Introduced in House Passed House Introduced in Senate Passed Senate Became Law
01/07/2020     01/29/2020  

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.

Date Version PDF TXT
01/07/2020 House: Prefiled and ordered printed; offered 01/08/20 20102261D Open

            

2020 SESSION

    20102261D
    HOUSE BILL NO. 796
    Offered January 8, 2020
    Prefiled January 7, 2020
    A BILL to amend and reenact � 58.1-416 of the Code of Virginia, relating to corporate income tax; sourcing of sales, other than sales of tangible personal property.
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    Patron-- Knight
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    Referred to Committee on Finance
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    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 subsection 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 law.

    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.

    Picture Name From Date Type
    Barry D. Knight R-Richmond Sponsor
    Date Branch Action
    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
    Summary
    Congress - Bill Number Major Title
    Branch Vote Date Yes No Not Voting
    Wiki





    Start Description.
    Implements market-based corporate income tax sourcing for attributing sales, other than sales of tangible personal property, to Virginia beginning with taxable year 2021.
    End Description.

    Bill TEXT Points.
    This Bill has been listed with the following Subjects from Texts:
    Income


    Income tax


    Virginia
    1-416 of the Code of Virginia, relating to corporate income tax; sourcing of sales, other than sales of tangible personal property


    End Bill TEXT Points.
    Date Bill Major Title
    Committee Name
    Subject Type