                                 CODE OF VIRGINIA

(CONTINGENT EFFECTIVE DATE — SEE EDITOR&#8217;S NOTE) WHEN CERTAIN OTHER SALES
DEEMED IN THE COMMONWEALTH (§ 58.1-416)

A. Sales, other than sales of tangible personal property, are in the
Commonwealth if:

   1. The income-producing activity is performed in the Commonwealth; or

   2. The income-producing activity is performed both in and outside the
   Commonwealth and a greater proportion of the income-producing activity is
   performed in the Commonwealth than in any other state, based on costs of
   performance.

B. 1. For debt buyers, as defined in § 58.1-422.3, sales, other than sales of
tangible personal property, are in the Commonwealth if they consist of money
recovered on debt that a debt buyer collected from a person who is a resident of
the Commonwealth or an entity that has its commercial domicile in the
Commonwealth. Such rule shall apply regardless of the location of a debt
buyer&#8217;s business.

   2. For property information and analytics firms, as defined in &#xA7;
   58.1-422.4, that meet the requirements set forth in &#xA7; 58.1-422.4, sales
   of services are in the Commonwealth if they are derived from transactions with
   a customer or client who receives the benefit of the services in the
   Commonwealth. Such rule shall apply regardless of the location of a property
   information and analytics firm&#8217;s business operations.

   3. For Internet root infrastructure providers, as defined in &#xA7;
   58.1-422.5, sales of services are in the Commonwealth if they are derived from
   sales transactions with a customer or client who receives the benefit of the
   services in the Commonwealth. Such rule shall apply regardless of the location
   of an Internet root infrastructure provider&#8217;s operations.

C. The taxes under this article on the sales described under subsection B are
imposed to the maximum extent permitted under the Constitutions of Virginia and
the United States and federal law. For the collection of such taxes on such
sales, it is the intent of the General Assembly that the Tax Commissioner and
the Department assert the taxpayer&#8217;s nexus with the Commonwealth to the
maximum extent permitted under the Constitutions of Virginia and the United
States and federal law.

D. If necessary information is not available to the taxpayer to determine
whether a sale other than a sale of tangible personal property is in the
Commonwealth pursuant to the provisions of subsections B and C, the taxpayer may
estimate the dollar value or portion of such sale in the Commonwealth, provided
that the taxpayer can demonstrate to the satisfaction of the Tax Commissioner
that (i) the estimate has been undertaken in good faith, (ii) the estimate is a
reasonable approximation of the dollar value or portion of such sale in the
Commonwealth, and (iii) in using an estimate the taxpayer did not have as a
principal purpose the avoidance of any tax due under this article. The
Department may implement procedures for obtaining its approval to use an
estimate. The Department shall adopt remedies and corrective procedures for
cases in which the Department has determined that the sourcing rules for sales
other than sales of tangible personal property have been abused by the taxpayer,
which may include reliance on the location of income-producing activity and
direct costs of performance as described in subsection A.

HISTORY: Code 1950, § 58-151.049; 1971, Ex. Sess., c. 171; 1984, c. 675; 2018,
c. 807; 2022, cc. 256, 257; 2023, cc. 405, 406.