Governor McAuliffe Signs Bill 

Advancing Date of Income Tax Conformity 

to December 31, 2015 

If you have additional questions, please visit the Department's website at http://www.tax.virginia.gov, or contact the Department at (804) 367-8031 for individual income tax questions or (804) 367-8037 for corporate income tax questions.

It's time to file!

Corporation Income Tax returns (Form 500) are due electronically on or before Dec. 15, 2015 from:

• Fiscal year filers whose taxable year ends on Aug. 31, 2015.
• Fiscal year filers whose taxable year ends on Feb. 28, 2015 and who are filing under Virginia’s automatic six-month extension. 

Virginia Automatic Extension: Virginia grants an automatic six-month extension from the original due date to file Form 500. However, the extension doesn't allow for extra time to pay any taxes that are owed. Corporate taxpayers should pay any tentative tax due using Form 500CP (Virginia Automatic Extension Payment) when the return is due. Penalty and/or interest may apply if the tentative tax due wasn't paid by the original date the return was due. A penalty may apply to returns filed during the extension period if less than 90 percent of the return's total tax liability was paid by the original due date.  

Electronic Filing Mandate:  All corporations are required to file estimated tax payments, annual income tax returns and final payments electronically. If this requirement causes undue hardship, you may request a waiver by submitting the Virginia Corporation Electronic Filing Waiver Request form. 

For details regarding Corporation Income Tax extensions and penalties or for information on how to file and pay electronically, visit our Corporation Income Tax web page. 

It’s very important that we maintain accurate information regarding your business. Please use our Business iFile to: 

• Tell us if you close your business or a specific business location
• Update your account with address or contact changes
• Add a new tax to your account
• Let us know you are no longer liable for a specific tax.  

It's time to file!

Pass-Through Entity Return of Income and Return of Nonresident Withholding Tax (Form 502) is due on Dec. 15, 2015 from: 

• Fiscal year filers whose taxable year ends on Aug. 31, 2015.
• Fiscal year filers whose taxable year ends on Feb. 28, 2015 and who are filing under Virginia’s automatic six-month extension. 

Virginia Automatic Extension: Virginia grants an automatic six-month extension from the original due date to file Form 502. However, the extension doesn't allow for extra time to pay any taxes that are owed. Taxpayers should pay any tentative tax due using Form 502W (Pass-Through Entity Withholding Tax Payment) at the time the return is due. Penalty and/or interest may apply if the tentative tax due wasn't paid by the original date the return was due. A penalty may apply to returns filed during the extension period if less than 90 percent of the return's total tax liability was paid by the original due date. 

Reminder: All pass-through entities are required to file the annual income tax return and make all payments electronically.  If the electronic filing requirement causes undue hardship, taxpayers may request a waiver by submitting the Virginia Pass-Through Entity Electronic Filing Waiver Request form. 

For details regarding extensions and penalties or for information on how to file and pay electronically, visit our Pass-Through Entity web page. 

It’s very important that we maintain accurate information regarding your business. Please use our Business iFile to: 

• Tell us if you close your business or a specific business location
• Update your account with address or contact changes
• Add a new tax to your account
• Let us know you are no longer liable for a specific tax   

To protect the personal information of Virginia taxpayers who have been identified as potential victims of identity theft, the Virginia Department of Taxation is providing these individuals with personal identification numbers (PINs) to use when filing their Virginia individual income tax returns in 2016. 

We are sending PINs to affected taxpayers in personalized letters through the U.S. mail in early December. Because some of these taxpayers may be your clients, you should be aware of the following information: 

• You should ask all clients if they have been issued PINs from the Virginia Department of Taxation. These PINS are different than the IP PIN issued by the IRS or an electronic filing PIN. The PINs are not interchangeable. 
• The PIN, in combination with the taxpayer’s Social Security number, serves as a unique identifier. Use the PIN on any individual income tax returns filed in 2016, including amended and prior year returns.
• If you use tax software to prepare returns, you will be prompted to enter the PIN. If you use Virginia’s fillable form, enter the PIN in the Office Use box. If you file a paper return, enter the PIN on page 2 in the Office Use box.
• If you are preparing a joint tax return and each spouse was issued a PIN, only one PIN needs to be provided on the return. Either of the spouse’s PINs will be acceptable. 
• If the PIN is not provided on the return, processing of the return may be delayed. 
• If a taxpayer forgets his or her PIN or loses the letter, he or she will need to call our Customer Contact Center at (804) 367-8031 to request a new PIN which will be provided by mail. Only the taxpayer or a representative who has a valid power of attorney (POA) from the taxpayer can request a replacement PIN. A tax preparer without a valid POA cannot request a replacement PIN. All replacement PINs will be mailed to taxpayers.
• The PIN will be valid for one calendar year. New PINs will be issued in November or December each year. 
• You should remind your clients not to share their PINs with anyone, except a tax professional filing their returns. 

Only those taxpayers whom we have identified as victims of identity theft are eligible to receive PINs. At this time, we don’t have a process for other taxpayers to request PINs. We may consider expanding this effort during the 2017 individual income tax filing season. 

If you have questions about the PIN process, please call the Tax Preparers’ Hotline at (804) 367-9286.

Legislation enacted during the 2015 General Assembly (SB 1319, Acts of Assembly, Chapter 382) combines the three existing sales tax holidays into one, three-day holiday in August. The legislation took effect on July 1, 2015. 

Prior Virginia law allowed for three separate sales tax holiday periods during which specified tangible personal property could be purchased exempt of the Retail Sales and Use Tax: a week-long exemption on hurricane preparedness items in May, a three-day exemption on school supplies and clothing in August, and a four-day exemption on items designated as Energy Star or WaterSense in October.  

The legislation consolidates all three of these holidays into the same August weekend each year, with the holiday beginning on the first Friday in August and ending on the Sunday that immediately follows. For 2015, the holiday will begin on Friday, Aug. 7 at 12:01 a.m. and end on Sunday, Aug. 9, at 11:59 p.m. For 2016 and subsequent years, there will be no separate Hurricane Preparedness holiday held in May, nor a separate Energy Star or WaterSense tax holiday in October.  

During the combined sales tax holiday, consumers may purchase portable generators, gas-powered chainsaws, chainsaw accessories, other hurricane preparedness items, clothing, footwear, school supplies, and Energy-Star or WaterSense-designated items, provided that each such item is priced below the maximum sales price and meets the other requirements set forth in the statutes.  

Notable additions to the list of qualifying items from previous years include certain computer supplies priced at $20 or less per item, such as computer storage media and printer paper, and all light bulbs affixed with the Energy Star label.    

Retailers may refer to the department's Combined Sales Tax Holiday Guidelines located here for a complete list of qualifying items, as well as the rules governing the upcoming combined holiday.  

If you have additional questions regarding this sales tax exemption, please visit the department's Sales Tax Holiday web page, or contact the department at (804) 367-8037.  

Please Take our Survey 

The Virginia Department of Taxation is gathering information to develop a new strategic plan, and we could use your help.  

We want to create a new plan for the future with you, the individual taxpayer, in mind. We want to know what you think our strengths are, any concerns you may have in working with us, and how we can improve. Do you use our website, including our self-service functions, and do you file your income tax returns electronically? The survey is anonymous and available for a short time only.  

So, if could spare a few minutes, please take this short  survey and tell us how we're doing.

Thank you for your time. 

Legislative Summary Released

The 2015 Legislative Summary has been released.  The full text of the Legislative Summary can be found on the Department's website in the "Facts and Figures" section or by clicking here.  

The Legislative Summary is published by the Department of Taxation as a convenient reference guide to state and local tax legislation enacted by the 2015 Session of the General Assembly, including the reconvened session on April 15 and 17, 2015.  Please note that any legislation enacted after this date is not included.  The Summary includes a general description of enacted legislation affecting:

• State taxes administered by the Department, and
• Local taxes for which the Department assists with administration or on which the Department renders advisory assistance.

References to chapter numbers are to the corresponding chapters in the Acts of Assembly, which may be viewed at: http://lis.virginia.gov.  Effective dates of the legislation vary and are set out in each description. 

In general, legislation affecting taxes administered by other state agencies is not included in the Summary. 

The Summary is intended to provide a synopsis of enacted legislation and is for informational purposes only.  The Summary is not a substitute for the actual state law, local ordinances, or tax related regulations.  

To view the full text of the Legislative Summary, click here. 

If you have additional questions, please visit the Department's website at http://www.tax.virginia.gov, or contact the Department at (804) 367-8031 for individual income tax questions or (804) 367-8037 for business income tax questions.

Educational Improvement Scholarships Tax Credit

For taxable years beginning on or after Jan. 1, 2014, an income tax credit may be claimed for monetary or marketable securities donations made to scholarship foundations included on an approved list published by the Virginia Department of Education. The credit is equal to 65 percent of the monetary or marketable securities donation made to the scholarship foundation. Tax credits will be awarded to taxpayers on a first-come, first-served basis. For information on how to qualify, contact the Virginia Department of Education.

Taxpayers can claim credits earned during both 2013 and 2014 on the 2014 tax return. In the following years, taxpayers will only be able to claim the credit for the current year. For more information about this credit, see the Tax Department's 2013 Legislative Summary.

Research & Development Expenses Tax Credit

Effective for taxable years beginning on or after Jan. 1, 2014, the tax credit amounts are increased to 15 percent of the first $234,000 in Virginia qualified research and development expenses, or 20 percent of the first $234,000 of Virginia qualified research and development expenses if the research was conducted in conjunction with a Virginia public or private college or university, to the extent the expenses exceed a base amount. Pass-through entities now have the election to claim the credit at entity level, rather than allocating the credit to the entity owners. Effective for fiscal years beginning on or after July 1, 2014, the annual cap has been increased to $6 million. Additionally, the credit sunset date was extended to Dec. 31, 2018.

Beginning with taxable year 2014, Virginia allows a subtraction for gains from home buyer savings accounts that were taxed for federal purposes. An individual may designate one or more accounts at a financial institution as a first-time home buyer savings account. Distributions from an account must be used for the sole purpose of paying or reimbursing the down payment and allowable closing costs for the purchase of a single-family residence in Virginia by a qualified beneficiary. 

Did you receive a refund from a return claiming itemized deductions filed in 2014? Or were you paid refund interest on a Virginia income tax refund issued during 2014? If so, you can access your Form 1099G/1099INT by visiting our webpage.