The Truck Renting and Leasing Association (TRALA) sponsored Virginia legislation that would limit the types of revenue taxed under the state’s 10% motor vehicle rental tax, and was introduced Jan. 11 by James Massie (R-Henrico). The bill, HB 322, would address administrative attempts to expand the definition of "gross proceeds" as they relate to the collection of the rental tax.
According to TRALA, 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 based not only on the rental agreement, but also on items including, but not limited to: parking tickets, delivery charges, pick-up charges, recovery charges, pass-through charges, transportation charges and third-party service charges. The DMV considers those items to be part of the gross proceeds from the rental even though none are typically listed on the rental agreement.
TRALA members and staff, along with the Virginia Trucking Association, first met with Virginia DMV staff in November 2010 to argue against the DMV's broad interpretation of the gross proceeds subject to the 10% tax. TRALA argued that the DMV position, expressed in a memo, was an overreaching interpretation.
According to TRALA's interpretation, several revenue sources listed as taxable should not be subject to the motor vehicle rental tax as they are not authorized in the Virginia Motor Vehicle Sales and Use Tax statutes or the accompanying Virginia Motor Vehicle Rental Taxes and Fees Rules and Regulations. Additionally, those same revenue sources would be specifically exempt from tax under Virginia law in any other circumstance. The DMV staff, however, continues to rely on the broader interpretation outlined by the VA Attorney General's office.
HB 322 specifically lists in statute revenue sources that are excluded from the definition of "gross proceeds" subject to the motor vehicle rental tax. The motor vehicle rental tax applies to rental transactions involving cars and trucks weighing up to 26,000 pounds rented for a period of less than twelve months.
To see a copy of Virginia HB 322, please click on the URL: http://www.trala.org/docs/Legislative_Bulletin/VA_HB_322.pdf