Page updated Sep 14 2009 8:44 a.m.

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Bank Franchise License Tax

Every bank or trust company with its main office or branch office(s) in the City must pay an annual City franchise tax.

Bank means any incorporated bank, banking association or trust company organized under Federal or State laws. The bank must conduct business or have an office in Virginia, or have a charter which appoints any location in Virginia as the place of its main office. A franchise tax is a tax on the privilege of conducting business.

Filing Procedures 

All banks with main offices must prepare and file bank franchise tax returns (Virginia Form 64, Schedule H) with the City by March 1 of each year. The City's Finance Department sends certified copies of the returns to the Virginia Department of Taxation.

Every bank with a main office in the City should mail the tax payment by June 1 of each year to:

Treasury Division
Finance Department
City of Alexandria
P.O. Box 323
Alexandria, VA 22313

Any bank that fails or neglects to file a return and pay the local tax may be subject to a penalty of up to $500.

Computation of Tax 

Main office: The City tax is 80% of the State's bank franchise tax. The State's franchise tax rate is $1 for each $100 of a bank's net capital, so the City tax rate is currently $0.80 per $100 of net capital.

Branch office: Banks with branches offices in the City must pay the bank franchise tax on net capital based upon the ratio of local deposits to total statewide deposits of the bank.

Net Capital 

Net capital is gross capital (capital, surplus and undivided profits) less the following items:

1. the assessed value of real property
2. the book value of tangible personal property
3. the pro rata share of government obligations,
4. the capital accounts of any bank subsidiaries, and
5. the amount of any reserve for loan losses allowable by the IRS, and the amount of any reserve for marketable securities valuation included in capital, surplus and undivided profits.

Excluded from Taxation 

Under State law, the term "bank" does not include the following three groups. Therefore, these groups are not required to pay an annual franchise tax:

1. all corporations organized under the laws of other states and operating in Virginia,
2. all banks not organized under Virginia laws, and
3. all natural persons and partnerships.

Further Information 

For tax forms and taxpayer assistance, contact:

Tax Services & Enforcement
301 King Street, Room 1700
Alexandria, VA 22314
703.746.3903 Option 4
Email:  

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