2006 Code of Virginia § 58.1-3706 - Limitation on rate of license taxes

58.1-3706. Limitation on rate of license taxes.

A. Except as specifically provided in this section and except for the feeauthorized in 58.1-3703, no local license tax imposed pursuant to theprovisions of this chapter, except 58.1-3712, 58.1-3712.1 and 58.1-3713,or any other provision of this title or any charter, shall be imposed on anyperson whose gross receipts from a business, profession or occupation subjectto licensure are less than: (i) $100,000 in any locality with a populationgreater than 50,000; or (ii) $50,000 in any locality with a population of25,000 but no more than 50,000. Any business with gross receipts of more than$100,000, or $50,000, as applicable, may be subject to the tax at a rate notto exceed the rate set forth below for the class of enterprise listed:

1. For contracting, and persons constructing for their own account for sale,sixteen cents per $100 of gross receipts;

2. For retail sales, twenty cents per $100 of gross receipts;

3. For financial, real estate and professional services, fifty-eight centsper $100 of gross receipts; and

4. For repair, personal and business services, and all other businesses andoccupations not specifically listed or excepted in this section, thirty-sixcents per $100 of gross receipts.

The rate limitations prescribed in this section shall not be applicable tolicense taxes on (i) wholesalers, which shall be governed by 58.1-3716;(ii) public service companies, which shall be governed by 58.1-3731; (iii)carnivals, circuses and speedways, which shall be governed by 58.1-3728;(iv) fortune-tellers, which shall be governed by 58.1-3726; (v) massageparlors; (vi) itinerant merchants or peddlers, which shall be governed by 58.1-3717; (vii) permanent coliseums, arenas, or auditoriums having a maximumcapacity in excess of 10,000 persons and open to the public, which shall begoverned by 58.1-3729; (viii) savings institutions and credit unions, whichshall be governed by 58.1-3730; (ix) photographers, which shall be governedby 58.1-3727; and (x) direct sellers, which shall be governed by 58.1-3719.1.

B. Any county, city or town which had, on January 1, 1978, a license taxrate, for any of the categories listed in subsection A, higher than themaximum prescribed in subsection A may maintain a higher rate in suchcategory, but no higher than the rate applicable on January 1, 1978, subjectto the following conditions:

1. A locality may not increase a rate on any category which is at or abovethe maximum prescribed for such category in subsection A.

2. If a locality increases the rate on a category which is below the maximum,it shall apply all revenue generated by such increase to reduce the rate on acategory or categories which are above such maximum.

3. A locality shall lower rates on categories which are above the maximumsprescribed in subsection A for any tax year after 1982 if it receives morerevenue in tax year 1981, or any tax year thereafter, than the revenue basefor such year. The revenue base for tax year 1981 shall be the amount ofrevenue received from all categories in tax year 1980, plus one-third of theamount, if any, by which such revenue received in tax year 1981 exceeds therevenue received for tax year 1980. The revenue base for each tax year after1981 shall be the revenue base of the preceding tax year plus one-third ofthe increase in the revenues of the subsequent tax year over the revenue baseof the preceding tax year. If in any tax year the amount of revenues receivedfrom all categories exceeds the revenue base for such year, the rates shallbe adjusted as follows: The revenues of those categories with rates at orbelow the maximum shall be subtracted from the revenue base for such year.The resulting amount shall be allocated to the category or categories withrates above the maximum in a manner determined by the locality, and dividedby the gross receipts of such category for the tax year. The resulting rateor rates shall be applicable to such category or categories for the secondtax year following the year whose revenue was used to make the calculation.

C. Any person engaged in the short-term rental business as defined in 58.1-3510 shall be classified in the category of retail sales for license taxrate purposes.

D. 1. Any person, firm, or corporation designated as the principal or primecontractor receiving identifiable federal appropriations for research anddevelopment services as defined in 31.205-18 (a) of the Federal AcquisitionRegulation in the areas of (i) computer and electronic systems, (ii) computersoftware, (iii) applied sciences, (iv) economic and social sciences, and (v)electronic and physical sciences shall be subject to a license tax rate notto exceed three cents per $100 of such federal funds received in payment ofsuch contracts upon documentation provided by such person, firm orcorporation to the local commissioner of revenue or finance officerconfirming the applicability of this subsection.

2. Any gross receipts properly reported to a Virginia locality, classifiedfor license tax purposes by that locality in accordance with subdivision 1 ofthis subsection, and on which a license tax is due and paid, or which grossreceipts defined by subdivision 1 of this subsection are properly reported tobut exempted by a Virginia locality from taxation, shall not be subject tolocal license taxation by any other locality in the Commonwealth.

3. Notwithstanding the provisions of subdivision D 1, in any county operatingunder the county manager plan of government, the following shall govern thetaxation of the licensees described in subdivision D 1. Persons, firms, orcorporations designated as the principal or prime contractors receivingidentifiable federal appropriations for research and development services asdefined in 31.205-18 (a) of the Federal Acquisition Regulation in the areasof (i) computer and electronic systems, (ii) computer software, (iii) appliedsciences, (iv) economic and social sciences, and (v) electronic and physicalsciences may be separately classified by any such county and subject to taxat a license tax rate not to exceed the limits set forth in subsections Athrough C above as to such federal funds received in payment of suchcontracts upon documentation provided by such persons, firms, or corporationsto the local commissioner of revenue or finance officer confirming theapplicability of this subsection.

E. In any case in which the Department of Mines, Minerals and Energydetermines that the weekly U.S. Retail Gasoline price (regular grade) forPADD 1C (Petroleum Administration for Defense District - Lower AtlanticRegion) has increased by 20% or greater in any one-week period over theimmediately preceding one-week period and does not fall below the increasedrate for at least 28 consecutive days immediately following the week of suchincrease, then, notwithstanding any tax rate on retailers imposed by thelocal ordinance, the gross receipts taxes on fuel sales of a gas retailermade in the following license year shall not exceed 110% of the grossreceipts taxes on fuel sales made by such retailer in the license year ofsuch increase. For license years beginning on or after January 1, 2006, everygas retailer shall maintain separate records for fuel sales and nonfuel salesand shall make such records available upon request by the local tax official.

The provisions of this subsection shall not apply to any person or entity (i)not conducting business as a gas retailer in the county, city, or town forthe entire license year immediately preceding the license year of suchincrease or (ii) that was subject to a license fee in the county, city, ortown pursuant to 58.1-3703 for the license year immediately preceding thelicense year of such increase.

The Department of Mines, Minerals and Energy shall determine annually if suchincrease has occurred and remained in effect for such 28-day period.

(Code 1950, 58-266.1; 1950, p. 155; 1956, c. 242; 1964, c. 424; 1968, c.619; 1970, cc. 231, 547; 1974, cc. 196, 438; 1975, cc. 23, 621; 1976, cc.521, 719; 1977, c. 320; 1978, cc. 772, 799, 817; 1979, cc. 565, 568, 570;1980, cc. 318, 736; 1981, cc. 419, 636; 1982, cc. 348, 548, 552, 554, 558,633; 1983, c. 554; 1984, cc. 247, 675, 695; 1985, c. 120; 1989, c. 589; 1992,c. 632; 1993, c. 918; 1996, cc. 77, 715, 720; 2006, c. 763.)