February 20, 2013
By Kirsti Correa
HB 1993, a bill that limits the definition of “gross proceeds” in Virginia’s 10% motor vehicle rental tax, passed the Senate and was enrolled into the state Legislature on Feb. 18. The bill is effective for rental periods beginning July 1.
Exclusions from “gross proceeds” include cash discounts taken on a contract; finance charges, carrying charges, service charges, and interest from credit given on a contract; charges for motor fuels; charges for optional accidental death insurance; Motor Vehicle Sales and Use Tax; violations, citations, or fines and related penalties and fees; delivery charges, pickup charges, recovery charges or drop charges; pass-through charges; transportation charges; third-party service charges; and refueling surcharges.
The Department of Taxation is also required to publish guidelines implementing the provisions.
The Truck Renting and Leasing Association (TRALA) said the need to clearly define the definition of gross proceeds arose when the Virginia Department of Motor Vehicles issued a memo based on an interpretation that came from the Virginia Attorney General’s office. The memo stated that vehicle rental companies should be collecting the 10% motor vehicle rental tax on both the rental agreement and the items that are now excluded in HB 1993.