Two bills that would amend the Middleburg Town Charter to authorize the collection of its longstanding business personal property tax are moving through the General Assembly.
The town has been collecting the tax from businesses at a rate of $1 per $100 in assessed value for decades, but Town Administrator Martha Semmes said a problem was discovered late last year. Town Attorney Martin Crim realized that a section of the Virginia Code restricts towns from assessing the tax if it’s at a higher rate than the vehicle tax. Since Middleburg phased out its vehicle tax 20 years ago, the business tax was, by default, higher.
“He felt that we should not be assessing that business tangible personal property tax,” Semmes said.
To correct the problem, the town staff worked with then-delegate Randy Minchew and Sen. Jill Vogel (R-27) to draft bills that would allow the town to continue assessing the tax without reinstating the vehicle tax. Vogel introduced the Senate bill last month; newly elected Del. Wendy Gooditis (D-10) introduced the House bill.
The Virginia Senate passed Vogel’s bill by a 37-3 vote last month. The House also approved the measure, although it stripped an emergency clause designed to allow the change to take effect upon the governor’s signature. The House bill is under review by the Senate.
Semmes said the town refunded businesses $253,397 for the taxes they paid between 2014 and 2016. According to state law, the town can refund the taxes only if they were collected within the past three years. Additionally, the town this year will also not be imposing the tax. “We decided not to charge it until we found out whether we were going to get this authority,” Semmes said.
The charter amendment would allow the town to assess a business tax without reinstating a car tax. The town dropped that tax in the wake of the Gilmore administration’s efforts to eliminate the local tax because of the cost and bureaucratic burden of applying to the state to refund the lost revenue.
Semmes said the business assessment allows the town to spread out the tax burden. “For any community to have as diverse a set of taxes as possible is great,” she said.
If the Senate approves the House bill and Gov. Ralph Northam approves the final bill, it will take effect July 1.