Source: https://lis.virginia.gov/cgi-bin/legp604.exe?042+ful+HB5018EH1
Timestamp: 2018-05-26 23:14:30
Document Index: 732606885

Matched Legal Cases: ['§ 58', '§ 58', '§ 482', '§ 58', '§ 58', '§ 58', '§ 58', '§ 58', '§ 58', '§ 58', '§ 58', '§ 2']

HOUSE BILL NO. 5018 AMENDMENT IN THE NATURE OF A SUBSTITUTE (Proposed by the by Delegate Parrish) (Patron Prior to Engrossment--Delegate Parrish) House Amendments in [ ] – April 13, 2004 A BILL to amend and reenact §§ 58.1-302, 58.1-321, 58.1-322, 58.1-391, 58.1-392, 58.1-402, 58.1-441, 58.1-603, 58.1-604, 58.1-604.1, 58.1-605, 58.1-606, 58.1-609.3, 58.1-611.1, 58.1-614, 58.1-615, 58.1-627, 58.1-628, 58.1-639, 58.1-801, 58.1-803, 58.1-807, 58.1-808, 58.1-901, 58.1-1001, and 58.1-3833 of the Code of Virginia, to amend the Code of Virginia by adding sections numbered 58.1-390.1, 58.1-390.2, and 58.1-393.1, and by adding in Article 9 of Chapter 3 of Title 58.1 sections numbered 58.1-394.1, 58.1-394.2, and 58.1-395, and to repeal §§ 58.1-390 and 58.1-394 of the Code of Virginia, relating to revenues for appropriation throughout the Commonwealth and its localities as part of the Tax Reform Compromise Act of 2004.
[ “Arms length rates and terms” means that (i) two or more related members enter into a written agreement for the transaction, (ii) such agreement is of a duration and contains rates and payment terms substantially similar to those which the related member would be able to obtain from an unrelated entity, and (iii) the borrower or payor substantially adheres to the payment terms of the agreement governing the transaction or any amendments thereto. There is a presumption that an interest rate is an arm’s length rate if it conforms to §§ 482 and 1274 of the Internal Revenue Code. ]
[ "Economic substance," for purposes of subparagraph B(8)(a) of § 58.1-402, means that a related member was formed for a valid business purpose, has substantial business operations, and bears the full expenses for a sufficient number of employees to adequately maintain, manage, defend or otherwise be responsible for the day-to-day operations or administration relating to its intangible property. The existence of valid economic substance shall be determined by the Commissioner based upon the totality of the facts and circumstances, taking into consideration the following criteria and any other criteria that may be published by the Department in regulations promulgated pursuant to the Administrative Process Act.
9. The related member does not issue a dividend to another related member that represents a distribution of revenue received by the related member from such other related member directly or indirectly for, related to or in connection with the use, maintenance, or management of intangible property in a transaction that would be subject to an addition to Virginia taxable income pursuant to subparagraph B(8)(a) of § 58.1-402 or subject to such addition in the absence of the safe harbors established in that same subparagraph, except where the related member can demonstrate by clear and convincing evidence that the issuance of the dividend serves a specific and bona fide business purpose such as financing investments in tangible, real, or intangible property, financing the expansion of the business operations, the provision of needed working capital, or the restructuring of the debt of or the push-down of acquisition-related indebtedness to the other related member. ]
[ 2. Losses related to or incurred in connection directly or indirectly with factoring transactions or discounting transactions; ]
[ 3 2 ] . Royalty, patent, technical and copyright fees;
[ 4 3 ] . Licensing fees; and
[ 5 4 ] . Other similar expenses and costs.
[ “Subject to a tax based on or measured by net income or capital” for purposes of subdivision B 8 a of § 58.1-402 includes, but is not limited to, situations in which a related member is required to file on a separate basis or is included in a combined or consolidated return in the jurisdiction in which the principal office of the related member is located. As used in this paragraph, the term “tax based on or measured by net income or capital” shall be inclusive of taxes that are imposed as the primary methodology by which a state taxes business entities, such as the Michigan Single Business Tax, the Washington Business and Occupation Tax, taxes on insurance premiums imposed by Virginia and other states, and the Virginia Bank Franchise Tax. ]
[ “Valid business purpose” means one or more business purposes, which alone or in combination, constitutes the motivation for some business activity or transaction, which activity or transaction changes in a meaningful way, apart from tax effects, the economic position of the taxpayer. ]
b. Two thousand dollars for taxable years beginning January 1, 1987, through December 31, 1987; $2,700 for taxable years beginning January 1, 1988, through December 31, 1988; and $5,000 for married persons (one-half of such amounts in the case of a married individual filing a separate return); and $3,000 Three thousand dollars for single individuals for taxable years beginning on and after January 1, 1989; $5,000 for married persons (one-half of such amounts in the case of a married individual filing a separate return) for taxable years beginning January 1, 1989, but before January 1, 2005; and $6,000 for married persons (one-half of such amounts in the case of a married individual filing a separate return) for taxable years beginning on and after January 1, 2005, provided that the taxpayer has not itemized deductions for the taxable year on his federal income tax return. For purposes of this section, any person who may be claimed as a dependent on another taxpayer's return for the taxable year may compute the deduction only with respect to earned income.
8. a. For taxable years beginning on and after January 1, 2004, the amount of any intangible expenses and costs [ or interest expenses and costs ] directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with one or more related members to the extent such expenses and costs were deductible or deducted in computing federal taxable income for Virginia purposes. This addition shall not be required for any portion of the intangible expenses and costs [ or interest expenses and costs ] if one of the following applies:
(2) The related member derives at least [ one-third 20 percent ] of its gross revenues from the licensing of intangible property to parties who are not related members [ or related members which utilize the intangible property outside the United States ] , and the transaction giving rise to the expenses and costs between the corporation and the related member was made at rates and terms comparable to the rates and terms of agreements that the related member has entered into with parties who are not related members for the licensing of intangible property.
[ (3) The corporation can establish to the satisfaction of the Tax Commissioner that the intangible expenses and costs meet both of the following: (1) the related member during the same taxable year directly or indirectly paid, accrued or incurred such portion to a person who is not a related member, and (2) the transaction giving rise to the intangible expenses and costs between the corporation and the related member did not have as a principal purpose the avoidance of any portion of the tax due under this chapter.
b. Nothing in this subdivision shall be construed to limit or negate the provisions of § 58.1-446. ]
[ 21. For taxable years beginning on and after January 1, 2004, any amount of intangible expenses and costs or interest expenses and costs added to the federal taxable income of a corporation in accordance with the provisions of subdivision B 8 a of this section shall be subtracted from the federal taxable income of the related member that received such amount if such related member is subject to Virginia income tax on the same amount. ]
E. If the tax rate on food purchased for human consumption remains the same for the period January 1, 2000 July 1, 2006, through March 31, 2001 2007, and the subsequent 12-month period beginning on April 1, 2001 2007, or with respect to any consecutive 12-month periods beginning on and after April 1, 2001 2007, the tax rate on such food shall remain the same unless none of the conditions described in subsection D have occurred, in which event the tax rate on food purchased for human consumption for the immediately following 12-month period shall be equal to the next lowest tax rate listed in subsection A.
A. Every dealer required to collect or pay the sales or use tax shall, on or before the twentieth day of the month following the month in which the tax shall become effective, transmit to the Tax Commissioner a return showing the gross sales, gross proceeds, or cost price, as the case may be, arising from all transactions taxable under this chapter during the preceding calendar month, and thereafter a like return shall be prepared and transmitted to the Tax Commissioner by every dealer on or before the twentieth day of each month, for the preceding calendar month. In the case of dealers regularly keeping books and accounts on the basis of an annual period which varies fifty-two 52 to fifty-three 53 weeks, the Tax Commissioner may make rules and regulations for reporting consistent with such accounting period.
B. 1. In addition to the amounts required under the provisions of this section and § 58.1-616, any dealer as defined by § 58.1-612 or direct payment permit holder pursuant to § 58.1-624, with taxable sales and purchases of $1,300,000 or greater for the twelve 12-month period beginning July 1, and ending June 30 of the immediately preceding calendar year, shall be required to make a payment equal to 90 percent of the sales and use tax liability for the previous June. Such tax payments shall be made on or before the 30th day of June, if payment is made by electronic funds transfer, as defined in § 58.1-202.1. If payment is made by other than electronic funds transfer, such payment shall be made on or before the 25th day of June. For purposes of this provision, taxable sales or purchases shall be computed without regard to the number of certificates of registration held by the dealer. Every dealer or direct payment permit holder shall be entitled to a credit for the payment under this subsection on the return for June of the current year due July 20. The provisions of this subsection shall not apply to persons who are required to file only a Form ST-7, Consumer User Tax Return.
On transactions over five dollars greater than five dollars, the tax shall be computed at three and one-half four percent, one-half cent or more being treated as one cent. If a dealer can show to the satisfaction of the Tax Commissioner that more than eighty-five 85 percent of the total dollar volume of his gross taxable sales during the taxable month was from individual sales at prices of ten 10 cents or less each, and that he was unable to adjust his prices in such manner as to prevent the economic incidence of the sales tax from falling on him, the Tax Commissioner shall determine the proper tax liability of the dealer based on that portion of the dealer's gross taxable sales which was from sales at prices of eleven cents or more.
On transactions over five dollars greater than five dollars, the tax shall be computed at four and one-half five percent, one half cent or more being treated as one cent. The foregoing bracket system shall not relieve the dealer from the duty and liability to remit an amount equal to four and one-half five percent of his gross taxable sales as provided in this chapter. If the dealer, however, can show to the satisfaction of the Tax Commissioner that more than eighty-five 85 percent of the total dollar volume of his gross taxable sales during the taxable month was from individual sales at prices of ten 10 cents or less each and that he was unable to adjust his prices in such manner as to prevent the economic incidence of the sales tax from falling on him, the Tax Commissioner shall determine the proper tax liability of the dealer based on that portion of the dealer's gross taxable sales which was from sales at prices of eleven 11 cents or more.
On the first 10 million dollars of value as determined pursuant to this section, [ 25 15¢ ] upon every $100 or portion thereof;
On the next 10 million dollars of value as determined pursuant to this section, [ 22 12¢ ] upon every $100 or portion thereof;
On the next 10 million dollars of value as determined pursuant to this section, [ 19 9¢ ] upon every $100 or portion thereof;
On the next 10 million dollars of value as determined pursuant to this section, [ 16 6¢ ] upon every $100 or portion thereof; and
On all over 40 million dollars of value as determined pursuant to this section, [ 13 3¢ ] upon every $100 or portion thereof, incorporated into this section.
B. The Tax Commissioner shall establish guidelines and rules for the transitional procedures regarding the imposition of the increased cigarette tax rate under this section. The guidelines and rules issued by the Tax Commissioner regarding the imposition of the increased cigarette tax rate shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.).
6. That the provisions of this act shall not become effective unless a general appropriation act is enacted by the General Assembly for the 2004-2006 biennium [ by midnight April 24, 2004 ] .