Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Tax Modernization topic
No spam. Unsubscribe anytime.
Committee backs substitute on receipts attribution; delayed effective date and work group directed to study cross-state gross-receipts changes
Summary
House Bill 1743, as substituted, clarifies how receipts are attributed for income-based tax measures, defines income-based taxes for purposes of the statute, includes a delayed effective date of July 1, 2026, and directs the Department of Taxation to convene a stakeholder work group and report findings to money committees.
Delegate Del. Watts presented House Bill 1743 and the substitute that followed stakeholder meetings and counsel review. The substitute adds language that such receipts shall be determined based on the facts and circumstances of the taxpayer's business operations without regard to the amount of income ultimately computed as taxable under the methodology used by another state to which receipts are attributable. It also defines "income or other tax based upon income" as a net income tax as defined by federal law or any other tax the measure of which is based in whole or in part on gross or net income or receipts. The substitute has a delayed effective date of July 1, 2026, and directs the Department of Taxation to convene a work group to study comparative treatment of net operating losses and related issues and to report findings and recommendations to the money committees by October 1, 2025.
Delegate Watts described the substitute as a modernization and said the delayed effective date gives time for stakeholder work and for the General Assembly to refine language in 2026 if necessary.
Members asked clarifying questions about next steps. Delegate McNamara asked whether the substitute essentially amounted to a study followed by future action; Watts confirmed the delayed effective date and the role of the stakeholder work group in producing recommendations that could be acted upon in the next session. Delegate Delia Orrock (commenting in support) commended the approach as practical for generating stakeholder participation.
The committee voted to report HB 1743 with the substitute. The committee’s roll call on the motion was 21 to 0 in favor.
Context and significance: The substitute is framed to address changes in other states moving from corporate income taxes to taxes on gross receipts. Committee discussion emphasized preventing double taxation and achieving consistent treatment for businesses operating in multiple states. The work group required by the substitute will compare Virginia’s rules to the approaches taken by other states and recommend clarifications to avoid unintended tax consequences.
Ending: The substitute was reported and will follow the regular legislative process; the delayed effective date and the work-group deadlines provide a timeline for further review and potential statutory refinements before implementation.
