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. 

• A new Schedule VAC was created to allow taxpayers to contribute all or part of their income tax refunds to one or more of their Virginia529^SM accounts. Virginia529^SM is a college savings plan that offers tax-advantaged savings for qualified higher education expenses. Programs include Virginia529 prePAID^SM, Virginia529 inVEST^SM, CollegeAmerica®, and CollegeWealth®. Other Voluntary Contributions, which were previously reported on the Schedule ADJ, have been moved to the Schedule VAC. 
  
  
• The field for political contribution credit has been moved from the Schedule CR to the tax return.
  
  
• Did you purchase merchandise by Internet, telephone or mail, or outside Virginia without being charged sales tax? If so, you may owe Consumer's Use Tax on those purchases. Use the new Consumer's Use Tax line in the return to report any amount you may owe. 

Employers must electronically file all 2014 annual withholding tax reconciliations and pay any amounts due by Feb. 2, 2015. This includes Form VA-6 or Form VA-6H and any required wage statements, such as Form W-2 or Form 1099. 

Annual withholding tax reconciliation returns are now due on Jan. 31 instead of Feb. 28. However, because Jan. 31, 2015 is a Saturday, taxpayers will have until Monday Feb. 2, 2015 to file and pay their annual 2014 withholding tax reconciliation.

Don't wait to file! Returns received after the new due date will be considered late. If you need help choosing an electronic filing or payment option that works best for you, visit the Virginia Department of Taxation's Withholding Tax FAQ page.

The Virginia Department of Taxation began accepting 2014 state individual income tax returns on Tuesday, Jan. 20, the same day as the Internal Revenue Service. 

 

This e-Alert contains filing tips and other information designed to help taxpayers prepare their individual income tax returns. If you are a tax preparer, you may wish to keep this information in mind when assisting your clients.