Business What's New

Latest Updates

General Provisions and Information

Corporations and Pass-Through Entities

Sales and Use Taxes

Employer Withholding Tax

Tobacco Taxes

Other Business and Miscellaneous Taxes


Forest Products Tax:  Change to Imposition of Tax, Effective 7/1/15

Under legislation enacted by the 2015 Session of the General Assembly, the imposition of the forest products tax will shift to the first manufacturer processing the forest products, effective July 1, 2015.  The intent of the change is to reflect current industry practices by moving responsibility for the tax from processors operating in the woods to commercial taxpayers with fixed places of business.  For guidelines on the transition and filing requirements, see Tax Bulletin 15-5 and the Frequently Asked Questions.  

Requesting Copies of Tax Returns - New Procedure 7/1/15

Effective July 1, 2015, the Department of Taxation will charge $5.00 for each copy of a previously filed tax return.  See our Copies of Returns page for details on the new procedure, including the form for making your request.



Pass-Through Entity Electronic Filing Requirement

Beginning January 1, 2015, all pass-through entities are required to file their annual returns and make all payments electronically. This is effective beginning with taxable year 2014 returns, return payments and withholding payments. The Department offers several options for electronically filing PTE returns and payments:

  • The PTE e-File program works with the IRS e-File program and allows both the federal and state returns to be filed together through one secure system.
  • A free online 502EZ eForm will be available, beginning January 2015, for filing the annual return and making a tax due payment if you meet certain eligibility requirements.
  • A free online 502W eForm will be available, beginning January 2015, for making withholding payments.
  • A bank ACH credit may be used to make tax due payments or withholding payments.

PTEs that are unable to file and pay electronically may request a waiver.


Announcing Form 500EZ

Form 500EZ, a new, shorter version of the Form 500 (Virginia Corporation Income Tax Return) is now available online. The form is designed to help businesses more easily meet the electronic filing requirement for corporation income tax returns, and is free and available 24/7. Qualifying businesses do not have to register, provide login credentials, or mail additional documentation when using Form 500EZ. Visit Form 500EZ for details and eligibility criteria.


New Cap for 2014 Qualified Equity and Subordinated Debt Investments Tax Credit

Under the amended budget bill for the 2012-2014 biennium (2014 House Bill 5001) and the budget bill for the 2014-2016 biennium (2014 House Bill 5002), the Qualified Equity and Subordinated Debt Investment Tax Credit cap will increase to $5 million for taxable year 2014. For taxable years after 2014, the tax credit cap will remain at the statutory cap of $5 million, unless the General Assembly takes future action to change it. For complete information, see Tax Bulletin 14-5.

Form VA-6 Filing Date Changed to January 31

Under the provisions of the 2014 Appropriations Act, the due date for filing the Employer's Annual Summary of Virginia Income Tax Withheld and required W-2 and 1099 statements has been changed from February 28 to January 31. The earlier filing date will help to ensure faster and more accurate processing of individual income tax refunds. The change takes effect for Forms VA-6 and VA-6H for calendar year 2014. Because January 31, 2015 is a Saturday, the actual due date for the 2014 Form VA-6 and accompanying income statements will be Monday, February 2, 2015. For details on filing, visit our Withholding Tax page.

Accelerated Sales Tax Update for 2014

Legislation passed by the General Assembly requires Retail Sales and Use Tax dealers who generated taxable sales and purchases of $2.5 million or more for the twelve-month period ending June 30, 2014 to make an accelerated payment. The payment must be made on or before June 25, 2015 for dealers paying by check, or June 30, 2015 for dealers making electronic payments. Impacted dealers will be allowed to credit this amount against the amount due with their June 2015 return (due July 20). Visit our Accelerated Sales Tax page for more information.


Retail Sales Tax - Electronic Filing and Payment Requirement, Effective July 1, 2013

The 2012-2014 Appropriations Act requires the Virginia Department of Taxation to collect all Retail Sales and Use Tax returns and payments electronically.

  • The new requirement applies only to dealers who file their sales and use tax returns on Forms ST-9 or ST-9CO (Form ST-9CO will be discontinued effective July 1, 2013).
  • All dealers will begin filing the new Form ST-9 beginning with the July 2013 return (due August 20, 2013) for monthly and seasonal filers, or the July - September 2013 return (due October 21, 2013) for quarterly filers.
  • Dealers who file on a quarterly basis must file and pay electronically beginning with the return for the period of July - September 2013, which is due to be filed by October 21, 2013. Monthly filers have been required to file and pay electronically since 2012.
  • Dealers who file on a seasonal basis must file and pay electronically beginning with the July 2013 return, due August 20, 2013.
  • Returns and payments must be submitted electronically on or before the due date to be considered timely.
  • Preprinted sales tax return coupon mailings will be discontinued for all filers effective with the July 2013 returns.

We offer three online filing and payment options: eForms, Business iFile, and Web Upload.

If you are unable to make the necessary changes to file and pay electronically by the effective date, you may request a temporary waiver. Submit your request in writing by completing the Sales Tax Electronic Filing Waiver Request form.

For questions, contact a Customer Service Representative at (804) 367-8037.


Employer Withholding Tax - Electronic Filing Requirement

Beginning July 1, 2013, every employer will be required to file all withholding tax returns and payments electronically. This requirement does not change the filing frequency requirements, however, it may change the filing and payment method used. Employers can meet these electronic filing and paying requirements without purchasing tax filing software. We offer several free online services that are available 24 hours a day, seven days a week:

  • eForms currently allows you to file and pay tax returns online, and will also allow you to submit W-2 information later this year. No sign-up is required to use this system, and the forms look similar to the paper versions. eForms requires a payment to be made when the return has an amount due. The payment will be debited via Debit Electronic Funds Transfer (EFT) from the checking account information entered with the return. Only checking accounts may be used with eForms. You may also schedule the date of the eForm return and payment.
  • Business iFile allows you to file returns and make payments by Debit EFT. Once enrolled in Business iFile, enter your tax information, bank information and schedule the date of the payment.
  • Web Upload allows you to file returns with payments and submit Employer W-2s online. Payments are made by by Debit EFT. Web Upload is "file driven" with the ability to save all return and payment information into a single file layout to submit to the Virginia Department of Taxation. The system supports Excel, fixed-width (column based) and delimited files. Once you sign-up for Web Upload, you create your file layout and submit your return, payment and bank information.
  • ACH Credit is used to make electronic payments directly into the state's bank account. You must contact your financial institution and make arrangements to credit the state's bank account with funds from your bank account. Your financial institution will advise you of ACH origination services offered and any associated costs.

The Tax Commissioner has the authority to waive the requirement to file and/or pay electronically should this cause an undue hardship for the employer. Requests for waiver must be submitted in writing, by completing the Employer Withholding Electronic Filing Waiver Request form.


2013 Land Preservation Tax Credit Cap

Previously, it was announced that the indexed tax credit cap for the Land Preservation Tax Credit for calendar year 2013 was $113,909,000. However, legislation passed by the 2013 General Assembly (House Bill 1398) removed the credit's adjustment for inflation. Therefore, the cap for calendar year 2013 and years to come has been reduced to $100 million. Please see Tax Bulletin 13-6 for more information.



Corporation Income Tax Changes for 2014

Interest Charged-Domestic International Sales Corporations (IC-DISCs) Exempt from Virginia Corporation Income Tax
For taxable years beginning on or after January 1, 2014, IC-DISCs are exempt from the Virginia Corporation Income Tax. Under prior law, IC-DISCs weren't exempt from taxation in Virginia, and were required to file and pay Virginia corporate income taxes even when exempt from federal taxation.

New Filing Option for Certain Virginia Corporations
The new online return, Form 500EZ, is a shorter version of the existing Form 500 and is designed to help businesses more easily meet the electronic filing mandate. The 500EZ is free, available 24/7, and does not require login credentials. Certain criteria must be met to use the Form 500EZ.

Manufacturer's Modified Apportionment Method
Qualifying manufacturers may elect to use a single sales factor for taxable years beginning on and after July 1, 2014, which will be computed on the Single Factor Computations line on Schedule 500A. For taxable years beginning on or after July 1, 2013, but before July 1, 2014, such manufacturers may elect to use a quadruple-weighted sales factor. See the instructions for Schedule 500A for details on how to apportion income.

Apportionment for Retail Companies
For taxable years beginning on or after July 1, 2012, but before July 1, 2014, retail companies are required to determine their Virginia taxable income by using an apportionment formula with a triple-weighted sales factor. For taxable years beginning on or after July 1, 2014, but before July 1, 2015, a quadruple-weighted sales factor must be used. A single sales factor apportionment formula will apply for taxable years beginning on and after July 1, 2015. See the Schedule 500A instructions for further information and qualifications.

Education Improvement Scholarships Tax Credit
For taxable years beginning on or after January 1, 2014, an income tax credit may be claimed for monetary or marketable securities donations made to scholarship foundations included on an approved list published by the Virginia Department of Education. Credits may be earned for taxable years beginning on or after January 1, 2013, but before January 1, 2028.Tax credits earned during taxable year 2013 must be claimed on the taxable year 2014 return. Tax credits earned during the taxable year 2014, and thereafter, should be claimed in the year during which they were earned. Accordingly, Education Improvement Scholarships Tax Credits earned during both taxable years 2013 and 2014 should be claimed on the taxable year 2014 tax return. The credit is equal to 65 percent of the monetary or marketable securities donation made to the scholarship foundation. The credit can be claimed against the individual income tax, corporate income tax, bank franchise tax, insurance premiums license tax, or tax on public service corporations. Tax credits will be awarded to taxpayers on a first-come, first-served basis in accordance with procedures established by the Virginia Department of Education. The total amount of credits available in any fiscal year is capped at $25 million. Any unused tax credits may be carried over for the next five succeeding taxable years or until the total amount of credit has been taken, whichever is sooner. For information on how to qualify, contact the Department of Education at (804) 225-3375 or go to Education Improvement Scholarships Tax Credit Program. See the Schedule 500CR and instructions to claim this credit.

Research and Development Expenses Tax Credit
Beginning with taxable year 2014, the amount of the credit allowed increases from 15 percent of the first $167,000 to 15 percent of the first $234,000 of Virginia qualified research and development expenses, and from 20 percent of the first $175,000 to 20 percent of the first $234,000 of Virginia qualified research and development expenses conducted in conjunction with a Virginia public or private college or university. The maximum amount of annual tax credits that may be issued increases from $5 million to $6 million for each fiscal year. A pass-through entity may elect to receive and claim any credit at the pass-through entity level instead of the credit being allocated to the owners of the pass-through entity.

Virginia Port Tax Credits
There are several changes to the port-related tax credits effective for taxable years beginning on or after January 1, 2014, including the reallocation of the annual credit amounts. The annual amount of International Trade Facility Tax Credits that may be issued increases from $250,000 to $1.25 million. The annual amount of Barge and Rail Usage Tax Credits that may be issued decreases from $1.5 million to $500,000. Port credits are expanded to allow credits for roll-on/roll-off cargo. Qualifying taxpayers are permitted to claim both the Port Volume Increase Tax Credit and the Barge and Rail Usage Tax Credit for the same cargo, provided the taxpayer meets the criteria for both credits. For the International Trade Facility Tax Credit, the minimum annual increase in cargo transported through a maritime port that is required for eligibility is reduced from 10 percent to 5 percent.


Advancement of Virginia's Fixed-Date Conformity to the Internal Revenue Code

Under emergency legislation (House Bill 1044; Chapter 1 of the 2015 Acts of Assembly) passed by the 2015 General Assembly and signed by Governor McAuliffe on February 16, 2015, Virginia's conformity to the terms of the Internal Revenue Code will advance from January 2, 2013 to December 31, 2014.   Tax Bulletin 15-1 provides taxpayers with directions on how to reconcile this legislation and Virginia's January 2, 2013 date of conformity to the Internal Revenue Code with their 2014 Virginia income tax returns.



Employer W-2 Electronic Filing Requirements

All employers are required to file their annual withholding statements, Forms W-2 , electronically with the Virginia Department of Taxation. Currently, the Web Upload online system supports electronic W-2 filing. Later this year, the eForms system will also support electronic W-2 submissions. The Department no longer accepts W-2s filed on CD, diskette or tape (also known as magnetic media).


Pass-Through Entity Electronic Filing

The Department of Taxation's e-File program will begin accepting Form 502 for taxable year 2013 through the Fed/State e-File program. The e-File system is supported by numerous commercial software programs. Check with your software vendor to see if they support e-Filing Form 502.

If a tax payment is required, the payment can be made through the e-File system as a direct debit or you may pay with an ACH Credit established through the Pass-Through Entity's (PTE's) bank. The e-File program provides many benefits to PTEs:

• Supports filing the federal and state returns electronically at the same time.

• The federal return is automatically provided to the state electronically.

• Supports unified filings.

• Supports attaching Portable Document Format (PDF) copies of required documentation.

• The ability to schedule a tax payment via direct debit on a future date, when filing before the due date.

In order to successfully e-File, the PTE must:

• Use an approved commercial e-File software program.

• Be able to create a readable PDF. This means that you must either have a scanner that allows you to scan documents into a PDF file or another program that allows you to save files in a PDF format

For paper filers, the Department offers a free and easy electronic submission process for filing VK-1s. You no longer have to print; package and mail your VK-1s. Simply upload your electronically stored VK-1 data using Web Upload. While we encourage you to use Web Upload to submit your VK-1s, the Form 502 return and Schedules 502ADJ and 502A must still be filed on paper. There is no problem with submitting the VK-1s via Web Upload and the return and schedules on paper, simply mark the "VK1s filed via Web Upload" box on the Form 502. Visit Web Upload for additional information.


Cigarette Revenue Stamping Agents Update

The Virginia Department of Taxation recently switched cigarette revenue stamp vendors. House Bill 5002 (2014 Special Session I, Acts of Assembly Chapter 2) requires the Department to provide a report to the General Assembly regarding incidents arising during Virginia tax stamping operations. If you are a permitted stamping agent, please report stamping operation exceptions resulting in costs equal to or greater than $500.00 that occur on or after April 1, 2014 to our Hotline at (804) 367-8209. Costs include damaged stamps, loss of productivity due to heat application setting modifications, and financial technical assistance required to modify heat application operations.



Last Updated 11/17/2015 11:58