How Will Virginia's New Single Sales Factor Method for Retail Companies Impact Your Company?

HB 154 was signed by the Governor of Virginia on March 6, 2012 requiring retail companies to use the single sales factor apportionment formula. 

The single sales factor for retail companies is phased-in as follows: (1) from July 1, 2012 until July 1, 2014, the apportionment formula is the property factor, the payroll factor, and triple the sales factor with a denominator of five; (2) from July 1, 2014 until July 1, 2015, the apportionment formula is the property factor, the payroll factor, and quadruple the sales factor with a denominator of six; and (3) from July 1, 2015 and thereafter a single sales factor formula applies. During the phase-in period, the denominator will be adjusted if the taxpayer does not have one of the factors.

For purposes of this provision, a retail company is defined using the North American Industry Classification System.

Will This Impact Your Company Negatively?

Retail companies who will be negatively affected by this legislation, should conduct analysis to determine if any planning can be done prior to the single sales factor formula becoming effective.