Pursuant to §§ 58.1-3510, 58.1-3510.1, 58.1-3510.2 and 58.1-3510.3 of the Code of Virginia, on and after August 1, 1989, there is hereby assessed and imposed on every person (which shall mean and include, where used in this article, individuals, firms. Partnerships, associations, corporations, and combination of individuals or whatever form or character) engaged in short-term rental business a tax of 1% on the gross proceeds of such business. Such tax shall be in addition to the tax levied pursuant to § 58.1-605 of the Code of Virginia and all other taxes of every kind now or hereinafter imposed by law. For purposes of this section, "gross proceeds" means the total amount charged, including penalties, late charges or interest, to each person for the rental of daily rental property, excluding any state and local sales tax paid pursuant to the Virginia Retail Sales and Use Tax Act.[1]
[1]
Editor's Note: See Code of Virginia, Title 58.1, Ch. 6.
For purposes of this article, "daily rental property" means all tangible personal property held for rental and owned by a person engaged in the short-term rental business, except trailers, as defined in § 46.2-100 of the Code of Virginia, and other tangible personal property required to be licensed or registered with the Department of Motor Vehicles, Department of Game and Inland Fisheries or the Department of Aviation.
A person is engaged in the short-term rental business if not less than 80% of the gross rental receipts of such business in any year are from transactions involving rental periods of 92 consecutive days or less, including all extensions and renewals to the same person or a person affiliated with the lessor. "Affiliated," for purposes of this section, shall mean any common ownership interest in excess of 5% of any officers or partners in common with the lessor and lessee. For purposes of this test:
A. 
Any rental to a person affiliated with the lessor shall be treated as rental receipts but shall not qualify for purposes of the eighty-percent requirement; and
B. 
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. For purposes of this section, the delivery and installation of tangible personal property shall not mean operation.
Except for daily rental passenger cars, rental property that is not daily rental property shall be classified for taxation pursuant to § 58.1-3503 of the Code of Virginia.
Every person engaged in the short-term rental business shall collect the rental tax from the lessee of the daily rental property at the time of the rental. The lessor of the daily rental property shall transmit a quarterly return to the Commissioner of the Revenue indicating the total business gross proceeds of the lessor, the gross proceeds derived from the short-term rental business, all rental gross proceeds claimed to be exempt from the daily rental tax and documentation of each such claim, and the total daily rental tax due the City for the previous quarter's short-term rental business and shall remit therewith the payment of such tax as is due for the quarter. The quarterly returns and payment of tax shall be filed with the Commissioner of the Revenue on or before the 20th day of each of the months of April, July, October and January, representing, respectively, the gross proceeds and taxes collected during the preceding quarters ending March 31, June 30, September 30 and December 31. The return shall be upon such forms and set forth such information as the Commissioner of the Revenue may require. The taxes required to be collected under this article shall be deemed to be held in trust by the person required to collect such taxes until remitted as required in this article.
If any person, whose duty it is so to do, shall fail or refuse to collect the tax imposed under this article and to make, within the time provided in this article, the returns and remittances required in this article, the Commissioner of the Revenue shall proceed in such manner as deemed best to obtain facts and information on which to base an estimate of the tax due. As soon as the Commissioner of the Revenue shall procure such facts and information necessary upon which to base the assessment of any tax payable by any person who has failed or refused to collect such tax and to make such return and remittance, the Commissioner shall proceed to determine and assess against such person the tax, penalty and interest provided for by this article and shall notify such person, by registered or certified mail, sent to his last known place of address, of the total amount of such tax, penalty and interest, and the total amount thereof shall be payable within 10 days from the date of such notice. In the event that such tax is not paid within 10 days from the date of the notice, the Treasurer shall proceed to collect the same in accordance with Chapter 39 of Title 58.1 of the Code of Virginia.
If any person, whose duty it is so to do, shall fail or refuse to remit to the Commissioner of the Revenue the tax required to be collected and paid under this article within the time specified in the article, there shall be added to such tax a penalty in the amount of 10% of the tax past due or the sum of $10, whichever is the greater. The assessment of such penalty shall not be deemed a defense to any criminal prosecution for failing to make any return or remittance as required in this article. Additionally, interest on late payments of all taxes due shall be added at the rate of 10% per year. Penalty and interest for failure to pay the tax assessed pursuant to this article shall be assessed on the first day following the day such quarterly installment payment is due.
No tax shall be collected or assessed on rentals by the commonwealth, any political subdivision of the commonwealth or the United States or any rental of durable medical equipment as defined in § 58.1-609.10 of the Code of Virginia. Additionally, all exemptions applicable in Chapter 6 of Title 58.1 of the Code of Virginia (§ 58.1-609.10) shall apply, mutatis mutandis, to the daily rental property tax.
Any person violating or failing to comply with any provision of this article shall be guilty of a misdemeanor.