                                 CODE OF VIRGINIA

MINIMUM TAX ON HOME SERVICE CONTRACT PROVIDERS (§ 58.1-400.4)

A. As used in this section, unless the context requires a different meaning:
			&#8220;Collected provider fees&#8221; means provider fees collected on home
service contracts issued to a resident of the Commonwealth.
			&#8220;Home service contract&#8221; means the same as that term is defined in
&#xA7; 59.1-434.1.
			&#8220;Provider&#8221; means the same as that term is defined in &#xA7;
59.1-434.1.
			&#8220;Provider fee&#8221; means the consideration paid for a home service
contract issued to a resident of the Commonwealth.

B. For taxable years beginning on and after January 1, 2018, a provider shall be
subject to a minimum tax instead of the corporate income tax imposed by &#xA7;
58.1-400, if applicable, net any income tax credits that may be used to offset
such tax, if the tax imposed by &#xA7; 58.1-400 is less than the minimum tax
imposed by this subsection. The minimum tax imposed by this subsection shall be
equal to 2.25 percent of such provider&#8217;s collected provider fees.

C. In the case of an income tax return for a period of less than 12 months, the
minimum tax shall be based on the collected provider fees for the calendar year
that ends during the taxable period or, if none, the most recent calendar year
that ended before the taxable period. The minimum tax shall be prorated by the
number of months in the taxable period.

D. For purposes of the corporate income tax imposed by &#xA7; 58.1-400, a
provider&#8217;s collected provider fees shall be considered sales in the
Commonwealth when determining such provider&#8217;s sales factor pursuant to
&#xA7; 58.1-414.

E. When a provider that is subject to the tax imposed by this section is one of
several affiliated corporations that file a consolidated or combined income tax
return, the portion of the affiliated corporations&#8217; tax liability that is
attributable to the provider shall be computed as follows:

   1. Each corporation included in the consolidated or combined return shall
   recompute its corporate income tax liability, net of any income tax credits,
   as if it were filing a separate return. The separate income tax liability of
   the provider shall then be compared to the affiliated corporation&#8217;s tax
   liability, net of any income tax credits, indicated on the consolidated or
   combined return. For purposes of this section, the lesser amount shall be
   deemed to be the corporate income tax imposed by &#xA7; 58.1-400 and
   attributable to the provider.

   2. If such corporate income tax amount is less than the minimum tax of the
   provider as calculated pursuant to subsection B, the provider shall be subject
   to the minimum tax in lieu of the corporate income tax imposed by &#xA7;
   58.1-400.

   3. If such corporate income tax amount exceeds the minimum tax of the provider
   as calculated pursuant to subsection B, the provider shall not owe the minimum
   tax.

F. The requirements imposed under Article 20 (&#xA7; 58.1-500 et seq.) of
Chapter 3 regarding the filing of a declaration of estimated income taxes and
the payment of such estimated taxes shall be applicable to a provider regardless
of whether such taxpayer expects to be subject to the minimum tax imposed herein
or to the corporate income tax imposed by &#xA7; 58.1-400.
			For purposes of determining the applicability of the exceptions under which
the addition to the tax for the underpayment of any installment of estimated
taxes shall not be imposed, it shall be irrelevant whether the tax shown on the
return for the preceding taxable year is the corporate income tax or the minimum
tax.

G. Every provider that owes the minimum tax imposed by this section shall remit
such tax payment to the Department of Taxation.

H. The minimum tax imposed by this section on providers is in lieu of all other
state and local license fees or license taxes on providers and home service
contracts.

I. The minimum tax imposed by this section shall:

   1. Apply to (i) any entity that immediately prior to January 1, 2018, was
   licensed as a provider under former Article 2 (&#xA7; 38.2-2617 et seq.) of
   Chapter 26 of Title 38.2 and that continues to act as a provider on and after
   January 1, 2018, and (ii) any entity that registers to sell home service
   contracts under Chapter 33.1 (&#xA7; 59.1-434.1 et seq.) of Title 59.1 on or
   after January 1, 2018; and

   2. Not apply to any entity that was exempt from the provisions of former
   Article 2 (&#xA7; 38.2-2617 et seq.) of Chapter 26 of Title 38.2 immediately
   prior to January 1, 2018.

J. Notwithstanding &#xA7; 58.1-3 or any other provision of law, the Department
of Taxation and the Department of Agriculture and Consumer Services may exchange
information regarding providers for purposes of enforcing the provisions of
Chapter 33.1 (&#xA7; 59.1-434.1 et seq.) of Title 59.1.

HISTORY: 2017, c. 727.