerce, are not only constitutional, but are also a fair and reasonable recompense for the services and benefits provided to interstate carriers by the taxpayers of Virginia. Commonwealth, Dep't of Taxation v. B.J. McAdams, Inc., 227 Va. 548 , 317 S.E.2d 788, 1984 Va. LEXIS 225 (1984).

“Income from Virginia sources” test serves to require a sufficient nexus between the taxing state and the taxpayer’s interstate business to pass constitutional scrutiny under the traditional notions of fair play and substantial justice standard of International Shoe Co. of Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945). Commonwealth, Dep't of Taxation v. B.J. McAdams, Inc., 227 Va. 548 , 317 S.E.2d 788, 1984 Va. LEXIS 225 (1984).

Showing that foreign taxpayer enjoys some benefits is sufficient. —

The requisite nexus between the taxing state and the taxpayer’s interstate business may be shown by the fact that the foreign taxpayer enjoys some benefits from the taxing state. It is unnecessary to quantify the value of the benefits conferred by the taxing state. An interstate common carrier’s use of the Virginia highway system, enjoyment of police protection, and like benefits, are sufficient to furnish the requisite nexus for taxation. Commonwealth, Dep't of Taxation v. B.J. McAdams, Inc., 227 Va. 548 , 317 S.E.2d 788, 1984 Va. LEXIS 225 (1984).

§ 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.

CASE NOTES

The requirement under this section to “report” changes in federal taxable income did not require filing an amended return where the Internal Revenue Service had informed the Virginia Department of Taxation of the adjustments. Blackwell v. Virginia Dep't of Taxation, 115 Bankr. 86, 1990 Bankr. LEXIS 1223 (Bankr. W.D. Va. 1990).

§ 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.

CASE NOTES

Public access to records. —

Section 2.2-3704 , restricting access to information under Virginia’s Freedom of Information Act to Virginia citizens did not abridge the ability of petitioner, an out-of-state searcher for his title company clients, to engage in a common calling in the sense the Privileges and Immunities Clause prohibited and a claim of constitutional violation by defendant state officials for denying the information sought failed; most of the information sought was available through §§ 8.01-241 , 17.1-208 , 55-106, 55-142.1, 58.1-314 , 58.1-908 , 58.1-1805 , 58.1-2021 (A), 58.1-3122 . McBurney v. Young, 569 U.S. 221, 133 S. Ct. 1709, 185 L. Ed. 2d 758, 2013 U.S. LEXIS 3317 (2013).

§ 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.

Article 2. Individual Income Tax.

§ 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.

CASE NOTES

Where taxpayers elected to include their children’s unearned income on their federal tax return, they could not change that election in computing their state taxable income. Commonwealth, Dep't of Taxation v. Davenport, 253 Va. 228 , 482 S.E.2d 808, 1997 Va. LEXIS 35 (1997).

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).

§ 58.1-322.01. 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.
    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.
    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.
  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. 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. 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.
    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.

  1. 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.
  2. 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.
    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.

  3. 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.
    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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. 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.
  13. 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.”

Article 3. Tax Credits for Individuals.

§ 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).

CASE NOTES

Local income tax imposed by former Md. Ann. Code (1957), Art. 81, § 283, is not an “income tax to the state” within the meaning of this section and therefore does not qualify for the credit against Virginia income taxes provided by this section. Department of Taxation v. Smith, 232 Va. 407 , 350 S.E.2d 645, 3 Va. Law Rep. 1408, 1986 Va. LEXIS 272 (1986).

District of Columbia’s tax on the net income of unincorporated businesses is an income tax; and a Virginia resident, who does business in the District of Columbia and pays the tax there, is entitled to credit against his Virginia income taxes for the amount paid to the District of Columbia. King v. Forst, 239 Va. 557 , 391 S.E.2d 60, 6 Va. Law Rep. 2118, 1990 Va. LEXIS 61 (1990).

Although not called an income tax, the District of Columbia’s tax on net income of unincorporated businesses located there was “income tax” within the meaning of this statute which gives out of state residents a tax credit. Mathy v. Commonwealth Dep't of Taxation, 253 Va. 356 , 483 S.E.2d 802, 1997 Va. LEXIS 51, cert. denied, 522 U.S. 967, 118 S. Ct. 414, 139 L. Ed. 2d 316, 1997 U.S. LEXIS 6734 (1997).

The District tax on plaintiffs was illegal and unauthorized under the federal Home Rule Act for purposes of qualifying for a credit under this section, since the Home Rule Act prohibits the imposition of “any tax on the whole or any portion of the personal income of any individual not a resident of the District.” Mathy v. Commonwealth Dep't of Taxation, 253 Va. 356 , 483 S.E.2d 802, 1997 Va. LEXIS 51, cert. denied, 522 U.S. 967, 118 S. Ct. 414, 139 L. Ed. 2d 316, 1997 U.S. LEXIS 6734 (1997).

§ 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. 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.
    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.
    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.
  3. 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.
  4. 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.
  5. 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).

CASE NOTES

Federal tax treatment. —

Funds’ exchange of tax credits for investor contributions included the transfer of “property” from the Funds to investors for purposes of I.R.C. § 707(a)(2)(B), and the transfers were properly recharacterized as “sales” under that provision and the factors enumerated in Treas. Reg. § 1.707-3; the Funds should have included money received as income in their tax returns. The Funds remained free to continue their partnership arrangement with investors under Virginia law, and investors remained free to utilize the historic rehabilitation tax credits they received through this arrangement in their state tax filings. Va. Historic Tax Credit Fund 2001 LP v. Comm'r, 639 F.3d 129, 2011 U.S. App. LEXIS 6364 (4th Cir. 2011).

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

    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.
    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.
    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.
  1. 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.
  2. 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 .
    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.
  2. 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.
  3. 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.

Article 4. Accounting, Returns, Procedures for Individuals.

§ 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.
    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.
    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.
  2. 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.
    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.
    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.
  6. 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. 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.
      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.
    3. 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.
  1. 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.
  2. 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.
  3. 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.
    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.
    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.
  2. 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.
  3. 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).

CASE NOTES

This language clearly provides that the statute is not the exclusive avenue for punishment for filing a false state income tax return. Brown v. Commonwealth, 30 Va. App. 243, 516 S.E.2d 678, 1999 Va. App. LEXIS 461 (1999).

It was in Commonwealth’s Attorney’s discretion whether to prosecute appellant under § 18.2-95 , the grand larceny statute, or to prosecute him under this section. Brown v. Commonwealth, 30 Va. App. 243, 516 S.E.2d 678, 1999 Va. App. LEXIS 461 (1999).

Claim of right defense inapplicable. —

A trial court did not err in refusing a defendant’s instructions that the claim of right defense applied to tax matters; that defense is only applicable to crimes of trespassory taking or entering upon the property of another and did not apply to the defendant’s claim that he was exempt from the duty to comply with the tax statutes. Burkholder v. Commonwealth, 2001 Va. App. LEXIS 57 (Va. Ct. App. Feb. 6, 2001).

§ 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).

CASE NOTES

Sufficient evidence. —

Evidence was sufficient to convict defendant because the record showed that defendant spoke with each taxpayer about his or her income and possible deductions, he collected relevant information, he accepted a fee, and he delivered prepared returns, which claimed deductions that were disallowed. Brailey v. Commonwealth, 55 Va. App. 435, 686 S.E.2d 546, 2009 Va. App. LEXIS 570 (2009).

§ 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.
    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.
      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.
    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 .
  4. 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 5. Reserved.

Article 6. Taxation of Estates and Trusts.

§ 58.1-360. Imposition of tax.

A tax is hereby annually imposed, at the rates prescribed by § 58.1-320 for individuals, on the Virginia taxable income for each taxable year of every estate and trust.

History. Code 1950, §§ 58-151.03, 58-151.021; 1971 Ex. Sess., c. 171; 1972, c. 310; 1978, cc. 159, 796; 1981, c. 402; 1984, c. 675.

Law Review.

For note, “Who Gets a Dead Man’s Gold? The Dilemma of Lottery Winnings Payable to a Decedent’s Estate,” see 28 U. Rich. L. Rev. 443 (1994).

Research References.

Living Trusts: Forms and Practice (Matthew Bender). Bickel.

Murphy’s Will Clauses: Annotations and Forms with Tax Effects (Matthew Bender). Murphy.

Planning for Large Estates (Matthew Bender). Freeman and Rapkin.

Tax, Estate & Financial Planning for the Elderly: Forms and Practice (Matthew Bender). Regan, Gilfix, Morgan, and English.

Trust Administration and Taxation (Matthew Bender). Nossaman and Wyatt.

§ 58.1-361. Virginia taxable income of a resident estate or trust.

  1. The Virginia taxable income of a resident estate or trust means its federal taxable income for the taxable year to which there shall be added or subtracted, as the case may be, the share of the estate or trust in the Virginia fiduciary adjustment determined under subsection B.
  2. The respective shares of an estate or trust and its beneficiaries (including, solely for the purpose of this allocation, nonresident beneficiaries) in the Virginia fiduciary adjustment shall be in proportion to their respective shares of distributable net income of the estate or trust. If the estate or trust has no distributable net income for the taxable year, the share of each beneficiary in the Virginia fiduciary adjustment shall be in proportion to his share of the estate or trust income for such year, under local law or the governing instrument, which is required to be distributed currently and any other amounts of such income distributed in such year. Any balance of the Virginia fiduciary adjustment shall be allocated to the estate or trust.

History. Code 1950, §§ 58-151.022, 58-151.023; 1971, Ex. Sess., c. 171; 1972, c. 827; 1973, c. 198; 1984, c. 675.

§ 58.1-362. Virginia taxable income of a nonresident estate or trust.

The Virginia taxable income of a nonresident estate or trust shall be its share of income, gain, loss and deduction attributable to Virginia sources as determined under § 58.1-363 increased or reduced, as the case may be, by:

  1. The amount derived from or connected with Virginia sources of any income, gain, loss and deduction recognized for federal income tax purposes but excluded from the computation of distributable net income of the estate or trust; and
  2. The net amount of any modifications as provided for in §§ 58.1-322.01 , 58.1-322.02 , and 58.1-322.04 with respect to the income or gain referred to in subdivision 1 of this section.

History. Code 1950, § 58-151.024; 1971, Ex. Sess., c. 171; 1972, c. 827; 1984, c. 675; 2017, c. 444.

The 2017 amendments.

The 2017 amendment by c. 444 substituted “§§ 58.1-322.01 , 58.1-322.02 , and 58.1-322.04 ” for “§ 58.1-322 (not including subsection D thereof).”

§ 58.1-363. Share of a nonresident estate, trust, or beneficiary in income from Virginia sources.

  1. The share of a nonresident estate or trust under § 58.1-362 and the share of a nonresident beneficiary of any estate or trust under provisions otherwise applicable to nonresident individuals in estate or trust income or loss attributable to Virginia sources shall be determined as follows:
    1. There shall be determined the items of income, gain, loss and deduction derived from Virginia sources, which enter into the computation of distributable net income of the estate or trust for the taxable year (including such items from another estate or trust of which the first estate or trust is a beneficiary).
    2. There shall be added or subtracted (as the case may be) the modifications described in §§ 58.1-322.01 , 58.1-322.02 , 58.1-322.03 , and 58.1-322.04 to the extent relating to items of income, gain, loss and deduction derived from Virginia sources which enter into the computation of distributable net income (including all such items from another estate or trust of which the first estate or trust is a beneficiary). No modification shall be made under this subsection which has the effect of duplicating an item already reflected in the computation of distributable net income.
    3. The amounts determined under subdivisions 1 and 2 shall be allocated among the estate or trust and its beneficiaries (including, solely for the purposes of this allocation, resident beneficiaries) in proportion to their respective shares of distributable net income. The amounts so allocated shall have the same character under this article as under the laws of the United States relating to federal income taxes. Where an item entering into the computation of such amounts is not characterized by such laws, it shall have the same character as if realized directly from the source from which realized by the estate or trust, or incurred in the same manner as incurred by the estate or trust.
  2. If the estate or trust has no distributable net income for the taxable year, the share of each beneficiary (including, solely for the purpose of such allocation, resident beneficiaries) in the net amount determined under subdivisions A 1 and 2 shall be in proportion to his share of the estate or trust income for such year, under local law or the governing instrument, which is required to be distributed currently and any other amounts of such income distributed in such year. Any balance of such net amount shall be allocated to the estate or trust.

History. Code 1950, § 58-151.025; 1971, Ex. Sess., c. 171; 1984, c. 675; 2017, c. 444.

The 2017 amendments.

The 2017 amendment by c. 444, in subdivision A 2, substituted “§§ 58.1-322.01 , 58.1-322.02 , 58.1-322.03 , and 58.1-322 .04” for “§ 58.1-322 ”; and in subsection B, substituted “subdivisions A 1 and 2” for “subdivisions 1 and 2 of subsection A.”

Michie’s Jurisprudence.

For related discussion, see 18 M.J. Taxation, § 191.

Article 7. Tax Credits for 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.

Article 8. Accounting, Returns, Procedures for Estates and Trusts.

§ 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.

Article 9. Taxation of Partnerships.

§ 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.

CASE NOTES

Minimum tax imposed upon telecommunications companies does not apply to pass-through telecommunications companies. —

Trial court erred in finding that the minimum tax imposed upon telecommunications companies pursuant to § 58.1-400.1 was applicable to all telecommunications companies, whether such companies were corporations or pass-through entities, because the plain language of §§ 58.1-400 and 58.1-400.1 indicated that the minimum tax was not intended to apply to pass-through telecommunications companies, which were not required to pay a corporate tax; even if § 58.1-400.1 is ambiguous concerning its applicability to telecommunications companies organized as pass-through entities, harmonizing § 58.1-390.2 with § 58.1-400.1 dictates excluding pass-through telecommunications companies from the minimum tax. Va. Cellular LLC v. Va. Dep't of Taxation, 276 Va. 486 , 666 S.E.2d 374, 2008 Va. LEXIS 89 (2008) (decided prior to 2009 amendments, which specifically made pass-through telecommunications companies subject to the minimum tax and the regulations).

§ 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.

Article 9.1. Reporting Adjustments to Federal Taxable Income from Federal Partnership Audits.

§ 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 .
    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.

Article 10. Taxation of Corporations.

§ 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).

CASE NOTES

Section does not apply to pass-through telecommunications companies. —

Trial court erred in finding that the minimum tax imposed upon telecommunications companies pursuant to § 58.1-400.1 was applicable to all telecommunications companies, whether such companies were corporations or pass-through entities, because the plain language of §§ 58.1-400 and 58.1-400.1 indicated that the minimum tax was not intended to apply to pass-through telecommunications companies, which were not required to pay a corporate tax; because the minimum tax is to be paid instead of the corporate tax, it is implied that the minimum tax imposed by § 58.1-400.1 only applies to corporations. Va. Cellular LLC v. Va. Dep't of Taxation, 276 Va. 486 , 666 S.E.2d 374, 2008 Va. LEXIS 89 (2008) (decided prior to 2009 amendments, which specifically made pass-through telecommunications companies subject to the minimum tax and the regulations).

Trial court erred in finding that the minimum tax imposed upon telecommunications companies pursuant to § 58.1-400.1 was applicable to all telecommunications companies, whether such companies were corporations or pass-through entities, because the plain language of §§ 58.1-400 and 58.1-400.1 indicated that the minimum tax was not intended to apply to pass-through telecommunications companies, which were not required to pay a corporate tax; the trial court erred in upholding the validity of 23 VAC 10-120-89, a regulation promulgated by the Virginia Department of Taxation, because 23 VAC 10-120-89 was inconsistent with § 58.1-400.1 to the extent that it imposed the minimum tax provided for under § 58.1-400.1 upon pass-through entities. Va. Cellular LLC v. Va. Dep't of Taxation, 276 Va. 486 , 666 S.E.2d 374, 2008 Va. LEXIS 89 (2008) (decided prior to 2009 amendments, which specifically made pass-through telecommunications companies subject to the minimum tax and the regulations).

Minimum income tax applicable to corporations not partnerships or pass through entities. —

Trial court erred in finding that the minimum tax imposed upon telecommunications companies pursuant to § 58.1-400.1 was applicable to all telecommunications companies, whether such companies were corporations or pass-through entities, because the plain language of §§ 58.1-400 and 58.1-400.1 indicated that the minimum tax was not intended to apply to pass-through telecommunications companies, which were not required to pay a corporate tax; the income tax imposed by § 58.1-400 is an income tax for corporations only and is not an income tax on partnerships or pass-through entities. Va. Cellular LLC v. Va. Dep't of Taxation, 276 Va. 486 , 666 S.E.2d 374, 2008 Va. LEXIS 89 (2008) (decided prior to 2009 amendments, which specifically made pass-through telecommunications companies subject to the minimum tax and the regulations).

Internet access revenues. —

State Corporation Commission properly declined to allow a deduction for a telecommunications company’s Internet-related revenues, when certifying the company’s gross receipts to the Virginia Department of Taxation, because to allow the deduction would have required the State Corporation Commission to exceed the statutory authority in § 58.1-400.1 , as the Commission’s function was limited to providing certifications of the company’s gross receipts to the department and to the company, so the State Corporation Commission had no authority to create deductions for Internet-related revenues not provided in § 58.1-400.1 .Level 3 Communs.. LLC v. State Corp. Comm'n, 282 Va. 41 , 710 S.E.2d 474, 2011 Va. LEXIS 122 (2011).

Internet Tax Freedom Act, Pub. L. No. 105-277, §§ 1100 et seq., 112 Stat. 2681, did not reach the function of the State Corporation Commission in certifying a telecommunication’s company’s gross receipts to the Virginia Department of Taxation because: (1) the Act barred states from imposing a tax on Internet access revenues or applying multiple or discriminatory taxes on electronic commerce; (2) the general assembly assigned the responsibility for imposing the relevant taxes to the Department, not the State Corporation Commission; and (3) the State Corporation Commission did not impose or apply any tax liability under the income tax or minimum tax structures for telecommunications companies. Level 3 Communs.. LLC v. State Corp. Comm'n, 282 Va. 41 , 710 S.E.2d 474, 2011 Va. LEXIS 122 (2011).

CIRCUIT COURT OPINIONS

Bank not subject to corporate income tax liability. —

Bank was exempt from corporate income tax liability because it was “subject” to the bank franchise tax, even though the liability for the tax might have been $0, and thus the exemption in § 58.1-400.1 applied. AMG Nat'l Trust Bank v. Commonwealth, 83 Va. Cir. 8, 2011 Va. Cir. LEXIS 243 (Norfolk July 6, 2011).

§ 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.
    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. 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.
    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.
  1. 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.
  2. 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.
  3. 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.
      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.
  4. 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.
  5. 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.
    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.
  6. Every electric supplier which owes the minimum tax imposed by this section shall remit such tax payment to the Department of Taxation.
  7. 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.
  8. 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;
      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