HB545: License tax, local; staffing firm deductions.

HOUSE BILL NO. 545

Offered January 13, 2016
Prefiled January 9, 2016
A BILL to amend and reenact § 58.1-3732.4 of the Code of Virginia, relating to the local license tax on staffing firms.
Patron-- Watts

Referred to Committee on Finance

Be it enacted by the General Assembly of Virginia:

1. That § 58.1-3732.4 of the Code of Virginia is amended and reenacted as follows:

§ 58.1-3732.4. Limitation on gross receipts; staffing firms.

A. Gross receipts for license tax purposes under this chapter shall not include employee benefits paid by a staffing firm to, or for the benefit of, any contract employee or independent contractor for the period of time that the contract employee or independent contractor is actually employed for the use of the client company pursuant to the terms of a PEO services contract or temporary help services contract. The taxable gross receipts of a staffing firm shall include any administrative fees received by such firm from a client company, whether on a fee-for-service basis or as a percentage of total receipts from the client company.

B. For the purpose of this section:

"Benefits" means wages, salaries, payroll taxes, payroll deductions, workers' compensation costs, and similar benefits and expenses.

"Client company" means a person that enters into a contract with a staffing firm by which the staffing firm, for a fee, provides PEO services or temporary help services.

"Contract employee" means an employee performing services under a PEO services contract or temporary help services contract.

"Independent contractor" means an independent contractor performing services under a PEO services contract or temporary help services contract.

"Employee benefits" means wages, salaries, payroll taxes, payroll deductions, workers' compensation costs, benefits, and similar expenses.

"PEO services" or "professional employer organization services" means an arrangement whereby a staffing firm assumes employer responsibility for payroll, benefits, and other human resources functions with respect to the employees or workforce of a client company with no restrictions or limitations on the duration of employment.

"PEO services contract" means a contract pursuant to which a staffing firm provides PEO services for a client company.

"Staffing firm" means a person that provides PEO services or temporary help services.

"Temporary help services" means an arrangement whereby a staffing firm temporarily assigns employees or independent contractors to support or supplement a client company's workforce.

"Temporary help services contract" means a contract pursuant to which a staffing firm provides temporary help services for a client company.

2. That the provisions of this act are effective for license years as defined under § 58.1-3700.1 of the Code of Virginia beginning on or after January 1, 2017.