Possible legislative proposals of Virginia Department of Taxation: September 22, 2003.

On September 22, 2003, the Virginia Chapter of Tax Executives Institute sent the following letter to the Virginia Department of Taxation. Virginia's Commissioner requested input from TEI in respect of five legislative proposals that the Department would like to have passed during the next session of Virginia's General Assembly. A response was prepared by the Virginia Chapter, whose president is Winfield L. Ryan of Dominion Resources Services, Inc., and issued under the aegis of the Institute's State and Local Tax Committee, whose chair is Barbara Barton of Electronic Data Systems Corp.

I am writing in response to your August 15, 2003, request for comments on five legislative proposals the Department of Taxation is considering for the General Assembly's 2004 session. On behalf of the Virginia Chapter of Tax Executives Institute (TEI), I thank you and your colleagues in the Department for involving TEI in this process.

TEI was established in 1944 to serve the professional needs of business tax professionals. Today, the Institute has 53 chapters in the United States, Canada, and Europe, including one in Virginia. TEI's more than 5,300 members are accountants, attorneys, and other business professionals who work for 2,800 of the leading companies in North America and Europe. TEI has more than 140 members in the Virginia Chapter, as well as many non-Virginia based members whose companies have significant operations and sales within the Commonwealth. As a professional organization, the Institute is dedicated to the development and effective implementation of sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the costs and burdens of administration and compliance to the benefit of taxpayers and government alike.

Our comments on each proposal are set forth below.

Pass Through Entities Draft Legislation (F-TAX-1)

This proposal would require business entities not subject to income tax at the federal or state level ("pass-through" entities such as partnerships, limited liability companies, and Subchapter S-Corporations) to file annual information returns with the Department if they do business in Virginia or have Virginia source income.

Recognizing the increasing prevalence and use of pass-through entities, TEI supports the Department's efforts to enhance the administration of state taxes in respect of such entities. We do this, moreover, even though the proposed legislation would add additional...