Week Two of the 2023 Session started off slowly with committees and subcommittees starting to plow through the hundreds of bills assigned to them. The next two weeks will be crunch time as the House and Senate work long hours to get through the bills introduced in each body before “Crossover” on February 7th.
On Monday, the House Appropriations Committee met to receive a revenue report update, an overview of potential tax cut options, and a presentation on the Opioid Abatement Authority. Secretary of Finance Stephen Cummings presented the revenue report and shared that the state appears to be on track to have a surplus of funds by the end of 2023. Governor Glenn Youngkin has proposed a tax relief plan based on this information for veterans and small businesses while also lowering the income tax rate for individuals and large corporations.
Senator Aaron Rouse (D) was sworn into the Senate of Virginia on Wednesday. A former Virginia Beach city councilman, Senator Rouse replaced Jen Kiggans after she stepped down to assume her new position in the U.S. House of Representatives following the congressional election this past November. Democrats now hold a 22-18 majority in the Senate and Republicans hold a 52-48 majority in the House of Delegates.
Wednesday, January 18th, budget amendments introduced by members of the General Assembly were released. The House Appropriations and Senate Finance committees will consider the Governor’s budget amendments and all the amendments submitted by legislators as they craft the committee budget bills to amend the current two-year state budget approved last year.
Friday, January 20th, was the filing deadline for all legislation so the bill tracking list incorporates the full scope of bills that impact the retail industry. As always, your Virginia Retail Federation team will keep you informed on legislative issues throughout the 2023 Session.
Below is a breakdown of the issues that were acted on in the last week.
Tax | Association Health Plan | Sales Tax | ABC | Unpaid Leave | Unemployment Compensation | Consumer Protection Act
Tax
- HB 1369 - Income tax, state; installment agreements for payment of taxes. Reported out of Finance 21-0, now on the Floor of the House.
- 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.
- 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. Reported from House Finance Committee 21-0. Now on the Floor of the House
- 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.
- 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 1595 Internal Revenue Code; conformity of the Commonwealth's taxation system. Passed the House 96-0
- 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.
- 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.
- HB 2138 - Income tax, state and corporate; business interest, qualified business income deduction. Reported from House Finance Committee 12-10
- Income tax; business interest; qualified business income deduction; corporate rate reduction. Increases from 30 percent to 50 percent the Virginia individual and corporate income tax deduction for business interest disallowed as a deduction under § 163(j) of the Internal Revenue Code beginning in taxable year 2024. The bill allows an individual income tax deduction in an amount equal to 50 percent of certain federal qualified business income deductions, excluding qualified real estate investment trust dividends. The bill also reduces from six percent to five percent the corporate income tax rate beginning in taxable year 2023.
- Income tax; business interest; qualified business income deduction; corporate rate reduction. Increases from 30 percent to 50 percent the Virginia individual and corporate income tax deduction for business interest disallowed as a deduction under § 163(j) of the Internal Revenue Code beginning in taxable year 2024. The bill allows an individual income tax deduction in an amount equal to 50 percent of certain federal qualified business income deductions, excluding qualified real estate investment trust dividends. The bill also reduces from six percent to five percent the corporate income tax rate beginning in taxable year 2023.
- HB 2319 - Income tax, state; lowers rates and deductions. Reported out of House Finance Committee 12-10, now on the Floor of the House
- Income tax; rates and deductions. Lowers the top income tax rate from 5.75 percent to 5.5 percent for taxable years beginning on and after January 1, 2024. The bill also raises the standard deduction to $9,000 for single individuals and $18,000 for married persons for taxable years beginning on and after January 1, 2024, but before January 1, 2026.
Association Health Plan
- HB 2201 - Association health plans; prohibiting discrimination based on health status, base premium rates. House Commerce and Energy Subcommittee recommends reporting with substitute (10-Y 0-N)
- Association health plans; prohibiting discrimination based on health status; base premium rates. Provides that for association health plans, a carrier may establish base premium rates formed on an actuarially sound, modified community rating methodology that considers the pooling of all participant claims and utilize each employer member's specific risk profile to determine premium rates for each employer member by actuarially adjusting above or below established base premium rates.
- Association health plans; prohibiting discrimination based on health status; base premium rates. Provides that for association health plans, a carrier may establish base premium rates formed on an actuarially sound, modified community rating methodology that considers the pooling of all participant claims and utilize each employer member's specific risk profile to determine premium rates for each employer member by actuarially adjusting above or below established base premium rates.
Sales Tax
- HB 1563 - Sales and use tax; agricultural exemptions. (Reported from House Finance Committee 18-3
- 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.
- 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.
- HB 1601 - Retail Sales and Use tax; agricultural exemptions, structural construction materials, definition. Laid on the table (defeated) in House Finance Committee 22-0
- Retail sales and use tax; agricultural exemptions; structural construction materials; definition. Clarifies that for the purpose of agricultural exemptions from the retail sales and use tax the definition of "structural construction materials" does not include structural construction materials and environmental control systems that will be affixed to or integrated into a commercial greenhouse structure that is 50,000 square feet or more in size, provided that such materials and equipment have been ordered to meet the specifications of the commercial greenhouse operator and are necessary for use in the greenhouse structure and growing system.
- Retail sales and use tax; agricultural exemptions; structural construction materials; definition. Clarifies that for the purpose of agricultural exemptions from the retail sales and use tax the definition of "structural construction materials" does not include structural construction materials and environmental control systems that will be affixed to or integrated into a commercial greenhouse structure that is 50,000 square feet or more in size, provided that such materials and equipment have been ordered to meet the specifications of the commercial greenhouse operator and are necessary for use in the greenhouse structure and growing system.
- SB 850 - Sales Tax; exemption for food purchased for human consumption, essential personal hygiene products. Passed by Indefinitely in Senate Finance and Appropriations Committee 12-4
- Income tax; standard deduction. Increases the standard deduction, starting with taxable year 2023, from $8,000 to $12,500 for single filers and from $16,000 to $25,000 for married filers (one-half of such amount in the case of a married individual filing a separate return). The increase would remain in effect until taxable year 2026, when the standard deduction is scheduled to be reduced to $3,000 for single filers and to $6,000 for married filers.
- Income tax; standard deduction. Increases the standard deduction, starting with taxable year 2023, from $8,000 to $12,500 for single filers and from $16,000 to $25,000 for married filers (one-half of such amount in the case of a married individual filing a separate return). The increase would remain in effect until taxable year 2026, when the standard deduction is scheduled to be reduced to $3,000 for single filers and to $6,000 for married filers.
- SB 1008 - Sales and use tax, local; exemptions for food purchased for human consumption. Passed by Indefinitely (defeated) in Senate Finance and Appropriations Committee 10-5
- Local sales and use tax; exemptions. Authorizes the governing board of a city or county to, by ordinance, exempt food purchased for human consumption and essential personal hygiene products from local sales and use tax.
- Local sales and use tax; exemptions. Authorizes the governing board of a city or county to, by ordinance, exempt food purchased for human consumption and essential personal hygiene products from local sales and use tax.
- SB 1287 - Sales and use tax, additional local; taxes to support schools. On the floor of the Senate
- Additional local sales and use tax to support schools. Adds Albemarle County and the City of Charlottesville to the list of qualifying localities that, under current law, are authorized to impose an additional local sales and use tax at a rate not to exceed one percent, with the revenue from such tax used only for capital projects for the construction or renovation of schools.
- Additional local sales and use tax to support schools. Adds Albemarle County and the City of Charlottesville to the list of qualifying localities that, under current law, are authorized to impose an additional local sales and use tax at a rate not to exceed one percent, with the revenue from such tax used only for capital projects for the construction or renovation of schools.
- SB 1408 - Sales and use tax, local; additional tax authorized in all counties & cities to support schools. On the floor of the Senate
- Additional local sales and use tax to support schools; referendum. Authorizes all counties and cities to impose an additional local sales and use tax at a rate not to exceed one percent with the revenue used only for capital projects for the construction or renovation of schools if such levy is approved in a voter referendum. Under current law, only Charlotte, Gloucester, Halifax, Henry, Mecklenburg, Northampton, Patrick, and Pittsylvania Counties and the City of Danville are authorized to impose such a tax. This bill is a recommendation of the Commission on School Construction and Modernization.
- Additional local sales and use tax to support schools; referendum. Authorizes all counties and cities to impose an additional local sales and use tax at a rate not to exceed one percent with the revenue used only for capital projects for the construction or renovation of schools if such levy is approved in a voter referendum. Under current law, only Charlotte, Gloucester, Halifax, Henry, Mecklenburg, Northampton, Patrick, and Pittsylvania Counties and the City of Danville are authorized to impose such a tax. This bill is a recommendation of the Commission on School Construction and Modernization.
ABC
- SB 809 - Alcoholic beverage control; displays of wine and beer. Reported from the Senate Floor 37-1
- 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, 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.
- 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, 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.
Unpaid Leave
- SB 1086 - Living organ donors; unpaid leave, civil penalty. Passed the Senate 38-0
- Living organ donors; unpaid leave; civil penalty. Requires that an employer that employs 15 or more employees provide eligible employees, defined in the bill, with (i) up to 60 business days of unpaid organ donation leave in any 12-month period to serve as an organ donor and (ii) up to 30 business days of unpaid organ donation leave in any 12-month period to serve as a bone marrow donor. The bill requires the employer to restore the employee's position following the leave, to continue to provide coverage for the employee under any health benefit plan, and to pay the employee any commission earned prior to the leave. The bill prohibits the employer from taking retaliatory action against the employee for taking organ donation leave. The bill requires the Commissioner of Labor and Industry to enforce its provisions and provides for civil penalties for violations of its requirements.
- Living organ donors; unpaid leave; civil penalty. Requires that an employer that employs 15 or more employees provide eligible employees, defined in the bill, with (i) up to 60 business days of unpaid organ donation leave in any 12-month period to serve as an organ donor and (ii) up to 30 business days of unpaid organ donation leave in any 12-month period to serve as a bone marrow donor. The bill requires the employer to restore the employee's position following the leave, to continue to provide coverage for the employee under any health benefit plan, and to pay the employee any commission earned prior to the leave. The bill prohibits the employer from taking retaliatory action against the employee for taking organ donation leave. The bill requires the Commissioner of Labor and Industry to enforce its provisions and provides for civil penalties for violations of its requirements.
Unemployment Compensation
- HB 1639 - Unemployment compensation; reduces time to file appeal. Reported from Commerce and Energy Subcommittee #1 5-2
- Unemployment compensation; time to file appeal. Reduces from 30 days to 15 days (i) the time after notice of the determination of a claim within which a claimant is required to file an appeal before such determination becomes final and (ii) the time after the date of notification or mailing of an appeal tribunal's decision on an unemployment compensation claim within which a party is required to file a subsequent appeal before such decision becomes final.
- Unemployment compensation; time to file appeal. Reduces from 30 days to 15 days (i) the time after notice of the determination of a claim within which a claimant is required to file an appeal before such determination becomes final and (ii) the time after the date of notification or mailing of an appeal tribunal's decision on an unemployment compensation claim within which a party is required to file a subsequent appeal before such decision becomes final.
Consumer Protection Act
- HB 1517- Virginia Consumer Protection Act; automatic renewal or continuous service offers. Reported from Commerce and Energy 22-0
- 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.
- 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.
