eNews Feb. 1, 2019 – Action AlertsFriday, February 01, 2019 - 04:14pm
In this issue:
- Action Alert: Call your Delegate before Monday to oppose bill affecting machinery and tools taxes
- Action Alert: Call your Delegate before Monday to oppose bill permitting weddings on agritourism sites
Call your Delegate before Monday to oppose HB2640
Machinery and tools tax bill slated for floor action
After letting HB2640 slip by for two days this week, Delegate Byron’s proposal to change the assessment process for manufacturing equipment will probably come to a vote on Monday. The bill’s provisions would overturn two opinions issued by the Tax Commissioner, two opinions issued by two different Attorneys General, and a Virginia Supreme Court ruling that sided with Hanover County on the locality’s assessment methodology.
A strong lobbying effort this week by local officials probably persuaded the bill’s patron to delay the floor vote.
VML asks our members to reach out again to their delegates. Here’s a link to delegates and contact info.
The message is simple — vote against HB2640.
Background Information Provided by Hanover County:
State law (§58.1-3507) authorizes the assessment of M&T at “depreciated cost or a percentage or percentages of total original capitalized cost”. Many localities assess M&T as a static percentage of its original cost when the machinery was purchased new. This results in an assessed value that is far less than the fair market value of the equipment for most, if not all, of a machinery’s useable life. If fair market value dips below the tax bill, the owner has the statutory right to present the Commissioner with an appraisal.
For years, most other jurisdictions that assess M&T as a percentage of original cost have interpreted the phrase “original total capitalized cost” to mean what the equipment originally cost when purchased by the original owner from the manufacturer or distributor. There are two State Tax Commissioner Rulings and two Attorney General Opinions, the most recent being in 2014, that expressly support this interpretation. Commissioners of the Revenue and local governing bodies have set their tax rates accordingly.
HB2640 would change the definition so that “ original cost” would mean whatever the current owner paid for it whenever, and from whomever, the current owner bought it, even if it were purchased at a distress or bankruptcy sale The challenge presented by changing “original cost” to mean whatever the current owner paid for it is that the change will result in inequities. If Acme Corporation bought a new machine in 2014 for $1,000,000 and still owns the machine five years later, the machine will be assessed at a sliding percentage of its original cost. But, if Blackwater Corporation bought an identical machine, which was originally sold in 2014 for $1,000,000, in 2019 for $600,000, then Blackwater’s machine would be assessed at a lower amount. Same machine, same original cost, same age, but a dramatically different assessed value. Not only does that not make sense, but it creates a tax uniformity problem.
This proposed change in definition would require that methods of assessment and/or tax rates be adjusted accordingly to maintain existing revenues. Such changes in assessment methods and tax rates would affect different manufacturers differently, with some being winners and some losers. Manufacturers presumably have relied on the existing methods and rates in making their investment decisions. requires that taxes be uniform within each classification of property.
VML Contact: Neal Menkes, email@example.com
Call your Delegate before Monday to oppose HB2364
Adds weddings to activities permitted on agritourism sites
As amended HB2364 (Knight) would add “weddings” to the definition of agritourism activities. This would allow (by right) any number of weddings and participants on a given agritourism site.
- This bill erodes the authority of localities to address issues such as impacts to neighboring property, access, parking, noise and sanitary concerns.
- Many buildings on agricultural property do not meet the building code and do not address issues such a fire suppression, proper ingress and egress, load bearing issues and electricity concerns that cannot be regulated by localities.
- Additionally, this bill opens to door to adding more activities outside local control to those permitted as part of agritourism.
Link to Delegates and contact info.
VML Contact: Michelle Gowdy, firstname.lastname@example.org