The News Desk is a collection of news, notes and breaking items affecting the Fredericksburg community.
State to end prepaid sales tax
BY CHELYEN DAVIS
If you’re a retailer still prepaying your July sales tax bill every year, you might finally be off the hook next year.
Gov. Bob McDonnell is proposing that the state devote another $20 million next year to eliminate the “accelerated sales tax” for all but 200 retailers.
The accelerated sales tax was a budget gimmick put in place in 2009—as the recession was hitting—to help balance the state’s books. It required retailers with more than $1 million in annual taxable sales to prepay to the state their July sales tax revenues, using estimates based on the previous June’s sales.
This meant the state could count that money in a different fiscal year. Retailers didn’t like it, since they hadn’t actually collected the money yet.
McDonnell and many lawmakers have promised since then to phase out the accelerated sales tax payments, and the $20 million amendment he announced Tuesday is part of that.
The state has gradually raised the threshold for retailers affected by the accelerated sales tax, upping it in 2011 to affect only retailers with taxable sales of $5.4 million or higher.
That cut 7,026 retailers out of the prepayment requirement, and another 1,407 were eliminated in this year’s budget as the state continued to raise the threshold.
With McDonnell’s newest amendment, 98 percent of the 9,696 retailers who originally had to make accelerated sales tax payments will be exempt by the start of fiscal 2014 next July, he said in a press release.
“The accelerated sales tax is bad policy and needs to be eliminated as quickly as we can,” McDonnell said in the release. “I have always opposed the policy of playing budget games with sales tax receipts. The accelerated sales tax penalizes Virginia retailers and merchants and skews states revenues. We need to get this anti-business policy off our books as soon as possible and I hope the General Assembly will support this budget proposal.”
In a Monday morning speech to the state legislative money committees, McDonnell will be announcing all of his proposed amendments to the two-year budget approved this spring. Lawmakers will then approve or reject his ideas in their budget process during the General Assembly session, which starts in January.
Chelyen Davis: 540/368-5028