Bill Text: VA HB552 | 2024 | Regular Session | Prefiled
Bill Title: Income tax, corporate; sourcing of sales other than sales of tangible personal property.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2024-02-07 - Continued to 2025 in Finance by voice vote [HB552 Detail]
Download: Virginia-2024-HB552-Prefiled.html
Be it enacted by the General Assembly of Virginia:
1. That §58.1-416, as it is currently effective and as it may become effective, of the Code of Virginia is amended and reenacted as follows:
§58.1-416. (Contingent expiration date — See Editor's note) When certain other sales deemed in the Commonwealth.
A. Sales, other than sales of tangible personal property, are
in the Commonwealth if:
1. The
income-producing activity is performed in the Commonwealth; or
2. The income-producing
activity is performed both in and outside the Commonwealth and a greater
proportion of the income-producing activity is performed in the Commonwealth
than in any other state, based on costs of performance. (i) in the case of services, to the extent that
the purchaser of the service receives the benefit of the service in the
Commonwealth or (ii) in the case of intangible personal property, to the extent
that the purchaser of the intangible personal property uses such property in
the Commonwealth. In the case of marketable securities, sales are in the
Commonwealth if the customer is in the Commonwealth. Sales from the sale,
lease, rent, or licensing of real property are in the Commonwealth if the real
property is located in the Commonwealth. Sales from the lease, rent, or
licensing of tangible personal property are in the Commonwealth if the tangible
personal property is located in the Commonwealth at the time of such lease,
rent, or licensing.
B. 1. For debt buyers, as defined in §58.1-422.3, sales, other than sales of tangible personal property, are in the Commonwealth if they consist of money recovered on debt that a debt buyer collected from a person who is a resident of the Commonwealth or an entity that has its commercial domicile in the Commonwealth. Such rule shall apply regardless of the location of a debt buyer's business.
2. For property information and analytics firms, as defined in §58.1-422.4, that meet the requirements set forth in §58.1-422.4, sales of services are in the Commonwealth if they are derived from transactions with a customer or client who receives the benefit of the services in the Commonwealth. Such rule shall apply regardless of the location of a property information and analytics firm's business operations.
C. The taxes under this article on the sales described under subsection
subsections A and B are imposed to the maximum extent
permitted under the Constitutions of Virginia and the United States and federal
law. For the collection of such taxes on such sales, it is the intent of the
General Assembly that the Tax Commissioner and the Department assert the
taxpayer's nexus with the Commonwealth to the maximum extent permitted under
the Constitutions of Virginia and the United States and federal law.
D. If necessary information is not available to the taxpayer
to determine whether a sale other than a sale of tangible personal property is
in the Commonwealth pursuant to the provisions of subsections A,
B, and C, the taxpayer may estimate the
dollar value or portion of such sale in the Commonwealth, provided that the
taxpayer can demonstrate to the satisfaction of the Tax Commissioner that (i)
the estimate has been undertaken in good faith, (ii) the estimate is a
reasonable approximation of the dollar value or portion of such sale in the
Commonwealth, and (iii) in using an estimate the taxpayer did not have as a
principal purpose the avoidance of any tax due under this article. The
Department may implement procedures for obtaining its approval to use an
estimate. The Department shall adopt remedies and corrective procedures for
cases in which the Department has determined that the sourcing rules for sales
other than sales of tangible personal property have been abused by the
taxpayer, which may include reliance on the location of income-producing
activity and direct costs of performance as described in
subsection A under the laws
and regulations of the Commonwealth as they existed for taxable years beginning
prior to January 1, 2025.
§58.1-416. (Contingent effective date — See Editor's note) When certain other sales deemed in the Commonwealth.
A. Sales, other than sales of tangible personal property, are
in the Commonwealth if:
1. The
income-producing activity is performed in the Commonwealth; or
2. The
income-producing activity is performed both in and outside the Commonwealth and
a greater proportion of the income-producing activity is performed in the
Commonwealth than in any other state, based on costs of performance. (i) in the case of services, to the extent that
the purchaser of the service receives the benefit of the service in the
Commonwealth or (ii) in the case of intangible personal property, to the extent
that the purchaser of the intangible personal property uses such property in
the Commonwealth. In the case of marketable securities, sales are in the
Commonwealth if the customer is in the Commonwealth. Sales from the sale,
lease, rent, or licensing of real property are in the Commonwealth if the real
property is located in the Commonwealth. Sales from the lease, rent, or
licensing of tangible personal property are in the Commonwealth if the tangible
personal property is located in the Commonwealth at the time of such lease,
rent, or licensing.
B. 1. For debt buyers, as defined in §58.1-422.3, sales, other than sales of tangible personal property, are in the Commonwealth if they consist of money recovered on debt that a debt buyer collected from a person who is a resident of the Commonwealth or an entity that has its commercial domicile in the Commonwealth. Such rule shall apply regardless of the location of a debt buyer's business.
2. For property information and analytics firms, as defined in §58.1-422.4, that meet the requirements set forth in §58.1-422.4, sales of services are in the Commonwealth if they are derived from transactions with a customer or client who receives the benefit of the services in the Commonwealth. Such rule shall apply regardless of the location of a property information and analytics firm's business operations.
3. For Internet root infrastructure providers, as defined in § 58.1-422.5, sales of services are in the Commonwealth if they are derived from sales transactions with a customer or client who receives the benefit of the services in the Commonwealth. Such rule shall apply regardless of the location of an Internet root infrastructure provider's operations.
C. The taxes under this article on the sales described under subsection
subsections A and B are imposed to the maximum extent
permitted under the Constitutions of Virginia and the United States and federal
law. For the collection of such taxes on such sales, it is the intent of the
General Assembly that the Tax Commissioner and the Department assert the
taxpayer's nexus with the Commonwealth to the maximum extent permitted under
the Constitutions of Virginia and the United States and federal law.
D. If necessary information is not available to the taxpayer
to determine whether a sale other than a sale of tangible personal property is
in the Commonwealth pursuant to the provisions of subsections A,
B, and C, the taxpayer may estimate the
dollar value or portion of such sale in the Commonwealth, provided that the
taxpayer can demonstrate to the satisfaction of the Tax Commissioner that (i)
the estimate has been undertaken in good faith, (ii) the estimate is a
reasonable approximation of the dollar value or portion of such sale in the Commonwealth,
and (iii) in using an estimate the taxpayer did not have as a principal purpose
the avoidance of any tax due under this article. The Department may implement
procedures for obtaining its approval to use an estimate. The Department shall
adopt remedies and corrective procedures for cases in which the Department has
determined that the sourcing rules for sales other than sales of tangible
personal property have been abused by the taxpayer, which may include reliance
on the location of income-producing activity and direct costs of performance as described in subsection A under the laws
and regulations of the Commonwealth as they existed for taxable years beginning
prior to January 1, 2025.
2. That the provisions of this act shall become effective for taxable years beginning on or after January 1, 2025.
