Update on important tax bills

January 21, 2016

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HB 92 (Cole), HB 469 (Head) and HB 1144 (Cole) are similar/identical bills and have been referred to House Finance Committee’s Subcommittee #2.

The bills would authorize localities to withhold interest on refunds of local taxes that are the result of an erroneous assessment caused by the taxpayer’s failure to file a license application or tax return prior to the filing deadline. Under current law, localities that elect to impose interest on delinquent taxes must also pay interest at the same rate on overpayments due to erroneously assessed taxes. Interest on delinquent taxes can accrue beginning no earlier than the first day following the day such taxes are due, and may not exceed 10 percent per year. Local governing bodies may impose interest at a rate not to exceed the rate of interest established in the Internal Revenue Code, or 10 percent annually, whichever is greater, for the second and subsequent years of delinquency.

VACo has worked to build support for these bills before the committee takes them up. We will continue to provide updates on the legislation.

Also, the Senate Finance Committee on January 20 heard and subsequently voted to pass by indefinitely SB 155 (Favola), a bill VACo supported.

The bill sought to increase the rate of the local cigarette tax that Arlington County and Fairfax County are authorized to impose from the amount levied under state law or 5 cents per pack, whichever is greater, to double the amount levied under state law or 5 cents per pack, whichever is greater. The portion of the revenues derived from the imposition of the tax that is greater than 30 cents per pack would be required to be annually dedicated to elementary or secondary education.

VACo Contacts: Dean Lynch, CAE and Beau Blevins

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