Additional Sales and Use Tax in Henry County, Virginia

Virginia Tax is announcing that effective April 1, 2021, a new 1% additional retail sales and use tax will be levied in Henry County, Virginia. The sales and use tax levied will total 6.3%, comprised of the 4.3% state tax, the 1% percent local option tax and the 1% Henry County additional tax.

Sales made on or after April 1, 2021 will be subject to the new tax rate. Items delivered to a purchaser and paid for on or after April 1, 2021 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 April 1, 2021, but paid for on or after April 1, 2021. Also, the increased rate will not apply when a taxable sale or lease payment is paid for in full prior to April 1, 2021, even though delivery may occur on or after April 1, 2021, or the paid-in-full lease payment covers a lease period beginning on or after April 1, 2021.  

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 21-2 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 804.367.8037 for business tax questions.

Important Information Regarding Virginia's Litter Tax: Increased Litter Tax Rate and Additional Penalty

Virginia Tax is notifying taxpayers of changes to the Virginia Litter Tax effective for returns due May 1, 2021.

The Virginia Litter Tax is imposed annually on each establishment from which business is conducted by certain manufacturers, wholesalers, distributors and retailers.

Previously, such tax applied at an annual rate of $10 per establishment. Effective for Litter Tax returns due May 1, 2021, this annual rate increases to $20 per establishment.

An additional litter tax on each establishment is imposed on manufacturers, wholesalers, distributors, and retailers of groceries, soft drinks, carbonated waters, beer and other malt beverages. Under prior law, such tax applied at an annual rate of $15 per establishment. Effective for Litter Tax returns due May 1, 2021, this annual rate for the additional tax increases to $30 per establishment.  

Under existing law, any taxpayer who fails to pay the Litter Tax by the May 1 deadline is subject to a penalty equal 100% of the tax due. In addition, interest accrues at the rate established pursuant to Va. Code § 58.1-1812. Effective for Litter Tax payments due May 1, 2021, an additional penalty of $100 will apply to any late payments. This new penalty applies in addition to the existing 100% penalty and any interest that may accrue.

More information can be found in Tax Bulletin 21-1 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 Stay the Same

Virginia Tax announces that Virginia's interest rates will stay the same for the first quarter of 2021. The underpayment and overpayment rates for Virginia taxes are 2% higher than the corresponding federal rates. Federal rates for the first quarter of 2021 are 3% for tax underpayments and 3% for tax overpayments by taxpayers other than corporations. Accordingly, the Virginia rates for the first quarter of 2021 will be 5% for tax underpayments (assessments) and 5% for tax overpayments (refunds).

Details about these interest rates can be found in Tax Bulletin 20-12 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 Tobacco Products Tax

Today, Virginia Tax is notifying taxpayers of changes to the state's Tobacco Products Tax recently enacted by the Virginia General Assembly.

Beginning Jan.1, 2021, heated tobacco products will be taxed at the rate of 2.25 cents per stick for taxable sales or purchases occurring on and after Jan. 1, 2021. Heated tobacco products will not be subject to the stamping requirements imposed on cigarettes under the Virginia Cigarette Tax.

Additionally, the Virginia General Assembly adopted economic nexus for purposes of the Tobacco Products Tax. Beginning Jan. 1, 2021, a distributor shall be deemed to have sufficient activity within the commonwealth to require registration if such distributor:

• Receives more than $100,000 in gross revenue from sales of tobacco products in the commonwealth in the previous or current calendar year; or
• Engages in 200 or more separate tobacco products sales transactions in the commonwealth in the previous or current calendar year.

More information can be found in Tax Bulletin 20-11 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 the Tobacco Tax Unit at 804.371.0730.

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.