|Introduced in House||Passed House||Introduced in Senate||Passed Senate||Became Law|
Income tax, corporate; sourcing of sales other than sales of tangible personal property.
Implements market-based corporate income tax sourcing for attributing sales, other than sales of tangible personal property, to Virginia beginning with taxable year 2021.
Be it enacted by the General Assembly of Virginia:
1. That � 58.1-416 of the Code of Virginia is amended and reenacted as follows:
� 58.1-416. When certain other sales deemed in the Commonwealth.
A. Sales, other than sales of tangible personal property, are
in the Commonwealth
if: 1. The
income-producing activity is performed in the Commonwealth; or 2. The
income-producing activity is performed both in and outside the Commonwealth
and a greater proportion of the income-producing activity is performed in the
Commonwealth than in any other state, based on costs of performance. (i)
in the case of services, to the extent that the purchaser of the service
receives the benefit of the service in the Commonwealth or (ii) in the case of
intangible personal property, to the extent that the purchaser
of the intangible personal property uses such property in the Commonwealth.
In the case of marketable securities, sales are in the Commonwealth if the
customer is in the Commonwealth.
Sales from the sale, lease,
rent, or licensing of real property are in the Commonwealth if the real
property is located in the Commonwealth.
Sales from the lease,
rent, or licensing of tangible personal property are in
the Commonwealth if the tangible personal property is located in the Commonwealth
at the time of such lease, rent or licensing.
B. For debt buyers, as defined in � 58.1-422.3, sales, other than sales of tangible personal property, are in the Commonwealth if they consist of money recovered on debt that a debt buyer collected from a person who is a resident of the Commonwealth or an entity that has its commercial domicile in the Commonwealth. Such rule shall apply regardless of the location of a debt buyers business.
C. The taxes under this article on the sales described under
subsections A and B are imposed to the
maximum extent permitted under the Constitutions of Virginia and the United
States and federal law. For the collection of such taxes on such sales, it is
the intent of the General Assembly that the Tax Commissioner and the Department
assert the taxpayers nexus with the Commonwealth to the maximum extent
permitted under the Constitutions of Virginia and the United States and federal
D. If necessary information is not available to the taxpayer
to determine whether a sale other than a sale of tangible personal property is
in the Commonwealth pursuant to the provisions of subsections A, B,
and C, the taxpayer may estimate the dollar value or portion of such sale in the
Commonwealth, provided that the taxpayer can demonstrate to the satisfaction of
the Tax Commissioner that (i) the estimate has been undertaken in good faith,
(ii) the estimate is a reasonable approximation of the dollar value or portion
of such sale in the Commonwealth, and (iii) in using an estimate the taxpayer
did not have as a principal purpose the avoidance of any tax due under this
article. The Department may implement procedures for obtaining its approval to
use an estimate. The Department shall adopt remedies and corrective procedures
for cases in which the Department has determined that the sourcing rules for
sales other than sales of tangible personal property have been abused by the
taxpayer, which may include reliance on the location of income-producing
activity and direct costs of performance
as described in
subsection A under the law
and regulations of the Commonwealth as they existed for
taxable years beginning prior to January 1, 2021.
2. That the provisions of this act shall become effective for taxable years beginning on or after January 1, 2021.
|01/29/2020||House||House: Assigned Finance sub: Subcommittee #3|
|01/07/2020||House||House: Prefiled and ordered printed; offered 01/08/20 20102261D|
|01/07/2020||House||House: Referred to Committee on Finance|