Last week was filled with action as the “Crossover” deadline was this past Tuesday, February 7. The House and Senate chambers went late into Monday and Tuesday evening passing legislation within their respective bodies. Both are now reviewing bills from the opposite chamber. As of today, the Senate has passed 516 bills and the House of Delegates has passed 599 bills, almost doubling their progress since one week ago.
The House Appropriations and the Senate Finance and Appropriations committees convened Sunday, February 5 to receive high level subcommittee reports and recommendations for investing state funds. There are vast differences between the House and Senate proposals. One of major difference, of note, is that the House budget proposal includes the Governor’s $1billion in tax cuts, and the Senate’s budget proposal does not include any of the proposed tax cuts. At the end of last week, both bodies adopted their respective proposals, after much discussion on the Floor. Now the budget bills will go through a conference process in which both chambers negotiate to create one final version of the budget prior to the last day of the legislative session on February 25.
With just two more weeks of session to go, your VRF team will keep you informed as bills progress through the legislative process. As always, should you have any questions about legislation or actions of the General Assembly, please do not hesitate to reach out.
Below you will find a list of bills that have seen action since Crossover. To view a complete list of bills that impact the retail industry click here.
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Individual and Corporate Income Tax
Individual and Corporate Income Tax
HB 1369: Income tax, state; installment agreements for payment of taxes. Passed the House (100-Y 0-N) and Passed the Senate (39-Y 0-N)
Installment agreements for payment of taxes. Requires the Tax Commissioner to offer to enter into an installment agreement with any individual taxpayer under which the taxpayer may satisfy his entire tax liability over a payment term of up to five years. The bill maintains the current law for corporate taxpayers whereby the Tax Commissioner may enter into a written agreement with any taxpayer under which such taxpayer is allowed to satisfy his entire tax liability in installment payments if the Tax Commissioner determines that such agreement will facilitate collection, but limits such agreement to no more than five years. The bill also removes the power under which the Tax Commissioner may alter, modify, or terminate an installment agreement if it is determined that the financial condition of the taxpayer has significantly changed or if the taxpayer fails to provide a financial condition update upon request.
HB 1405: Income tax, corporate; returns, affiliated corporations. Passed the House (100-Y 0-N) and Passed the Senate (39-Y 0-N)
Corporate income tax; filing method for affiliated corporations. Removes the requirement that, in order for a group of affiliated corporations to be granted permission from the Tax Commissioner to change their filing status for corporate income tax purposes, for the previous tax year there would have been no decrease in tax liability computed under the proposed election as compared to the affiliated group's former filing method. The bill retains the current requirement that the affiliated group agree to file returns under both the new filing method and the former method and pay the greater of the two amounts for the taxable year in which the new election is effective and for the immediately succeeding taxable year.
HB 1456: Income tax, state; pass-through entities. Passed the House (98-Y 0-N) and Passed the Senate (39-Y 0-N)
Income tax; pass-through entities. Makes changes to the elective entity level tax on pass-through entities. The bill would impose the tax only on the share of income, gain, loss, or deduction attributable to eligible owners, as opposed to imposing the tax on the entire entity. "Eligible owner" is defined in the bill as an owner of a pass-through entity that is a natural person or a person eligible to be a shareholder in an S corporation. The bill also strikes the requirement that to qualify for the tax a pass-through entity must be 100 percent owned by natural persons or persons eligible to be shareholders in an S corporation.
SB 1476: Income tax, state; pass-through entities. Passed the Senate (40-Y 0-N) and reported from House Finance (21-Y 0-N)
Income tax; pass-through entities. Makes changes to the elective entity level tax on pass-through entities effective beginning with taxable year 2021. The bill would impose the tax only on the share of income, gain, loss, or deduction attributable to eligible owners as opposed to imposing the tax on the entire entity. The bill defines "eligible owner" as an owner of a pass-through entity that is a natural person, estate, or trust. The bill also removes the requirement that to qualify for the tax election a pass-through entity must be 100 percent owned by natural persons or persons eligible to be shareholders in an S corporation.
Tax Conformity
HB 1595: Internal Revenue Code; conformity of the Commonwealth's taxation system. (Emergency Clause) Passed the House (96-Y 0-N) and Passed the Senate (39-Y 0-N)
Conformity of the Commonwealth's taxation system with the Internal Revenue Code; emergency. Advances Virginia's date of conformity with the Internal Revenue Code from December 31, 2021, to December 31, 2022.
SB 882: Internal Revenue Code; conformity of the Commonwealth's taxation system. (Emergency Clause) Reported from House Finance Committee (21-Y 0-N), now on House Floor
Conformity of the Commonwealth's taxation system with the Internal Revenue Code; emergency. Advances Virginia's date of conformity with the Internal Revenue Code from December 31, 2021, to December 31, 2022.
SB 1405: Income tax; rolling conformity; report. Passed the Senate (39-Y 0-N) and Reported from House Finance with substitute (21-Y 0-N)
Income tax; rolling conformity; report. Provides that Virginia shall generally conform to federal tax laws on a rolling basis, meaning that Virginia tax laws incorporate changes to federal income tax law as soon as Congress enacts them on or after January 1, 2023. However, the bill provides that Virginia shall not conform to any changes in a single act of Congress with an impact of more than $50 million on revenues in the year in which the amendment was enacted or any of the next four years. For any amendment enacted on or after January 1, 2024, the $50 million impact threshold shall be adjusted annually by the change in the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) for the previous year
Transient Occupancy Tax
HB 1442: Transient occupancy tax; administration. Passed the House (100-Y 0-N) and Passed the Senate (39-Y 0-N)
Transient occupancy tax; administration. Requires the Department of Taxation to annually publish on its website the current transient occupancy tax rates imposed in each locality. The bill also (i) requires the tax-assessing officer of a locality to administer and enforce the assessment and collection of transient occupancy taxes from accommodations intermediaries, (ii) specifies certain return filing requirements for accommodations intermediaries, and (iii) directs the Compensation Board to contract with a third-party provider for development of an electronic interface that enables accommodations intermediaries, beginning on July 1, 2024, to provide a single filing and remittance system for transient occupancy taxes due for all localities.
Consumer Protection Act
HB 1517: Virginia Consumer Protection Act; automatic renewal or continuous service offers. Reported from General Laws and Technology with substitute (15-Y 0-N)
Virginia Consumer Protection Act; automatic renewal or continuous service offers; cancellation reminders; prohibited practices. Requires suppliers of automatic renewals or continuous service offers that include a free trial to, within 30 days of the end of any such free trial, notify the consumer of his option to cancel the free trial before the end of the trial period to avoid an obligation to pay for the goods or services. The bill provides that failure to notify a consumer of such option is a violation of the Virginia Consumer Protection Act. The bill also makes it a violation of the Virginia Consumer Protection Act for a supplier to fail to disclose the total cost of a good or service to a consumer, including any mandatory fees or charges, prior to entering into an agreement for the sale of any such good or provision of any such service.
Sales Tax Exemptions
HB 1563: Sales and use tax; agricultural exemptions. Passed the House (87-Y 11-N 2-A) and Passed the Senate (39-Y 0-N)
Sales and use tax; agricultural exemptions. Provides a sales and use tax exemption for property used to produce agricultural products for market in an indoor, closed, controlled-environment commercial agricultural facility. The property exempted includes (i) internal structural components required to create the necessary growing environment for plants, including watering systems, towers for growing plants, and lighting and air systems, and (ii) transparent elements of external structural components of such facilities, including windows, walls, and roofs, that allow sunlight in for the commercial production of agricultural products. The exemption shall not apply to property used in producing cannabis.
ABC
HB 1866: Alcoholic beverage control; suspension or revocation of certain retail licenses, reinstatement. Passed the House (52-Y 48-N) and Reported from Senate Rehabilitation and Social Services with amendment (15-Y 0-N)
Alcoholic beverage control; suspension or revocation of certain retail licenses; reinstatement. Provides that if the Board of Directors of the Virginia Alcoholic Beverage Control Authority suspends or revokes the license of a retail establishment due solely to the fact that the establishment's food establishment permit from the Department of Health was revoked or suspended, the Board shall automatically reinstate such license once the Department of Health has reinstated the food establishment permit, provided that the licensee is in compliance with all applicable provisions of law.
HB 1979: Alcoholic beverage control; displays of wine and beer. Passed the House (99-Y 1-N) and Reported from Senate Rehabilitation and Social Services with amendments (15-Y 0-N)
Alcoholic beverage control; displays of wine and beer. Requires licensees that sell wine and beer for off-premises consumption, when displaying such wine and beer outside a clearly discernible location reserved solely for alcoholic beverages, to (i) not place such wine or beer in an area immediately adjacent to nonalcoholic beverages containing the same or similar brand name, logo, or packaging as an alcoholic beverage and (ii) equip any such display with signage that indicates the product is an alcoholic beverage available only to persons who are 21 years of age or older, is clearly visible to consumers, and is of sufficient size to notify the consumer of the product's alcohol content. The bill clarifies that its provisions do not prohibit the placement of nonalcoholic wine or beer in or near a display of alcoholic beverages that contain the same or similar brand name, logo, or packaging as the nonalcoholic wine or beer.
HB 2336: Alcoholic beverage control; marketplace license fees. Passed the House (94-Y 6-N) and Reported from Senate Rehabilitation and Social Services with amendments (15-Y 0-N)
Alcoholic beverage control; marketplace license fees. Lowers the annual state license fee from $1,000 to $500 and the annual local license tax from $200 to $100 for marketplace licenses when the license privileges are exercised during a period of six or less consecutive months and such period is specified prior to the beginning of the license year.
SB 809: Alcoholic beverage control; displays of wine and beer. Passed the Senate(37-Y 1-N) and reported from House General Laws (22-Y 0-N)
Alcoholic beverage control; displays of wine and beer. Requires licensees that sell wine and beer for off-premises consumption, when displaying such wine and beer outside a clearly discernible location reserved for alcoholic beverages, to (i) not place such wine or beer in an area immediately adjacent to nonalcoholic beverages containing the same or similar brand name, logo, or packaging as an alcoholic beverage and (ii) equip any such display with signage that indicates the product is an alcoholic beverage, is clearly visible to consumers, and is of sufficient size to notify the consumer that the product contains alcohol. The bill clarifies that its provisions do not prohibit the placement of nonalcoholic wine or beer in or near a display of alcoholic beverages that contain the same or similar brand name, logo, or packaging as the nonalcoholic wine or beer.
