The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.
Virginia enacted legislation, a so-called “Amazon Law,” creating a presumption of nexus for certain out-of-state dealers, with the effective date of the provisions dependent upon whether federal legislation is enacted. [S.B. 597, enacted 4/4/12]
Virginia could realize as much as an additional $18 million in Fiscal Year 2014 and $24 million in Fiscal Years 2015 and subsequent years in state and local sales tax revenue, according to the fiscal statement.
The law provides that dealer is presumed to have sufficient activity within the state to require registration “if any commonly controlled person maintains a distribution center, warehouse, fulfillment center, office, or similar location within the Commonwealth that facilitates the delivery of tangible personal property sold by the dealer to its customers.”
The presumption may be rebutted by demonstrating that the commonly controlled person's activities in Virginia are “not significantly associated with the dealer's ability to establish or maintain a market in the Commonwealth.”
The subsection defines a “commonly controlled person” as any person that is a member of the same controlled group of corporations as the dealer or any other entity that bears the same ownership relationship to the dealer as a corporation that is a member of the same controlled group of corporations. The Virginia statute references I.R.C. § 1563(a) in defining controlled group of corporations of which the dealer may be part.
The effective date of the bill depends upon whether federal legislation passes authorizing states to require remote sellers to collect sales taxes on sales to in-state purchasers and the effective date of such federal legislation.
Specifically, the legislation is effective on the earlier of Sept. 1, 2013, or the effective date of federal legislation authorizing states to require a seller to collect taxes on sales of goods to in-state purchasers without regard to the seller's location. However, if such federal legislation is enacted prior to Aug. 15, 2013, and the effective date of that federal legislation is after Sept. 1, 2013, but on or prior to Jan. 1, 2014, then the legislation is effective Jan. 1, 2014.
The text of the legislation is available on the internet at http://lis.virginia.gov/cgi-bin/legp604.exe?121+ful+CHAP0590+pdf.
By Christine Boeckel
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