Virginia Department of Taxation

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1 Virginia Department of Taxation 2013 Legislative Update 1 Agenda Tips and Tools for Preparers Income Tax Legislation Tax Credits Business Tax Changes Administrative Changes Other Issues Late Payment Penalty Reminder Questions????? 2

2 Tips and Tools for Preparers 3 Tips and Tools for Preparers 2013 Legislative Summary - P. D The summary is a comprehensive review of law changes for 2013 and beyond. Download from TAX website: 4

3 Tips and Tools for Preparers Need help fast: Call our Tax Professional Hotline (804) Hours: 8:30am 4:30pm Monday Friday Live Chat: Chat online with a representative Months January - May June December Hours 8:30 am 8:00 pm 8:30 am 5:00 pm 5 Tips and Tools for Preparers Power of Attorney and Tax Information Authorization Form R-7 - Application for Enrollment as Virginia Authorized Agent (AA) Use this form to register as a representative or Authorized Agent for a taxpayer(s) to receive any correspondence, documentation or other written materials related to specific tax matters for which the Form PAR 101 has been filed Submit Form Form R-7 by mail or fax to: Virginia Department of Taxation PO Box 1114 Richmond, VA Fax: (804)

4 Tips and Tools for Preparers Power of Attorney and Tax Information Authorization Form PAR 101-Power of Attorney and Declaration of Representative Use this form to receive authorization as an individual to represent a taxpayer(s) before the Department. Submit Form PAR 101 by mail or fax to: Virginia Department of Taxation PO Box 1115 Richmond, VA Individual Fax: (804) Business Fax : (804) Tips and Tools for Preparers Laws, Rules and Decisions at Tax Professionals Page Sign up for e-alerts (formerly e-subscriptions) A What s New section can be found for each tax type in the instruction booklets and on our website 8

5 Tips and Tools for Preparers Applications for Tax Credits administered by the Department of Taxation should be sent to: Department of Taxation Tax Credit Unit Post Office Box 715 Richmond, Virginia Questions?? (804) Tips and Tools for Preparers Writing In? General Correspondence: Virginia Department of Taxation Post Office Box 1115 Richmond, Virginia Offers in Compromise and 1821 Appeals: Tax Commissioner Post Office Box 2475 Richmond, Virginia

6 Income Tax Legislation 11 Income Taxes - VA Fixed Date Conformity HB 2150 & SB 1241 Federal Conformity Legislation Advance the date of conformity from December 31, 2011 to January 2, 2013 Virginia will continue to deconform from: Five-year carry back of NOLs generated in 2008 or 2009; Deductions for applicable high yield discount obligations; Bonus depreciation; and The income tax exclusion for cancellation of debt income realized after December 31, 2008 and before January 1, 2011 Virginia will conform to: A 2010 Federal law that temporarily increased the federal earned income tax credit (EITC) for Taxable Year 2012 The American Taxpayer Relief Act of

7 Income Taxes HB 2145 & SB 1220 Deposit of Tax Refund into Virginia College Savings Plan Accounts Effective beginning in Taxable Year 2014 Allow an individual to designate that his individual income tax refund, or a portion thereof, be deposited into one or more Virginia College Savings Plan accounts If the taxpayer owns more than one VCSP account, then the designated refund amount would be allocated between the accounts in equal amounts or as otherwise designated by the taxpayer 13 Income Taxes HB 2167 Deductions for Prepaid Funeral, Medical, and Dental Insurance Premiums Taxable years beginning on and after January 1, 2013 Allows an income tax deduction for: A prepaid funeral insurance policy covering an individual, or Medical or dental insurance for any person for whom the individual taxpayer may claim a deduction for such premiums under federal income tax laws May be claimed by individuals age 66 or older with earned income of at least $20,000 and FAGI no more than $30,000 14

8 Income Tax Credits 15 Income Tax Credits SB 1296 Unclaimed Tax Credits Declared Obsolete Effective July 1, 2013 Deems tax credits that have not been claimed by any taxpayer during the five preceding calendar years obsolete Does not prevent the carryover or transfer of a credit in subsequent years 16

9 Income Tax Credits HB 1398 Land Preservation Tax Credit Cap Limits the maximum amount of credits that may be issued in a calendar year to $100 million Effective for Calendar Year 2013 and thereafter Reduction from the indexed credit cap of $113.9 million for Calendar Year Income Tax Credits HB 1500 Qualified Equity and Subordinated Debt Investments Tax Credit The 2013 Budget Bill increases the cap for Taxable Years 2013 to $4.5 million and 2014 to $5 million. Taxable Year(s) Credit Cap $3 million 2010 $5 million 2011 $3 million 2012 $4 million 2013 $4.5 million 2014 $5 million 18

10 Income Tax Credits HB 1923 Increase in Worker Retraining Tax Credit Increases the Worker Retraining Tax Credit for eligible worker retraining courses taken by qualified employees at private schools from a maximum of $100 per year per qualified employee to: $200 per year per qualified employee, or $300 per year per qualified employee if the retraining includes retraining in a STEM or STEAM discipline Science, technology, engineering, mathematics, or applied mathematics related discipline Adds a sunset date to the Worker Retraining Tax Credit (January 1, 2018) 19 Income Tax Credits HB 2047 Long-Term Health Care Insurance Tax Credit Repeals the Long-Term Care Insurance Tax Credit, the credit will expire December 31, 2013 Will not affect any Long-Term Care Insurance Tax Credits earned prior to the repeal, or the administration of such tax credits Clarifies when the individual income tax deduction for long-term health care insurance premiums is disallowed Such deduction is completely disallowed if the individual has claimed a federal income tax deduction for long-term health care insurance premiums Effective for taxable years beginning on or after January 1,

11 Income Tax Credits HB 1996 & SB 1227 Neighborhood Assistance Act Tax Credit Increase the maximum annual amount of tax credits: From a credit of $50,000 for an individual or married persons To a maximum credit of $81,250 per individual for a donation of $125,000 or a maximum credit of $162,500 for married persons for a donation of $250,000 Clarify that the existing $500 minimum donation requirement applies on an individual basis HB 1996 extends the expiration date to July 1, Income Tax Credits HB 1996 & SB 1227 Education Improvement Scholarships Tax Credit Increase the maximum annual amount of tax credits: From a credit of $50,000 for an individual or married persons To a maximum credit of $81,250 per individual for a donation of $125,000 or a maximum credit of $162,500 for married persons for a donation of $250,000 Clarify that the existing $500 minimum donation requirement applies on an individual basis HB 1996 extends the expiration date to January 1,

12 Income Tax Credits HB Investments Eligible for Tax Credits Allows any investment by a taxpayer that is transacted via an online general solicitation, an online broker, or a funding portal to be eligible for any income tax credit for which it qualifies Requires the Department to develop guidelines to facilitate the submission of electronic documents required to be submitted by a taxpayer to document or verify that an investment eligible for a tax credit has been made Effective July 1, Business Tax Changes 24

13 Income Taxes HB Increase in Retail Sales and Use Tax Effective July 1, 2013 Increased the state portion of the retail sales and use tax from 4 percent to 4.3 percent. Imposed an additional state sales and use tax of 0.7 percent in the Northern Virginia and Hampton Roads regions. The additional taxes do not apply to food purchased for human consumption. 25 Income Taxes Electronic Filing Mandate for Retail Sales Tax Forms Effective July 1, 2013 Requires only those dealers who file their sales and use tax returns on Forms ST-9 or ST-9CO to submit returns and payments using an electronic medium We offer three online filing and payment options: eforms, Business ifile, and Web Upload The Tax Commissioner has the authority to waive the requirement to file by electronic means. All requests for waivers must be submitted to the Tax Commissioner in writing 26

14 Income Taxes Electronic Filing Mandate for Employer Withholding Tax Forms Effective July 1, 2013 Requires all employers to file annual withholding reports as well as all quarterly, monthly, and semiweekly returns using an electronic medium We offer three online filing and payment options: eforms, Business ifile, Web Upload, and ACH Credit The Tax Commissioner has the authority to waive the requirement to file by electronic means. All requests for waivers must be submitted to the Tax Commissioner in writing 27 Income Taxes Electronic Filing and Payment for Pass-Through Entities Requires the Department to develop an annual return for pass-through entities to file using an electronic medium before January 1, 2015 The pass-through entity return will be available for electronic filing by January 1, 2015 for the 2014 taxable year. 28

15 Administrative Changes 29 Administrative Changes Walk-In Service Now Seasonal As of July 1, 2013, the Department of Taxation s Customer Service Walk-In area at 1957 Westmoreland St., Richmond, is open ONLY during the busiest filing months of the year. Taxpayer Assistance Hours: M-F 8:30 a.m.- 4:30 p.m. (January 1 st May 31 st Only) Cashier Hours: M-F 8:30 a.m. - 4:30 p.m. (Year-Round) 30

16 Other Issues 31 Other Issues Debit Card 2013 Refund Options Direct Deposit Debit Card Paper checks may be issued for certain processing exceptions 32

17 Other Issues Requirement for date of birth on individual returns The taxpayer s date of birth will be used to assist in the verification of taxpayer identity. If filing a joint return, enter primary filer and spouse s date of birth in the same order as the names and social security numbers appear. Be sure bank account number, address and phone numbers are correct. IMPORTANT! Please use current client information 33 Other Issues 760C Exception Codes on efile returns 760C Exception codes will now be accepted on efile returns When you input the applicable Exception Code into your software, TAX will not assess the 760C charge Please look for this change and help us avoid assessing taxpayers who qualify for an exception 34

18 Other Issues Paid by Credit Card 760CG Paid by Credit Card wording will be changed to Will pay by Credit/ Debit Card with an option of yes or no Some taxpayers saw the wording and thought they d paid by Credit Card, when they had not We heard from Tax Professionals that it would help if TAX changed the wording 35 Other Issues 1099G/INT 1099G/INT for TY2013, TAX will provide the 1099Gs electronically! Available online at by mid-january 2015 for returns filed in 2014 Taxpayers will need to check a box on their 2013 return and agree to electronic pickup The 1099G Electronic Delivery application will be similar to the Where s my Refund application 36

19 Late Payment Penalty Reminder If a tax due return is filed on or before May 1 (original due date), no extension applies. The late payment penalty will be assessed on any tax paid after that date at the rate of 6% per month. The maximum late payment penalty is 30% of the tax due. 37 Late Payment Penalty Reminder If a tax due return is filed during the extension period, the late payment penalty applies to any tax not paid with the return on the date filed. The extension ends at the point the return is filed The late payment penalty begins to accrue on the day following the date the return is submitted, on any balance of unpaid tax 38

20 Late Payment Penalty Reminder Filers often submit returns electronically, then mail a paper check, which could trigger a penalty The Department allows time for mail delivery before issuing an assessment The Department also has a payment mailing allowance in place to address situations involving a short delay between filing of the return and payment of the balance due 39 Late Payment Penalty Reminder The payment mailing allowance does not address longer lapses between filing and payment dates Advise your clients to use direct debit or online payment services, or to mail checks promptly once the return is filed. 40

21 Late Payment Penalty Reminder If a client receives a penalty assessment that you believe is not justified, you or your client may write in to request a review of the assessment Follow the instructions on the Notice of Assessment 41 That s All Folks Questions??? 42

Virginia Department of Taxation

Virginia Department of Taxation 2013 Legislative Update 1 Agenda Tips and Tools for Preparers Income Tax Legislation Tax Credits Business Tax Changes Administrative Changes Other Issues Late Payment Penalty