Virginia House Passes Bill to Limit Motor Vehicle Rental Tax

In a unanimous vote on Feb. 5, the Virginia House of Delegates passed legislation that would limit the definition of “gross proceeds” in Virginia’s 10% motor vehicle rental tax. HB 1993 will now head to the Senate.

HB 1993 excludes parking fines, delivery charges, pickup charges, delivery charges, pass-through charges, transportation charges, third party service charges, refueling surcharges, as well as other items that had already been excluded via regulation, from the definition of “gross proceeds.”

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 (DMV) 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.

Auto Rental News reported on the bill when it was first introduced on Jan. 11. The bill is sponsored and supported by TRALA members and staff, who have argued against the broad interpretation in meetings with DMV staff.

The Virginia Department of Taxation now handles administration of the motor vehicle rental tax, and voiced support for the legislation.

Further amendments to HB 1993 are anticipated in the Senate and would likely limit more items, including charges for motor fuels, violations, citations or fines, as well as recovery and drop charges. 

View more on the legislation here.

Related news: Indianapolis City-County Council Approves Rental Car Tax Increase

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