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Multistate Tax Alert: Virginia Update

Guidelines on single sales factor election for manufacturers & phase-in of single sales factor apportionment for retailers


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The Virginia Department of Taxation (the “Department”) recently issued final guidelines with respect to the manufacturer’s election to use single-sales factor apportionment for corporate income tax purposes. The election, codified at Va. Code Ann. § 58.1-422, allows qualifying manufacturers to use a modified apportionment factor for tax years beginning after July 1, 2011. The Department had issued amended draft guidelines on August 30, 2012 regarding the election. The final guidelines incorporate the changes resulting from the 2012 General Assembly (H.B. 460 Chapter 427 of the 2012 Acts of the Assembly) and certain public comments received regarding the draft guidelines.

Also, in 2012 Virginia adopted mandatory single-sales factor corporate income tax apportionment for retailers. This mandatory apportionment formula is being phased in beginning July 1, 2012.

In the attached Tax Alert we summarize these Virginia apportionment provisions.

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