Important Information Regarding Virginia’s Enhanced Form 1099-K Filing Requirements

Virginia Tax is announcing changes to the filing requirements in Virginia associated with Form 1099-K. Virginia law now requires that a payment settlement entity submit to Virginia Tax either (1) a duplicate of each Form 1099-K that it submits to the IRS or (2) a duplicate of each Form 1099-K that it submits to the IRS related to a participating payee with a Virginia state address or that is a Virginia taxpayer. “Payment settlement entities” include:

• In the case of a payment card transaction, the merchant acquiring entity (defined as the bank or other organization which has the contractual obligation to make payment to participating payees in settlement of payment card transactions); and
• In the case of a third party network transaction, the third party settlement organization (defined as the central organization which has the contractual obligation to make payment to participating payees of third party network transactions).

This Virginia filing requirement applies to reportable payment transactions made on or after Jan. 1, 2020.

In addition, for Virginia tax purposes, third-party settlement organizations must now submit Form 1099-K information to Virginia Tax based on a different threshold than what is imposed for federal tax purposes. 

• For federal tax purposes, third party settlement organizations are required to submit to the IRS Form 1099-K with respect to third party network transactions of a participating payee, if for the calendar year, reportable payment transactions with the participating payee exceed $20,000 and the total number of transactions with the participating payee exceeds 200.
• For Virginia tax purposes, third party settlement organizations are now required to submit Form 1099-K information to Virginia Tax to the extent that they make payments of $600 or more in a taxable year to another person who is not an employee in pursuit of the organization’s trade or business.

This may require certain third-party settlement organizations to report Form 1099-K to Virginia Tax even if they were not required to submit such information to the IRS. Such information is also required to be provided to the participating payee. This enhanced reporting requirement applies only with respect to participating payees with a Virginia mailing address and to reportable payment transactions made on or after Jan. 1, 2020.

Finally, payment settlement entities are required to submit Form 1099-K information to Virginia Tax electronically.

More information regarding these requirements, including due dates and the process for requesting a waiver, can be found in Tax Bulletin 20-10 and in the Laws, Rules, and Decisions section of our website.  

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8037 for business tax questions.

Beginning on Feb. 1, 2021, the new format will allow CPAs to take a variety of different courses and topics to meet the CPE ethics requirement, as long as it is taken from a VBOA-approved provider.

The two-hour annual CPE requirement will remain the same. All licensees (excluding those approved for the Inactive status) will still be required to complete a VBOA-approved ethics course that complies with VBOA regulation 18VAC5-22-90. 

However, CPAs will have a choice of the ethics course they can take to meet the two-hour ethics course CPE requirement. CPAs can take an ethics course that is specific to their line of work or something they prefer.

Every ethics course must be pre-approved by the VBOA and include the 2021 VBOA Segment. The 2021 VBOA Segment is a 10-minute video that must be added to all approved ethics courses.

The VBOA will continue to approve all providers and courses ahead of time and it will be the CPAs responsibility to choose an ethics course from a VBOA-approved provider. Providers must submit their ethics course with the VBOA Segment for approval by submitting their course and approval request to the VBOA.  Only approved courses will meet the 2021 Virginia ethics requirement.

This new format will allow you and other providers to create a course of your choosing. However, the backbone of the course must be focused on ethics but can be told and presented in a variety of ways on a variety of topics.

Some examples of course topics may include, but are not limited to: 

• Professional conduct and ethics
• Ethics in the real world
• Ethics in tax practice
• Behavioral ethics
• Governmental ethics
• Ethics of industry professionals/CPAs

2020 format

Currently, there is only one Virginia-Specific Ethics Course offered each year and all Active Virginia CPAs are required to take the same course. 

Virginia Interest Rates Stay the Same

Virginia Tax announces that Virginia's interest rates will stay the same for the fourth quarter of 2020. The underpayment and overpayment rates for Virginia taxes are 2% higher than the corresponding federal rates. Federal rates for the fourth quarter of 2020 are 3% for tax underpayments and 3% for tax overpayments by taxpayers other than corporations. Accordingly, the Virginia rates for the fourth quarter of 2020 will be 5% for tax underpayments (assessments) and 5% for tax overpayments (refunds).

Details about these interest rates can be found in Tax Bulletin 20-9 and in the Laws, Rules, and Decisions section of our website.  

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8031 for individual income tax questions and 804.367.8037 for business tax questions.

New Regional Sales and Use Tax in Central Virginia Region 

Virginia Tax is announcing that effective Oct.1, 2020, a new .7% regional retail sales and use tax will be levied in localities in Central Virginia. This includes the city of Richmond and the counties of Charles City, Chesterfield, Goochland, Hanover (including the town of Ashland), Henrico, New Kent and Powhatan. The sales and use tax levied in these localities will total 6%, comprised of the 4.3% state tax, the .7% regional state tax and the 1% percent local option tax.

Sales made on or after Oct.1, 2020, will be subject to the new tax rate. Items delivered to a purchaser and paid for on or after Oct. 1, 2020, will be taxed at the 6% rate, regardless of when the property was ordered. The increased rate will not apply to property delivered prior to Oct. 1, 2020, but paid for on or after Oct.1, 2020. Also, the increased rate will not apply when a taxable sale or lease payment is paid for in full prior to Oct.1, 2020, even though delivery may occur on or after Oct.1, 2020, or the paid-in-full lease payment covers a lease period beginning on or after Oct.1, 2020.  

The rate of tax on food purchased for home consumption and qualifying essential personal hygiene products is unaffected by the law change and will remain at the current 2.5% (1.5% state and 1% local) rate statewide.  

More information can be found in Tax Bulletin 20-8 and in the Laws, Rules, and Decisions section of our website.  

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8037 for business tax questions.

Virginia Interest Rates Decrease 

Virginia Tax announces that Virginia's interest rates will decrease for the third quarter of 2020. The underpayment and overpayment rates for Virginia taxes are 2% higher than the corresponding federal rates. Federal rates for the third quarter of 2020 are 3% for tax underpayments and 3% for tax overpayments by taxpayers other than corporations. Accordingly, the Virginia rates for the third quarter of 2020 will be 5% for tax underpayments (assessments) and 5% for tax overpayments (refunds).

Details about these interest rates can be found in Tax Bulletin 20-7 and in the Laws, Rules, and Decisions section of our website.  

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8031 for individual income tax questions and 804.367.8037 for business tax questions.

2020 Legislative Summary Published

The 2020 Legislative Summary is now available. 

The Legislative Summary is published by Virginia Tax as a convenient reference guide to state and local tax legislation enacted by the 2020 Session of the General Assembly, including the reconvened session on April 22, 2020.

The Summary includes a general description of enacted legislation affecting:

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

References to chapter numbers are to the corresponding chapters in the Acts of Assembly, which may be viewed at: https://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. 

View the Legislative Summary

If you have additional questions, please visit https://www.tax.virginia.gov, or contact us at 804.367.8031 for individual income tax questions or 804.367.8037 for business tax questions.

Effective July 1, 2020, Item 3-5.21 of House Bill 30 (the 2020 Appropriation Act) increases the tobacco products tax rates on all products subject to the tax for taxable sales or purchases occurring on and after such date. This budget provision also imposes the tobacco products tax on liquid nicotine products at the rate of $0.066 per milliliter of liquid nicotine, effective July 1, 2020.

Updated Guidelines and Rules for the Tobacco Products Tax have been published to reflect these changes. As necessary, additional guidelines and rules will be published and posted on the Virginia Tax website at www.tax.virginia.gov. For additional information, please contact the agency's Tobacco Unit at tobaccounit@tax.virginia.gov or call 804.371.0730.

Additional Sales and Use Tax in Halifax County

Virginia Tax is announcing that effective July 1, 2020, a new 1% additional retail sales and use tax will be levied in Halifax County. The sales and use tax levied in Halifax County will total 6.3%, comprised of the 4.3% state tax, the 1% percent local option tax, and the 1% percent Halifax additional tax.

Sales made on or after July 1, 2020, will be subject to the new tax rate. Items delivered to a purchaser and paid for on or after July 1, 2020, will be taxed at the 6.3% rate, regardless of when the property was ordered. The increased rate will not apply to property delivered prior to July 1, 2020, but paid for on or after July 1, 2020. Also, the increased rate will not apply when a taxable sale or lease payment is paid for in full prior to July 1, 2020, even though delivery may occur on or after July 1, 2020, or the paid-in-full lease payment covers a lease period beginning on or after July 1, 2020.  

The rate of tax on food purchased for home consumption and qualifying essential personal hygiene products is unaffected by the law change and will remain at the current 2.5% (1.5% state and 1% local) rate statewide.  

More information can be found in Tax Bulletin 20-6 and in the Laws, Rules, and Decisions section of our website.  

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8037 for business tax questions.

Important Information Regarding Virginia's Income Tax Payment Deadlines: Interest Waiver for Certain Tax Payments in Response to the COVID-19 Crisis 

Virginia Tax is announcing that certain income tax payments originally due during the period from April 1, 2020, to June 1, 2020, may now be submitted to the agency without the accrual of interest as would otherwise be required for late payments. This waiver of interest only applies if full payment is made on or before June 1, 2020. For a taxpayer filing on extension, at least 90% of the total tax liability must be paid by June 1, 2020, in order for the interest waiver to apply. If the interest waiver applies to such a taxpayer, no interest will accrue on the amount of tax paid by June 1, 2020, but interest
will accrue from the original due date to the date of payment on any amount left unpaid after June 1, 2020.

This waiver of interest applies to any payment required to be made with a Taxable Year 2019 individual, corporate, or fiduciary income tax return, as well as any such payment required to be made with respect to an election to file on extension. In addition, this waiver of interest applies to any individual, corporate, or fiduciary estimated income tax payments that are required to be paid during the period from April 1, 2020, to June 1, 2020. The waiver also applies to payments associated with composite returns.

Dealers that were granted an extension of the due date for the February 2020 sales tax return and payment due in March pursuant to Tax Bulletin 20-3 will receive a waiver of the interest that would have otherwise accrued for such late payment. This waiver of interest only applies to such payments submitted to Virginia Tax no later than April 20, 2020.

More information can be found in Tax Bulletin 20-5 and in the Laws, Rules, and Decisions section of our website.  

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8031 for individual income tax questions and 804.367.8037 for business tax questions.

Important Information Regarding Virginia's Income Tax Payment Deadlines: Income Tax Payment Extension and Penalty Waiver in Response to the COVID-19 Crisis 

Virginia Tax is announcing that any income tax payments due during the period from April 1, 2020, to June 1, 2020, can now be submitted at any time on or before June 1, 2020, without penalty. As a result, Virginia Tax will automatically waive any late payment penalties that would otherwise apply so long as full payment is made by June 1, 2020. If full payment of the amount owed during the period is not made by June 1, 2020, this penalty waiver will not apply, and late payment penalties will accrue from the original date that the payment was due.

Interest will continue to accrue from the original due date of such payment. Therefore, taxpayers who are able to pay by the original due date are encouraged to do so. Taxes eligible for this payment extension and penalty waiver include individual, corporate, and fiduciary income taxes, as well as any estimated income tax payments that are required to be paid to Virginia Tax during this period.

Please note that this does not provide a filing extension. To avoid any late filing penalties that may apply, taxpayers that utilize the aforementioned payment extension are still required to file income tax returns by the relevant due dates. However, if you are unable to file by such due dates, Virginia offers automatic filing extensions to all taxpayers for up to 6 months (or 7 months in the case of certain corporations). No application is required to file on extension. Please see the Virginia Tax website for more information. If you decide to take advantage of Virginia’s automatic filing extension, please be sure to make an extension payment by June 1, 2020, to avoid late payment penalties or extension penalties, as applicable.

More information can be found in Tax Bulletin 20-4 and in the Laws, Rules, and Decisions section of our website.  

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8031 for individual income tax questions and 804.367.8037 for business tax questions.