Virginia Supreme Court Rules Vehicle Repair and Labor Tax Unconstitutional

March 13, 2008

UPDATE: On February 29, 2008, the Virginia Supreme Court declared as unconstitutional the tax on motor vehicle repair, labor and services imposed by the Northern Virginia Transportation Authority. This ruling also applies to the repair tax scheduled to be imposed by dealers in the Hampton Roads Transportation Authority on May 1, 2008.

The Supreme Court ruled that the provisions in HB 3202 that permitted the Northern Virginia Transportation Authority and the Hampton Roads Transportation Authority to impose regional taxes and fees violated the Constitution of Virginia and are invalid.

The Virginia Department of Taxation recently released Virginia Tax Bulletin 08-5 (.PDF), notifying dealers in the Hampton Roads Transportation Authority not to begin collecting repair tax on May 1, 2008, as originally scheduled. This bulletin follows Virginia Tax Bulletin 08-3 (.DOC), which specifically addresses the Northern Virginia Transportation Authority. The taxes and fees already imposed by the Northern Virginia Transportation Authority are null and void.

If you have questions, please contact VSCPA Government Affairs Director Erin Collins at (804) 422-6705.