FAQs for Business
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My corporation has elected S status for federal purposes. How can I elect S status for Virginia purposes?
Virginia law recognizes the federal S election. No separate election is needed at the state level.
My corporation is an S corporation; therefore, I file only an information return for federal purposes. Do I have to file a Virginia return?
Yes. Every corporation organized under the laws of Virginia, including S corporations and foreign corporations registered with the State Corporation Commission for the privilege of doing business in Virginia, and corporations having income from Virginia sources, must file a return with the Department of Taxation each year. For most corporations, the due date for filing is the 15th day of the fourth month following the close of the corporation's taxable year. S corporations file an information return on Form 502 beginning with taxable year 2004. For earlier years, see Form 500S.
We are shareholders in an S corporation that is being taxed as a pass-through entity and has income from Virginia sources. We don't live in Virginia and this is the only Virginia source income we receive. Can the corporation file on our behalf, or do we each have to file a separate nonresident return?
The S corporation may file a single composite income tax return (Form 765) on behalf of its qualified nonresident shareholders in lieu of such owners filing separate nonresident returns. For the S corporation to include a nonresident owner on a composite return, such owner must consent to be included on the composite return. For complete instructions on composite filing, see Form 765 and the Form 765 instructions, Schedule L, and the Guidelines for Pass-Through Entity Withholding (Public Document 15-240).
Our organization is exempt from income tax under Internal Revenue Code Section 501(c). Do we need to file a Virginia corporation income tax return?
As a tax exempt organization, you are required to file a Virginia corporation income tax return, Form 500, only if you must file federal Form 990-T to report unrelated business taxable income. The Virginia return is due to be filed by the 15th day of the sixth month following the close of your taxable year. If you file only Form 990 for federal purposes, no Virginia return is required.
We are a foreign corporation that does business in Virginia. Is there a special return for foreign corporations?
No. If your corporation is an S corporation, use Virginia Form 502; otherwise, use Virginia Form 500. In either case, use Schedule A to allocate and apportion the corporation's income to determine the amount subject to Virginia income tax.
Our corporation has its headquarters in Maryland, and had a branch office in Virginia for several years. We closed the Virginia office three months into our current taxable year. How can we file a part-year income tax return?
Virginia law does not provide for part-year filing by a corporation when its federal return will reflect a full taxable year. You should file your return on Virginia Form 500, and use Schedule A to compute your Virginia taxable income.
What are the penalties for late filing of the Virginia corporation income tax return and late payment of the tax?
For taxable years beginning on or after January 1, 2005, an automatic six-month filing extension is allowed for corporations filing on Form 500 or Form 502. No paper application or online application for extension is required. The extension provisions do not apply to payment of any tax that may be due with Form 500. To avoid penalties, Form 500 filers must pay at least 90% of their final tax liability by the original due for filing the return. The payment must be submitted on Form 500CP.
Late filing penalties apply to returns that are filed more than six months after the original due date of the return. For "C" corporations, the late filing penalty is assessed on the tax due at a rate of six percent per month, from the due date through the date of payment. The minimum penalty is $100, and the maximum penalty is 30 percent. The penalty for late payment is assessed at the same rates, but does not apply to any month for which a late filing penalty has already been assessed. The maximum amount for combined late filing and late payment penalties is 30 percent of the tax due with the return.
To take advantage of the automatic extension provision, S corporations must file Form 502 no later than six months from the original due date of the return. For example, a calendar year Form 502 is due on April 15; therefore, the return must be filed no later than October 15 for the six-month extension provision to apply. The penalty for late filing of Form 502 is $200 per month, for a maximum of six months from the original due date. Accordingly, a Form 502 that is filed more than six months from the original due date will be subject to the maximum late filing penalty of $1,200.
I filed my corporation income tax return on extension with full payment for the tax due, but I still received a bill for extension penalty and interest. Doesn't having an extension mean that no penalty will be assessed?
Not always. An extension of time extends only the due date for filing your return, not the due date for paying the tax. Unless you pay at least 90 percent of the tax by the original filing due date, you will be subject to an extension penalty. In addition, you will be subject to interest on any balance of tax due with your return, regardless of whether the 90 percent requirement was met. For further information, refer to our Penalties and Interest page.
My corporation is a member of an affiliated group that files a consolidated federal return. Until this taxable year, we were the only group member doing business in Virginia, so we filed a separate return. During the year another group member, Corporation B, began doing business in Virginia. Can we elect to file a consolidated Virginia return, or will we need to request permission from the Tax Commissioner?
Because this is the first taxable year for which you would be eligible to file in Virginia with another member of your affiliated group, as long as you meet the requirements set forth in 23 VAC 10-120-320, you may elect to file a consolidated Virginia return. The election will be binding for you and Corporation B, as well as any group members who begin doing business in Virginia, for a period of at least 20 taxable years.
My corporation was recently acquired by the parent of an affiliated group that files a consolidated return in Virginia. Will we need to request permission from the Tax Commissioner to be included in the consolidated return?
No. The consolidated filing election of the affiliated group is binding on members who join the group after the election is made. Therefore, your corporation must be included in the group's consolidated Virginia return.
Who is subject to Litter tax?
Every manufacturer, wholesaler, distributor and retailer of the following products is subject to litter tax:
- food for human or pet consumption
- cigarettes and tobacco products
- soft drinks and carbonated waters
- beer and other malt beverages
- newspapers and magazines
- motor vehicle parts
- paper products and household paper
- glass containers
- metal containers
- plastic or fiber containers made of synthetic material
- cleaning agents and toiletries
- non-drug drugstore sundry products
- distilled spirits
The tax does not apply to businesses where the sale or distribution of taxable products is incidental to normal business operations, such as establishments that sell snacks or soft drinks as a convenience to employees or customers. Other examples include nursing homes, hospitals (excepting gift shops and cafeterias), dry cleaners, Laundromats, antiques shops, repair garages, and companies that maintain "honor system" boxes.
When is the litter tax due? What return do I file?
The litter tax is reported on Form 200, which must be filed by May 1 of each year.
What is the litter tax rate?
The tax is imposed at a rate of $10 per business establishment. An additional tax of $15 per business establishment is imposed on businesses that manufacture, sell or distribute groceries, soft drinks, or beer.
What are the penalties for late filing of Form 200, or late payment of the tax?
If Form 200 is filed after May 1, or if the tax due is paid after that date, the penalty is 100 percent of the tax due. In addition, interest will be accrued on the tax due with the return from the due date through the date of payment.
Where can I get litter tax forms and instructions?
The Department of Taxation mails preprinted returns to all registered litter tax filers each year. If you have not received your forms by April 1, you should call our Customer Service Section at (804) 367-8037 or download Form 200 from this web site.