House Finance Roundup

January 26, 2021

Several bills of interest to local governments have been referred to the House Finance Committee.  Below is an update on the status of several bills considered by the Committee or its subcommittees.

HB 1774 (Walker) adds motor vehicles with a gross weight of 10,000 pounds or more used by a motor carrier engaged in interstate commerce to transport passengers to the list of types of property that may be taxed at rates different than those applied to other tangible personal property.  Currently such vehicles are classified as a separate class of property if they are used to transport property.  This legislation has passed the House and awaits action in Senate Finance and Appropriations.

HB 1803 (Orrock) would authorize localities to offer credits against local taxes and fees (with the exception of property taxes) for individuals who provide certain volunteer services in the locality, which the locality would be able to define, within certain parameters set by the bill.  House Finance Committee’s Subcommittee #1 heard this bill on January 25 and tabled it due to concerns about the breadth of the bill.

HB 1939 (Wyatt) deals with the applicability of the meals tax on prepackaged single-serving salads.  The bill responded to a situation in one locality over whether prepared salads grown and delivered to consumers should be subject to the meals tax or should instead be considered akin to groceries.  Current Code provides that “sandwiches, salad bar items sold from a salad bar, prepackaged single-serving salads consisting primarily of an assortment of vegetables, and nonfactory sealed beverages” are subject to the meals tax; the bill would insert a definition of “single-serving” from federal nutrition guidelines.  Although the bill is intended to respond to a specific situation, concerns were raised by the restaurant industry, VACo, Commissioners of the Revenue, and others about the potential enforcement challenges for prepackaged salads sold by restaurants that may be an unintended consequence of importing the federal standard into Virginia Code.  Members of House Finance Committee’s Subcommittee #1 expressed a desire to clarify the current Code language but were concerned about whether the federal standard might make Virginia Code less clear, so the bill was recommended to be tabled.  It is expected that further discussions on this issue will take place in the “offseason.”

HB 2165 (Hope) is intended to address situations in which formal documentation of inheritance for a property may be limited and taxes become delinquent on the property.  The bill would extend to 60 months (from 36 months, as in current Code) the time period for which a local tax official may suspend an action for the sale of tax delinquent property upon entering into an agreement with the owner for payment of the delinquent taxes.  The bill would also authorize the local tax official to suspend such an action upon written notice by an individual asserting ownership rights in the property, in which case the tax official would notify the court of the claim; if the court determined that the person did have ownership rights in the property, the person would be able to enter into an installment plan of up to 60 months.  The bill also provides that a final court order confirming sale of tax delinquent property may not be entered sooner than 90 days after the tax official gives notice of the action or 90 days after the official receives notice from a person asserting ownership rights.  The bill was unanimously recommended for reporting by Subcommittee #1.

HB 2293 (Morefield) extends the sunset date on the local gas severance tax that is dedicated to each locality’s Coal and Gas Road Improvement Fund, the Virginia Coalfield Economic Development Fund, and construction or maintenance of water, sewer, and natural gas lines.  The legislation extends the sunset date from January 1, 2022, to January 1, 2024.  VACo registered its support for the legislation, which was recommended for reporting by Subcommittee #1.

VACo Contact:  Katie Boyle

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