VA Tax News

  • 16 Jan 2013 2:45 PM | Anonymous

    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.

  • 16 Jan 2013 2:44 PM | Anonymous

    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


    For details on this new credit and modifications to existing credits, see What's New for Tax Credits.
  • 16 Jan 2013 2:43 PM | Anonymous

    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.

    At this time, 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.
  • 16 Jan 2013 2:43 PM | Anonymous

    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. 

  • 14 Jan 2013 4:36 PM | Anonymous

    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.

  • 14 Jan 2013 4:35 PM | Anonymous

    Corporate returns for the taxable year ending September 30, 2012, must be filed on or before January 15, 2013

    Even though Virginia law provides for an automatic six-month extension, it is an extension to file, not an extension to pay.  At least 90 percent of the total tax liability for the taxable year must be paid on or before the due date of the return.  Visit the Corporate Income Tax page of the Department's website for more information.


    Corporate returns for the taxable year ending March 31, 2012 for which an extension of time to file was taken must also be filed on or before January 15, 2013.  

  • 08 Nov 2012 11:49 AM | Anonymous

    The Virginia Department of Taxation would like to clarify how Tax Preparers should submit the Corporate Income Tax Electronic Filing Waiver Request on behalf of their clients.     

    • Complete a single Corporate Income Tax Electronic Filing Waiver Request Form.
    • Attach a list of the Corporations for which you prepare tax returns and/or submit payments and include the following information for each corporation.
      • Corporation Name
      • Corporation FEIN
      • Indicate whether you have a Power of Attorney for each client
    • Fax the Waiver Request and list to 804-367-3015
    • The Department will issue a single waiver to the tax preparer covering all their clients.

    Listed below are some valid reasons for which a Tax Professional would request a waiver.

    • The Tax Preparer’s software does not support electronic filing
    • The cost to purchase software supporting e-File would be a cost burden on the firm.    
    • The fact that the IRS does not support a specific federal form or schedule through their e-File program is not a valid reason for a waiver on its own merit.  Since Virginia’s e-File program supports PDF attachments, the federal return or form can be attached as a PDF and filed as an “unlinked” return to Virginia.  Please check with your software company as to whether they support both linked and unlinked returns.  
      • If you do not have a scanner or other means to produce a PDF, then request a waiver.
      • If your software does not support unlinked filing of returns to the state, then request a waiver.

    If you have any questions, please direct them to Nancy Wilson at

  • 08 Nov 2012 11:48 AM | Anonymous

    The Virginia Department of Taxation is implementing a significant change in the way individual income tax refunds are issued, and we need your help to prepare your clients for choosing the best option for their 2012 refunds.

    As required by the 2012-2014 Appropriations Act, there will be two options on 2012 returns for receiving individual income tax refunds - direct deposit or debit card.  Both paper and software versions of the individual income tax returns will require that one of these two options be selected.  Requesting a paper check in preference to direct deposit or a debit card will not be an option. 

    To ensure the smoothest possible transition from the use of paper checks, we ask your help with two critical areas.  First, ensure that you obtain accurate dates of birth, addresses, and telephone numbers from each of your clients, as well as complete and correct bank account information for those who wish to use direct deposit.  Second, educate your clients about the refund options on the return.  If your clients routinely drop off their information for return preparation without a face-to-face consultation, you may want to notify them of the changes to required information in advance. We hope the following information will be helpful to share with your clients.

    Why was the law changed?  The Department of Taxation issues over a million income tax refund checks each year.  The switch to debit cards will save the Commonwealth of Virginia money by reducing check printing and mailing costs.  The Department of Treasury has partnered with Xerox State and Local Solutions, Inc. to administer the tax refund debit card program at no cost to the Commonwealth. Issuing debit cards to individuals who do not choose direct deposit on their 2012 returns will reduce the Treasury’s annual costs by $200,000.

    What are the benefits of each option for Virginia taxpayers?  Direct deposit is still the fastest method for receiving a refund, provided accurate bank account information is entered on the return, so be sure to check your bank information carefully before filing your return.  For individuals who prefer not to use direct deposit, the refund debit card offers a more secure and convenient alternative to paper checks that also lets the recipient avoid check-cashing fees.

    Is the Virginia Tax Refund Debit Card secure?  The Virginia Tax Refund Debit Card is the equivalent of a bank account with a MasterCard® bank, and is protected by federal and state banking laws.  The card itself can be activated only by using the recipient’s identifying information, including social security number and date of birth.  Once activated, the card can be used only with a personal identification number (PIN) chosen by the recipient.

    How can the debit card be used?  The card can be cashed at any MasterCard® bank, or it can be used like a regular debit card at retail stores and ATMs, or to make transactions online.  Unlike some types of debit cards, the Virginia Tax Refund Debit Card is valid only until the refund amount has been exhausted. The card cannot be reloaded.

    Are there fees associated with using the debit card?  Many transactions are free, such as a one-time withdrawal of funds or cash back with a purchase, but there are fees for some other transactions.  A fee schedule is available on our website. 

    How will debit cards work for a joint refund?  In the case of a joint return, a debit card will be issued to each spouse to enable both spouses to access their joint refund.  The refund itself cannot be divided between the spouses.  Instead, the couple will access their funds as they mutually agree, just as they would have done with a paper check.

    We have attached two flyers (Refund Options Flyer and Debit Card Overview) that you may find helpful to distribute within your organization, as well as to any members or clients that you serve.  One provides a basic overview of the refund options, and the other addresses the changes in more detail, including frequently asked questions about the Virginia Tax Refund Debit Card.

    Please share this information with your clients to help them understand their refund options for 2012, and make them aware of the change from paper checks to debit cards.  We will continue to add information to our website, including Frequently Asked Questions, links to the Xerox website and other helpful resources.  If you have questions in the meantime, feel free to call our Tax Professionals Hotline at (804) 367-9286.

  • 02 Mar 2012 3:38 PM | Anonymous

    These issues reflect some of the more common problems we encounter with corporate income tax returns.

    • If your corporate name has changed from the previous year when you filed the return, please check the “Name Change” box on the return. You should notify the Department of Taxation of any name change, in addition to the Virginia Corporation Commission.
    • If your physical address or mailing address is different from the previous year when you filed their last return, please check the applicable “Address Change” box.
    • Please be sure to verify that the nine-digit Federal Identification Number (FEIN) was entered correctly on the return and it is the correct number assigned to your corporation.
    • If you are claiming a subtraction, deduction or a credit, please be sure to attach the supporting documentation.  This documentation could be a Schedule ADJ or Schedule CR.  Also provide supporting documentation such as tax-credit certificates and statements.
    • If estimated payments or extension payments are being claimed on the return, please verify the amount of estimated or extension payments made during the year before filing the return.
    • If you are claiming a subtraction, deduction, or contribution, please enter the valid codes on the Schedule ADJ.
    • When submitting a paper tax return to the Virginia Department of Taxation, please ensure the front page and the back page are both sent (even if there are no entries on the back page).  Keep in mind, Virginia now accepts Corporation Income Tax returns through our e-File program.  For more information, see our Corporate Income Tax e-File page
    • When submitting a corporation tax return, please use the correct form for the year the return is being submitted.   
    • Please be sure to use the proper return based on your company’s entity type.  Corporations should be fling form 500 whereas a pass-through-entity should be filing form 502. All forms can be located on our website.
    • If the corporation return that you are submitting is a “final return” please do not request an overpayment credit.  Just request a refund.

    Please ensure you have registered with the Department of Taxation prior to submitting your corporation tax return.  You may register the business online using our iReg system.  Notifying the Virginia Corporation Commission does not automatically register you with the Department of Taxation.
  • 02 Mar 2012 3:35 PM | Anonymous

    As a general rule, pass-through entities are required to withhold tax on the Virginia taxable income they pass through to their nonresident owners.  The Department of Taxation offers the following tips for reporting the tax on Form 502:

    • Keep in mind that the tax payment for 2011 is due on April 16, 2012, even if the entity takes advantage of the automatic six-month filing extension for its Form 502.

    • The tax is reported and reconciled on page 2, Section 1, of Form 502.

    • On line 1, enter the total tax actually withheld for nonresident owners.  Do not include tax amounts that would have been withheld for owners who are exempt from the withholding requirement, or personal estimated tax payments made by the owners themselves.

    • Line 2 must be completed if the Form 502 is being filed after April 16.  Use this line to report the tax that was paid prior to filing Form 502.

    • Line 3 will reflect an overpayment if the payment amount on line 2 is greater than the tax liability reported on line 1.  If line 2 is less than line 1, enter the balance of tax due on line 4.

    • If the return is filed after April 16 and the amount of tax due reported on line 4 represents more than 10 percent of the total tax liability reported on line 1, the entity may be subject to a penalty.
    For complete information on the withholding requirements for pass-through entities, see the instructions for Form 502 on our website.
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