Sec. 40-245. - Definitions.

The following words and phrases, when used in this article, shall, for the purposes of this article, have the following respective meanings, except where the context clearly indicates a different meaning:

(a)

Short-term rental property means all tangible personal property held for rental and owned by a person engaged in the short-term rental business except:

(1)

Trailers as defined in § 46.2-100, Code of Virginia, 1950 as amended; and

(2)

Other tangible personal property required to be licensed or registered with the Virginia Department of Motor Vehicles, the Virginia Department of Game and Inland Fisheries, or the Virginia Department of Aviation.

(b)

Engaged in the short-term rental business. A person is engaged in the short-term rental business if:

(1)

Not less than eighty (80) percent of the gross rental receipts of such business during the preceding year arose from transactions involving the rental of short-term rental property, other than heavy equipment property as defined in subdivision (2), for periods of ninety-two (92) consecutive days or less, including all extensions and renewals to the same person or a person affiliated with the lessee; or

(2)

Not less than sixty (60) percent of the gross rental receipts of such business during the preceding year arose from transactions involving the rental of heavy equipment property for periods of two hundred seventy (270) consecutive days or less, including all extensions and renewals to the same person or a person affiliated with the lessee. For the purposes of this subdivision, the term "heavy equipment property" means rental property of an industry that is described under code 532412 or 532490 of the 2002 North American Industry Classification System as published by the United States Census Bureau, excluding office furniture, office equipment, and programmable computer equipment and peripherals as defined in § 58.1-3503 A 16 of the Code of Virginia.

(c)

For purposes of determining whether a person is engaged in the short-term rental business as defined above, (i) a person is "affiliated" with the lessee of rental property if such person is an officer, director, partner, member, shareholder, parent or subsidiary of the lessee, or if such person and the lessee have any common ownership interest in excess of five (5) percent, (ii) any rental to a person affiliated with the lessee shall be treated as rental receipts but shall not qualify for purposes of the eighty (80) percent requirement of subdivision (1) or the sixty (60) percent requirement of subdivision (2), and (iii) any rental of personal property which also involves the provision of personal services for the operation of the personal property rented shall not be treated as gross receipts from rental, provided, however, that the delivery and installation of tangible personal property shall not mean operation for purposes of this section.

(Ord. No. 3887-89, § 1; Ord. No. 6611-09, § 1)

Sec. 40-246. - Levied; amount.

There is hereby imposed and levied a tax upon short-term rental property in an amount of one (1) percent of the gross proceeds of any person engaged in the short-term rental business. Gross proceeds shall mean the total amount charged to each person for the rental of short-term rental property, excluding any state and local sales tax paid under the provisions of Chapter 6 of Title 58.1, Taxation, of the Code of Virginia, 1950, as amended. The imposition and collection of a short-term rental property tax shall be in lieu of taxation of such rental property as tangible business personal property in the same tax year.

(Ord. No. 3887-89, § 1; Ord. No. 6611-09, § 1)

Sec. 40-247. - Collection of tax.

(a)

Any person engaged in the short-term rental business shall collect the rental tax from the lessee of the short-term rental property at the time of the rental. The lessor of the short-term rental property shall transmit a quarterly return to the commissioner of the revenue indicating the gross, not later than the fifteenth day following the end of each calendar quarter, reporting the gross rental proceeds derived from the short-term rental business. The commissioner of the revenue shall assess the tax due, and the commissioner of the revenue shall collect the daily rental property tax pursuant to subsection (c) of this section. The short-term rental business shall pay the tax so assessed not later than the last day of the month following the end of the calendar quarter.

(b)

Notwithstanding the provisions of subsection (a) of this section, no tax shall be collected or assessed on: (1) rentals by the Commonwealth, any political subdivision of the Commonwealth or the United States; or (2) any rental of durable medical equipment as defined in Subdivision 10 of § 58.1-609.10 of the Code.

(c)

The commissioner of the revenue shall receive taxes in the following manner:

(1)

Commissioner of the revenue to receive taxes. The commissioner of the revenue of the City of Newport News shall collect the daily rental property taxes and continue to collect the amount due and payable for the quarterly payments, up to and including the due date, without penalty or interest thereon.

(2)

Failure to file return or remit payments; fraudulent return; civil penalties. Any person failing to remit the payments of daily rental property taxes on or before the due dates shall incur a penalty thereon of six (6) percent if the failure is for not more than one (1) month, with an additional six (6) percent for each additional month, or fraction thereof, during which the failure continues, not to exceed thirty (30) percent in the aggregate. In no case, however, shall the penalty be less than ten dollars ($10.00) and such minimum penalty shall apply whether or not any tax is due for the period for which such return was required. If such failure is due to providential or other good cause shown to the satisfaction of the commissioner of the revenue, such return with or without remittance may be accepted exclusive of penalties. In the case of a false or fraudulent return where willful intent exists to defraud the city of any tax due under this article, or in the case of a willful failure to file a return with the intent to defraud the city of any such tax, a specific penalty of fifty (50) percent of the amount of the proper tax shall be assessed. All penalties and interest imposed by this article shall be payable by the lessor and collectible by the commissioner of the revenue in the same manner as if they were a part of the tax imposed.

(3)

Interest on taxes and penalties not paid when due. Interest at the rate of ten (10) percent per annum shall be computed and collected from the lessor upon the taxes and penalty from the date such taxes and/or penalty were due.

(Ord. No. 3887-89, § 1; Ord. No. 6441-07, § 1, eff. 1-1-08; Ord. No. 6611-09, § 1)

Sec. 40-247.1. - Penalty for failure to file return or making false return.

Any lessor subject to the provisions of this article willfully failing or refusing to file a return herein required to be made, or willfully failing or refusing to file a supplemental return or other data required by the commissioner of the revenue, or who makes a false or fraudulent return with intent to evade the tax hereby levied, or who makes a false or fraudulent claim for a refund, or who willfully violates any other provision of this article, punishment for which is not otherwise herein provided, shall be guilty of a Class 1 misdemeanor.

(Ord. No. 6441-07, § 1, eff. 1-1-08)

Sec. 40-248. - Renter's certificate of registration.

(a)

Every person engaging in the business of short-term rental of tangible personal property shall file an annual application for a certificate of registration with the commissioner of the revenue. The application shall be on a form prescribed by the commissioner of the revenue and shall set forth the name under which the applicant operates or intends to operate the rental business, the location of the business and such other information as the commissioner may require.

(b)

Each applicant shall sign the application as owner of the rental business. If the rental business is owned by an association, partnership, limited liability company or corporation, the application shall be signed by a member, partner, executive officer or other person specifically authorized by the association, partnership, limited liability company or corporation to sign.

(c)

Upon approval of the application by the commissioner, a certificate of registration shall be issued. The certificate shall be conspicuously displayed at all times at the place of business for which it is issued.

(d)

The certificate is not assignable and shall be valid only for the person in whose name it is issued and the place of business designated.

(e)

A person who has not previously been engaged in the short-term rental business who applies for a certificate or registration pursuant to this section shall be eligible for registration upon his certification that he anticipates meeting the requirements of subdivision (1) or (2) of subsection (b) of section 40-245 above, designated by the applicant at the time of application, during the year for which registration is sought.

(f)

In the event that the commissioner of the revenue makes a written determination that a rental business previously certified as a short-term rental business has failed to meet either of the tests set forth in section 40-245(b) during a preceding tax year, such business shall lose its certification as a short-term rental business and shall be subject to the business personal property tax with respect to all rental property for the tax year in which such certification is lost and any subsequent tax years until such time as the rental business obtains recertification. In the event that a rental business loses its certification as a short-term rental business pursuant to this subsection, such business shall not be required to refund to customers daily rental property taxes previously collected in good faith and shall not be subject to assessment for business personal property taxes with respect to rental property for tax years preceding the tax year in which the certification is lost unless the commissioner of the revenue makes a written determination that the business obtained its certification by knowingly making materially false statements in its application, in which case the commissioner may assess the taxpayer the amount of the difference between short-term rental property taxes remitted by such business during the period in which the taxpayer wrongfully held certification and the business personal property taxes that would have been due during such period but for the certification obtained by the making of the materially false statements. Any such assessment, and any determination not to certify or to decertify a rental business as a short-term rental business as defined in this section may be appealed pursuant to the procedures and requirements set forth in § 58.1-3983.1 of the Code of Virginia for appeals of local business taxes.

(g)

A rental business that has been decertified pursuant to the provisions of subsection (f) shall be eligible for recertification for a subsequent tax year upon a showing that it met one (1) of the tests provided in section 40-245(b) for at least ten (10) months of operations during the present tax year.

(Ord. No. 3887-89, § 1; Ord. No. 6611-09, § 1)

Sec. 40-249. - Exemptions.

All exemptions applicable in Chapter 6 of Title 58.1, Taxation, of the Code shall apply to the short-term rental property tax imposed by this article.

(Ord. No. 3887-89, § 1; Ord. No. 6611-09, § 1)

Secs. 40-250—40-254. - Reserved.