Friday, January 10, 2014
2014 Constitutional Amendment (voter referendum)
HB 46 (Ramadan), HJ 8 (Ramadan) and SJ 81 (Black) provide for a referendum at the November 4, 2014, election to approve or reject an amendment to allow the General Assembly to exempt from taxation the real property of the surviving spouse of a soldier killed in action. This exemption applies regardless of whether the spouse was killed in action prior to the effective date of this subdivision, but the exemption shall not be applicable for any period of time prior to the effective date. This exemption applies to the surviving spouse’s principal place of residence without any restriction on the spouse’s moving to a different principal place of residence and without any requirement that the spouse reside in the Commonwealth at the time of death of the member of the armed forces. This provision was passed in the 2013 session and is proffered again in 2014.
Below are other bills providing tax exemptions from real or personal property:
HB 57 (Miller) exempts from sales and use tax gold, silver, and platinum bullion. The provisions of the bill are set to expire December 31, 2017.
HB 156 (Minchew), HB 361 (Anderson) and SB 175 (Black) clarify that a real property shall be exempt from taxation for religious reasons if property is exclusively used for religious worship shall include, but not be limited to, (i) property used primarily for outdoor worship activities and (ii) property whose use is reasonably connected to and supportive of the principal religious worship use.
HB 589 (Davis) provides that the personal property tax exemption for household goods includes property primarily used for household purposes, and property, such as cell phones, that are used inside and outside a person’s home.
HB 1000 (Minchew) provides that a locality may exempt or defer taxes on property of certain elderly and handicapped persons. An “eligible person” means a person who is at least age 65 or permanently and totally disabled. Real property owned and occupied as the sole dwelling of an eligible person includes real property (i) held by the eligible person alone or in conjunction with his spouse as tenant or tenants for life or joint lives, (ii) held in a revocable inter vivos trust over which the eligible person or the eligible person and his spouse hold the power of revocation, or (iii) held in an irrevocable trust under which an eligible person alone or in conjunction with his spouse possesses a life estate or an estate for joint lives or enjoys a continuing right of use or support. The term “eligible person” does not include any interest held under a leasehold or term of years.
VACo Contact: Dean Lynch, CAE
Tax bills are an issue again in 2014
HB 435 (LeMunyon) prohibits a locality from increasing its merchants’ capital tax, local license (BPOL) fees and taxes, and taxes on machinery and tools used in a business above the locality’s rates in effect as of January 1, 2014, and establishes refundable income tax credits for the same taxes beginning with taxable year 2014.
The refundable individual and corporate income tax credits would equal 33 percent of such taxes paid during the taxable year. The credit would sunset on December 31, 2018. The bill also would prohibit any subtraction or deduction for these taxes in computing Virginia taxable income.
HB 497 (Head) permits a taxpayer to appeal to the Tax Commissioner or request a written ruling from him with regard to the classification of the business for BPOL tax purposes, regardless of whether the locality has conducted an audit, issued an assessment, or taken any other action.
HJ 45 (DeSteph) establishes a joint subcommittee to study the local business license (BPOL) tax. Similar studies were completed in 2013 from JLARC and the Small Business Development Commission/Manufacturers Development Commission.
Other tax and finance bills of interest:
HB 499 (Yost) provides that a locality may reduce the number of years of delinquency in payment of taxes from five years to three years before a locality may sell real property that (i) measures less than 4,000 square feet or (ii) is determined to be unsuitable for building.
HB 525 (Pogge) and SB 480 (Norment) require every notice of assessment to set forth (i) the new and prior two appraised values of land and appraised value of improvements, and the assessed values of such if different from the appraised values; (ii) the new tax rate and the rates for the prior two tax years; (iii) the total new tax levy and the tax levies for the prior two years; and (iv) the percentage changes in such levies. Under current law, such information is required for the current year and the prior year.
HB 605 (Campbell) dedicates to localities with an unemployment rate greater that 6 percent (i) one-half of the Governor’s Development Opportunity Fund and (ii) sales tax revenue generated by a sales and use tax of 1 percent.
HB 617 (Davis) creates a classification for personal property tax rate purposes of property owned by a business during its first two years of operation, if the business’s annual gross revenues do not exceed $100,000. A locality may impose a rate of tax on such property that is lower than the rate on the general class of tangible personal property.
HB 729 (Lingamfelter) modifies the individual income and retail sales and use taxes by lowering the top three individual income marginal tax rates, increasing the individual income tax filing thresholds, repealing the retail sales and use tax on food, increasing the state retail sales and use tax from 4.3 percent to 5 percent except in the counties and cities located in the Hampton Roads and Northern Virginia Planning Districts, extending the retail sales and use tax to certain personal services that are currently exempt from the tax, and eliminating the retail sales and use tax exemption for nonprofit entities with at least $1 million in gross revenue.
The bill lowers the tax on individual income (i) in excess of $17,000 from 5.75 percent to 5.5 percent, (ii) between $5,000 and $17,000 from 5 percent to 4.9 percent, and (iii) between $3,000 and $5,000 from 3 percent to 2.95 percent. The bill increases the income threshold at which at an individual income tax return must be filed from $11,950 to $15,000 for single persons and from $23,900 to $30,000 for married persons.
The bill increases the state retail sales and use tax from 4.3 percent to 5 percent throughout Virginia except in Hampton Roads and Northern Virginia. The end result would be a 5 percent state retail sales and use tax in all regions of the Commonwealth beginning in 2015. An amount equal to the revenues generated by the increase would be distributed from the Transportation Trust Fund to each planning district in the Commonwealth in which the revenue was generated to be used solely in the planning district for new construction projects on new or existing roads, bridges, and tunnels or mass transit.
The retail sales and use tax increase would become effective on January 1, 2015, and the individual income tax changes would become effective for taxable years beginning on and after January 1, 2015.
HB 875 (Yancey) provides that a locality may condition the sale of certain tax delinquent real property on the purchaser’s investing a certain amount in improvements to the property, provided that in determining surplus accruing to the locality, the proceeds of the sale shall be increased by such amount.
VACo Contact: Dean Lynch, CAE
Register for the 2014 Local Government Day
The Virginia Association of Counties, Virginia Municipal League and the Virginia Association of Planning District Commissions will host Local Government Day at the General Assembly on Thursday, February 6.
The event will be held at the Richmond Marriott, located at 500 East Broad Street in downtown Richmond.
Staff will report on legislation affecting local governments. Local officials are encouraged to participate in committee meetings and lobby state legislators at the Capitol. In the evening, local officials are urged to invite their state legislators to dinner.
The cost of the event, which includes a box lunch, is $45 per person.
VACo Contact: Carol Cameron