As a result of new legislation, Virginia is making a significant change in the way that your clients may receive their individual income tax refund, the Virginia Tax Refund Debit Card. 

There are two options for receiving a refund, direct deposit and the new refund debit card.  Both paper and software versions of the individual income tax returns require that one of these two options be selected.  Requesting a paper refund check is no longer an option. 

While using direct deposit is still the fastest method for receiving a refund, the refund debit card offers a more secure and convenient alternative to paper checks and takes about the same amount of time as the refund check did previously.

When gathering information to prepare your clients' returns, be sure to get the correct banking information and birth date(s). When selecting direct deposit, always verify the correct banking information with your clients and do not default to last year's information. 

Please visit the Department's website for additional information such as, where and how to use the refund debit card, how to use the card for free, transactions with associated fees and the fee schedule, how the card works for joint filers and more.

The filing threshold amounts for taxable years 2012 and beyond have been increased. The new threshold for single individuals has increased from $11,650 to $11,950. The filing threshold for married couples filing jointly has increased from $23,300 to $23,900. The threshold for married couples who file separate returns has increased from $11,650 to $11,950.

For complete 2012 legislative information see the 2012 Legislative Summary on the Department's website. 

Effective beginning with the 2012 taxable year, individual refunds will be issued through prepaid debit cards or by direct deposit to taxpayers' checking or savings accounts. The paper check refund option is being replaced with the debit card option. Taxpayers receiving a refund may choose either to receive a debit card or direct deposit by filling in the requested information on their returns.

This change is one of the budget reduction measures included in the 2012-2014 Appropriations Act (273 of HB 1301 - Acts of Assembly 2012 Special Session I, Chapter 3) passed by the General Assembly. Visit www.tax.virginia.gov for detailed information and answers to frequently asked questions.

Virginia's date of conformity with the Internal Revenue Code (IRC) was advanced from December 31, 2010, to December 31, 2011, with limited exceptions. Virginia will continue to disallow federal income tax deductions for bonus depreciation allowed for certain assets under IRC §§ 168(k), 168(l), 168(m), 1400L and 1400N; the five-year carryback of federal net operating loss deductions generated in taxable year 2008 or 2009; and federal income tax deductions for applicable high yield discount obligations under IRC § 163(e)(5)(F). 

In addition, fixed date conformity adjustments continue to be required for Cancellation of Debt Income under IRC § 108(i), and the domestic production deduction under IRC § 199.

At the time this message was written, the only required adjustments for "fixed date conformity" were those mentioned above. However, if federal legislation is enacted that results in changes to the Internal Revenue Code for the 2012 taxable year, taxpayers will be required to make adjustments to their Virginia returns that are not described in the instruction booklet. Information about any such adjustments will be posted on the Department's website at www.tax.virginia.gov.

Web Upload is a free, easy, and secure way to electronically submit VK1s.  When using Web Upload, you no longer have to print, package and mail your VK1s.  Simply upload your electronically-stored VK1 data.  All Web Upload file types are supported.  Excel files may only contain up to 65,536 records (this is an Excel limitation).

All PTE returns and schedules must be filed on paper, so simply mark the VK1s filed via Web Upload box on Form 502.  Your return and VK1 document will be matched up in processing.

Visit the Web Upload page of the Department's website for complete information on submitting your VK1 file. 

Taxpayers who claim the Virginia Telework Expenses Tax Credit are not allowed to exclude those expenses from Virginia taxable income. To the extent excluded from federal taxable income, any expenses incurred by a taxpayer in connection with the Telework Expenses Tax Credit must be added to the Virginia return.

The Telework Expenses Tax Credit is a new individual and corporate income tax credit for employers who incur eligible telework expenses pursuant to a telework agreement or conduct telework assessments. 

Taxpayers are required to apply to the Department of Taxation between September 1 and October 31 of the year preceding the taxable year for which the tax credit is earned to reserve a portion of the credit. 

To qualify for a credit, the employer must enter into a signed telework agreement with the teleworking employee on or after July 1, 2012, but before January 1, 2017. 

This telework agreement must be in accordance with policies set by the Department of Rail and Public Transportation (DRPT) which are available on the Telework!VA website at www.teleworkva.org.

Virginia's date of conformity with the Internal Revenue Code (IRC) was advanced from December 31, 2010, to December 31, 2011, with limited exceptions. 

Virginia will continue to disallow federal income tax deductions for the 30% and 50% bonus depreciation allowed for certain assets and the five-year carryback of federal net operating loss deductions generated in taxable years 2008 or 2009. 

Also, Virginia will continue to disallow the income tax deductions related to applicable high yield discount obligations under IRC § 163(e)(5)(F). 

In addition, fixed date conformity adjustments continue to be required for Cancellation of Debt Income under IRC § 108(i), and the domestic production activities deduction under IRC § 199.
 

For taxable years beginning on or after July 1, 2012, but before July 1, 2014, retail companies are required to determine their Virginia taxable income by using an apportionment formula with a triple-weighted sales factor.  

A single sales factor apportionment formula will be phased in over a three-year period beginning as a triple-weighted sales factor for taxable years beginning on or after July 1, 2012, but before July 1, 2014, followed by a quadruple-weighted sales factor for taxable years beginning on or after July 1, 2014, but before July 1, 2015, and then a single sales factor for taxable years beginning on and after July 1, 2015. 

The 2012-2014 Appropriations Act Item (273 of HB 1301 - Acts of Assembly 2012 Special Session I, Chapter 3) requires all corporations to file their estimated tax payments, annual income tax returns and final payments electronically beginning January 1, 2013.  This includes Taxable Year 2012 returns, tax due payments, extension payments and Taxable Year 2013 estimated payments.  

• The annual corporate income tax return must be filed through the Federal/State e-File program, which is supported by numerous commercial software applications. For a list of approved commercial e-File software and more information, visit the Department's Corporate Income Tax page.

• Tax due payments can be made through the e-File system as a direct debit or by an ACH Credit transaction initiated through the corporation's bank.

• The Department provides two secure online options for electronically submitting estimated and extension payments, e-Forms and Business iFile. For more information and to determine the method that works best for you visit "Estimated and Extension Payments" on the Corporate Income Tax page of the Department's website.  Estimated tax payments and extension payments can also be submitted by an ACH Credit. 

Corporations unable to file and pay electronically by the effective date may request a waiver.