Tax Relief Currently Under Consideration in the General Assembly

Real Estate, Land Use & Construction Law

Tax Relief Currently Under Consideration in the General Assembly

Jan 5, 2010 | Real Estate, Land Use & Construction Law

Tax reform means “Don’t tax you, don’t tax me, tax that fellow behind the tree.” – Russell Long, U.S. Senator from Louisiana, 1948-1987.

Despite the budget crisis facing the Commonwealth and local jurisdictions all around Virginia, the General Assembly is considering new tax credits and limits in its upcoming session.

HB 2 proposes a tax credit equal to ten percent of the eligible investments made by small business tax payers in personal property and real estate improvements used in the business. Acquisition of or expenses related to motor vehicles used in the business and purchase or rental of real estate will not qualify as eligible investments. Qualifying investments must be at least $10,000 and must be made beginning July 1, 2010 but before July 1, 2011. For purposes of this proposed tax credit, a business qualifies as “small” if it has 500 or fewer employees. The patrons of HB 2 are Delegate Manoli Loupassi of the 68th District, which includes parts of Chesterfield County and the City of Richmond, and Delegate Christopher Peace of the 97th District, which includes parts of Hanover, Caroline, Henrico, Spotsylvania, King William and King and Queen Counties.

HB 47 proposes a tax credit to employers for expenses incurred in allowing employees to telecommute pursuant to a signed telework agreement for taxable years beginning on or after January 1, 2011 but before January 1, 2013. Under this proposed tax credit, an employer is eligible for a credit of up to $1,200 per teleworking employee, depending on the number of days per month the teleworking employee teleworks and whether the employer’s primary place of business is located in a nonattainment area under the Federal Clean Air Act. The employer may also receive a 100% tax credit (capped at $20,000 per employer) for costs incurred for conducting a telework assessment in the year prior to implementing a formal telework program. There is a $1 million annual cap for taxable years 2011 and 2012 for the aggregate amount of tax credits to be issued. This seems like a good deal for the constituents of Delegate Scott Lingamfelter of the 31st District, who is sponsoring this bill. Delegate Lingamfelter is based out of Woodbridge, an area that could greatly benefit by an increase in telecommuting.

HB 57 seeks to prohibit localities from imposing a business, professional and occupational license (“BPOL”) tax if they have not already done so as of January 1, 2010. Additionally, the bill freezes BPOL tax rates in jurisdictions that have already chosen to impose BPOL taxes. This bill is being introduced by Delegate Mark Cole of the 88th District, which spans Stafford, Spotsylvania and Fauquier Counties and the Town of Remington. Unlike its neighbors, Stafford County had no BPOL tax until 2008, when the Stafford County Board of Supervisors narrowly voted to impose the tax by a 4-3 vote. The Stafford County Sun’s article shortly after that vote discusses how opposed Stafford residents were to the tax, and how controversial the vote was. In fact, Stafford County residents were not the only ones opposed to the tax. Some Spotsylvania residents, who were already subject to the BPOL tax, felt that the lack of a BPOL tax in Stafford not only gave Stafford a competitive edge, but also put political pressure on their local politicians to keep their taxes low. You can read one take on this theme in a blog post on the Spotsylvania Republican Committee’s blog, On the Spot. For an overview of what jurisdictions have imposed BPOL taxes as of 2005, take a look at this chart meticulously pulled together by the University of Virginia’s Weldon Cooper Center for Public Service.


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