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.

Important Information for Those Affected by the COVID-19 Crisis: Option to Request Extension of Sales Tax Deadlines

Tax Commissioner Craig M. Burns has announced that Virginia Tax will consider requests from sales tax dealers for an extension of the due date for filing and payment of the February 2020 sales tax return due March 20, 2020. If the request is granted, Virginia Tax will allow filing and payment of such return on April 20, 2020, with a waiver of any penalties that would have applied. However, interest will accrue even if an extension is granted.

Dealers should submit a request for extension by utilizing the secure e-mail
system available on the Virginia Tax website, by faxing to 804.254.6111, or writing to the following address:

Virginia Tax
Office of Customer Services
P.O. Box 1115
Richmond, VA 23218-1115

More information can be found in Tax Bulletin 20-3 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.

Virginia Interest Rates Remain the Same

Virginia Tax announces that Virginia's interest rates will stay the same for the second quarter of 2020. The underpayment and overpayment rates for Virginia taxes are 2% higher than the corresponding federal rates. Federal rates for the second quarter of 2020 will also remain at 5% for tax underpayments and 5% for tax overpayments by taxpayers other than corporations. Accordingly, the Virginia rates for the second quarter of 2020 will be 7% for tax underpayments (assessments) and 7% for tax overpayments (refunds).

Details about these interest rates can be found in Tax Bulletin 20-2 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 2019 Virginia Income Tax Returns: Virginia's Conformity to the Internal Revenue Code Advanced to Dec. 31, 2019

Under emergency legislation enacted by the 2020 General Assembly, Virginia's date of conformity to the terms of the Internal Revenue Code will advance from Dec. 31, 2018, to Dec. 31, 2019. This legislation also allows Virginia to generally conform to the Further Consolidated Appropriations Act, 2020.

However, it specifically deconforms Virginia from a provision that reduces the medical expense deduction floor for Taxable Year 2019 and Taxable Year 2020. Virginia generally allows taxpayers to claim a deduction on their state returns for most itemized deductions that were claimed for federal income tax purposes, including the medical expense deduction. Such deduction is equal to the amount of a taxpayer’s eligible medical expenses in excess of a deduction floor. The deduction floor was set to increase from 7.5% of federal adjusted gross income to 10% for Taxable Year 2019. The Further Consolidated Appropriations Act, 2020 extended the 7.5% deduction floor for Taxable Year 2019 and Taxable Year 2020. Because Virginia deconforms from this provision, Virginia’s deduction floor will be 10% for Taxable Year 2019 and Taxable Year 2020.

The legislation enacted by the 2020 General Assembly also allows Virginia to conform to a federal tax law stating that the Virginia Beach Tragedy Fund is entitled to federal tax exempt status. In addition, this ensures that cash contributions made specifically for the relief of victims or families of victims of the tragedy qualify for the charitable contributions deduction. 

Tax Bulletin 20-1 provides more detail and information regarding the conformity adjustments that may be necessary on Taxable Year 2019 income tax returns.    

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.

Virginia Interest Rates Remain the Same

Virginia Tax announces that Virginia's interest rates will stay the same for the first quarter of 2020. The underpayment and overpayment rates for Virginia taxes are 2% higher than the corresponding federal rates. Federal rates for the first quarter of 2020 will also remain at 5% for tax underpayments and 5% for tax overpayments by taxpayers other than corporations. Accordingly, the Virginia rates for the first quarter of 2020 will be 7% for tax underpayments (assessments) and 7% for tax overpayments (refunds).

Details about these interest rates can be found in Tax Bulletin 19-10 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 804.367.8031 for individual income tax questions and 804.367.8037 for business tax questions.

Important Information Regarding Virginia's Overall Limit on Itemized Deductions: Indexed Amounts of the Limitation for Taxable Year 2019

Virginia Tax is announcing the reinstatement of the Pease Limitation for Virginia income tax purposes, meaning the overall limit on itemized deductions is back in effect beginning with Taxable Year 2019.

This is due to legislation enacted by the Virginia General Assembly deconforming from the provision of the federal Tax Cuts and Jobs Act (TCJA) that suspended the limitation. 

For Taxable Year 2019, the amounts of the Virginia-specific Pease limitation amounts are:

• $326,050 if married filing jointly or a qualifying widow(er);
• $298,850 if a head of household;
• $271,700 if single; and
• $163,025 if married filing separately.

Details can be found in Tax Bulletin 19-9 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.

Important Information Regarding Virginia Fiduciary Income Tax Returns: Return Filing and Other Requirements Applicable to Virginia's Revised Definition of Resident Estate or Trust

Virginia Tax is announcing a revision to the definition of “resident estate or trust.” Under legislation enacted by the 2019 General Assembly, an estate or trust is no longer considered a resident estate or trust for Virginia income tax purposes on or after July 1, 2019, solely because it is being administered in Virginia.

Therefore, unless an estate or trust administered in Virginia also meets one of the three remaining criteria, it’s considered a nonresident estate or trust for Virginia income tax purposes. The criteria include:

• The estate of a decedent who at the time of death was domiciled in Virginia;
• A trust created by the will of a decedent who at the time of death was domiciled in Virginia; or
• A trust created by or consisting of property of a person domiciled in Virginia.

All resident estates and trusts that are required to file a federal fiduciary income tax return or that have any Virginia taxable income for the taxable year are required to file an income tax return in Virginia. A nonresident estate or trust is not required to file an income tax return in Virginia unless it is required to file a federal fiduciary income tax return and had Virginia source income.

For taxable years beginning on or after July 1, 2019, the new definition of “resident estate or trust” will be in effect for the entire taxable year. A taxpayer should use the new definition contained in this legislation to determine if it was a “resident estate or trust” for such taxable years. For taxable years ending on or before June 30, 2019, the new definition of “resident estate or trust” does not apply.

However, for many taxpayers this new definition became effective during the midst of their taxable year. For these taxpayers, the new definition will only apply to the portion of their taxable year that occurs on or after July 1, 2019. The old definition will apply to the portion of their taxable year that occurred prior to July 1, 2019.

Details can be found in Tax Bulletin 19-7 and in the Laws, Rules, and Decisions section of our website. 

 View the Tax Bulletin

Virginia Tax announces that Virginia's interest rates will stay the same for the fourth quarter of 2019. The underpayment and overpayment rates for Virginia taxes are 2% higher than the corresponding federal rates. Federal rates for the fourth quarter of 2019 will also remain at 5% for tax underpayments and 5% for tax overpayments by taxpayers other than corporations. Accordingly, the Virginia rates for the fourth quarter of 2019 will be 7% for tax underpayments (assessments) and 7% for tax overpayments (refunds).

Details about these interest rates can be found in Tax Bulletin 19-6 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 804.367.8031 for individual income tax questions and 804.367.8037 for business tax questions.

Federal Rates Remain Unchanged: State and certain local interest rates are subject to change every quarter due to changes in federal rates established pursuant to Internal Revenue Code (“IRC”) § 6621. IRC § 6621 dictates that the federal underpayment and overpayment rates are three percentage points higher than the federal short‐term rate. Federal rates for the second quarter of 2019 will be 6% for tax underpayments (assessments) and 6% for tax overpayments (refunds) by noncorporate taxpayers.

Virginia Code § 58.1‐15 provides that the underpayment rate for Virginia taxes will be 2% higher than the corresponding federal rate and the overpayment rate for Virginia taxes will be 2% higher than the federal overpayment rate for noncorporate taxpayers. Accordingly, the Virginia rates for the second quarter of 2019 will be 8% for tax underpayments (assessments) and 8% for tax overpayments (refunds).

Rate for Addition to Tax for Underpayments of Estimated Tax

Taxpayers whose taxable year ends on March 31, 2019: For the purpose of computing the addition to the tax for underpayment of Virginia estimated income taxes on Form 500C (for corporations), Form 760C (for individuals, estates, and trusts), or Form 760F (for farmers and fishermen), the second quarter 8% underpayment rate will apply through the due date of the return, July 15, 2019.

Reduced Rate for Certain Assessments in Dispute

For administrative appeals filed with the Department of Taxation on or after July 1, 2011, a reduced interest rate equal to the federal short term rate established pursuant to IRC § 6621(b) applies, beginning nine months after the date of assessment until a determination is issued. The federal short‐term rate established pursuant to IRC § 6621(b) for the second quarter of 2019, rounded to the nearest whole percent, is 3%. Accordingly, the reduced rate for the second quarter of 2019 for qualifying assessments in dispute is 3%.

Local Tax

Assessments: Localities that assess interest on delinquent taxes under Va. Code § 58.1‐3916 may impose interest at a rate not to exceed 10% for the first year of delinquency, and at a rate not to exceed 10% or the federal underpayment rate in effect for the applicable quarter, whichever is greater, for the second and subsequent years of delinquency. For the second quarter of 2019, the federal underpayment rate is 6%.

Refunds: Localities that charge interest on delinquent taxes are required to pay interest to taxpayers on all overpayments or erroneously assessed taxes at the same rate as they charge interest on delinquent taxes under Va. Code § 58.1‐3916. Click here to read the full bulletin for the recent interest rates. 

Additional Information: This Tax Bulletin, along with other reference documents, is available online in the Laws, Rules and Decisions section of the Department’s website, located at www.tax.virginia.gov. If you have questions about interest rates, please visit Virginia Tax’s website or contact the Department at 804.367.8031 (for individuals), 804.786.2450 (for Soft Drink Excise Tax and Aircraft Sales and Use Tax), or 804.367.8037 (for all other business taxes).