What had Northern Virginia repair providers and customers do after the regional motor-vehicle repair tax was invalidated in 2008?

Subject

The Northern Virginia Transportation Authority

Plain-English summary

Virginia told motor-vehicle repair providers to stop collecting the Northern Virginia repair tax and remit what they had already collected. The Supreme Court of Virginia had ruled on February 29, 2008 that the House Bill 3202 provisions allowing the regional authority to impose taxes and fees were unconstitutional and invalid.

Providers had to report and pay all repair tax collected through February. Any repair tax mistakenly collected in March also belonged on the February return. The Department extended that return and payment deadline to May 6, 2008, and required a return even when no tax was owed.

Customers seeking refunds had to use the Virginia Department of Treasury's refund program. Repair providers were not responsible for returning the tax directly and were instructed to send customers to Treasury.

The ruling did not affect the Northern Virginia Transportation District motor-vehicle fuel sales tax, the corresponding fuel tax in Potomac and Rappahannock Transportation Commission member localities, or Virginia's ordinary retail sales and use tax.

What this means for you

• This bulletin governed the wind-down of a tax invalidated in 2008.
• Providers still had to remit tax already collected, including mistaken post-invalidation collections.
• Treasury, not repair shops, handled customer refunds.
• The bulletin did not repeal the separate fuel sales tax or the general retail sales and use tax.

Citations and references

• Virginia Tax Bulletin 08-6.
• House Bill 3202, 2007 Va. Acts ch. 896, as described in the bulletin.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 08-27

Original ruling text

TAX BULLETIN 08-6
Virginia Department of Taxation

March 25, 2008

IMPORTANT INFORMATION REGARDING
The Northern Virginia Transportation Authority

Motor vehicle repair labor and services sales and use tax (“Repair TAX”)

On February 29, 2008, the Supreme Court of Virginia ruled that the provisions in House Bill 3202 ( Acts of Assembly 2007, Chapter 896) that permitted the Northern Virginia Transportation Authority (“NVTA”) to impose regional taxes and fees violated the Constitution of Virginia and are invalid.

The Department of Taxation (“TAX”) is responsible for the administration and collection of the Motor Vehicle Repair Labor and Services Sales and Use Tax (“Repair Tax”). All providers of repair services were previously directed to stop collecting the Repair Tax as of February 29, 2008 .

Providers of repair services must pay to TAX all Repair Tax collected through the end of February. These funds must be submitted with the enclosed February return. If you mistakenly collected any Repair Tax in the month of March, that tax must also be reported on the February return and paid to TAX.

Although the due date of the February return would have been March 20, you have 30 business days from March 25, 2008 to file the return and make the payment. The returns and payments will be due on May 6, 2008. Returns are due even if no tax is owed.

The Department of Treasury (“Treasury”) will administer a refund program for the Repair Tax. Under this program, the Repair Tax collected will be refunded to your customers who paid the tax on repair transactions. This program will be the only method for getting a refund of the tax. Treasury will issue more information concerning the refund process. Providers of repair services are not responsible for making refunds to their customers who paid the tax. All customers seeking refunds of the tax should be directed to Treasury. Please check their website, www.trs.virginia.gov , for more information on requesting a refund.

The Motor Vehicle Fuel Sales Tax imposed in the Northern Virginia Transportation District and in the member localities of the Potomac and Rappahannock Transportation Commission is not affected by this ruling. The Virginia Retail Sales and Use Tax is also not affected by this ruling.

If you have any questions please contact TAX at (804) 367-8037.