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Latest Updates
- Tax Bulletin 13 - 8: Changes to Imposition of New Sales Tax Rates
- Sales and Use Tax Rates Changing July 1, 2013
- 2013 Land Preservation Tax Credit Cap - Updated
- Employer Withholding Tax - Electronic Filing Requirement
- Hurricane Preparedness Sales Tax Holiday Starts May 25!
- Accelerated Sales Tax Payment Requirements for June 2013
- Motor Vehicle Fuel Sales Tax - Change in Administration
- Walk-In Service to Become Seasonal, Effective July 1, 2013
- Update on Exemptions for Nonprescription Drugs and Proprietary Medicines
- Advancement of Virginia's Fixed-Date Federal Conformity
- Penalty Relief for Farmers, Fishermen and Merchant Seamen
- Corporation Income Tax Electronic Filing and Payment Requirement
- Corporation Income Tax Changes for 2012
- Insurance Premiums License Tax - Change in Administration 1/1/13
- Retail Sales Tax Electronic Filing and Payment Requirement - Effective July 1, 2012
- Motor Vehicle Rental Tax - Change in Administration 7/1/12
General Provisions and Information
- Online eForms for Business Taxes
- 2012 Legislative Summary
- Expanded Definition of "Postmark" (filing date)
- Guidelines Under Development
Corporations and Pass-Through Entities
- 2013 Land Preservation Tax Credit Cap - Updated
- Corporation Income Tax Electronic Filing and Payment Requirement
- Corporation Income Tax Changes for 2012
- Updated Guidelines for Virginia Motion Picture Production Tax Credit
- Advancement of Virginia's Fixed-Date Federal Conformity
- What's New for Tax Credits
- Telework Expenses Tax Credit
- Long-Term Capital Gain Subtraction
- Manufacturer's Apportionment - Alternative Election
- Pass-Through Entities Guidelines Update Project
- Pass-Through Entity VK-1 Schedules
Sales and Use Taxes
- Tax Bulletin 13 - 8: Changes to Imposition of New Sales Tax Rates
- Sales and Use Tax Rates Changing July 1, 2013
- Hurricane Preparedness Sales Tax Holiday Starts May 25!
- Accelerated Sales Tax Payment Requirements for June 2013
- Motor Vehicle Fuel Sales Tax - Change in Administration
- Update on Exemptions for Nonprescription Drugs and Proprietary Medicines
- Retail Sales Tax Electronic Filing and Payment Requirement - Effective July 1, 2012
- Motor Vehicle Rental Tax - Change in Administration 7/1/12
- Sales Tax Holidays
- Sales Tax Exemption for Farmers Markets
Employer Withholding Tax
Tobacco Taxes
Other Business and Miscellaneous Taxes
Sales and Use Tax Rates Changing July 1, 2013 - Updated June , 2013
Under legislation enacted by the 2013 General Assembly, House Bill 2313, Virginia’s sales and use tax rates will increase on July 1, 2013. Notices will be mailed to approximately 150,000 affected dealers on or about April 19 to help them prepare for the change, and revised forms and instructions will be available in May.
Effective July 1, the state rate for the Retail Sales and Use Tax will increase from 4% to 4.3%, resulting in a total state and local tax rate of 5.3%. Also effective July 1, the state rate for the Retail Sales and Use Tax will increase an additional 0.7% for cities and counties located within the Northern Virginia Region and the Hampton Roads Region, raising the total state tax rate in those regions to 5%, and the combined state and local rate to 6%. The current rate of 2.5% on sales of qualifying food remains unchanged.
Tax Bulletin 13 - 8, issued June 13, 2013, removes the Counties of Gloucester and Surry from the list of affected localities in the Hampton Roads Region. These counties are not located in the Hampton Roads Planning District (Planning District 23).
Details are available on our Changes and Updates page.
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 allows you to file and pay tax returns online. 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 Virginia Electronic Filing Waiver Request form.
Accelerated Sales Tax Payment Requirements for June 2013
Legislation passed by the General Assembly requires Retail Sales and Use Tax dealers who generated taxable sales and purchases of $26 million or more for the twelve-month period ending June 30, 2012 to make an accelerated payment. The payment must be made on or before June 25, 2013 for dealers paying by check, or July 1, 2013 for dealers making electronic payments. Affected dealers are entitled to credit this amount against the amount due with their June returns (due July 22, 2013). See our Accelerated Sales Tax page for details.
Motor Vehicle Fuel Sales Tax - Change in Administration
In accordance with the provisions of Senate Bill 503,enacted by the 2012 General Assembly, the administration and collection of the Motor Vehicle Fuel Sales Tax imposed in certain transportation districts will transition from the Department of Taxation to the Department of Motor Vehicles (DMV), effective July 1, 2013. Registered distributors do not need to take any action with the Department of Taxation. As part of the transition, Motor Vehicle Fuel Sales Tax accounts will automatically be closed at the end of June 2013. For information regarding transactions or issues for periods beginning on or after July 1, 2013, contact DMV.
Walk-In Service to Become Seasonal, Effective July 1, 2013
Beginning July 1, 2013, the Department of Taxation’s Customer Service Walk-In area at 1957 Westmoreland St., Richmond, will be open ONLY during the busiest filing months of the year – January through May. This means the Customer Service Walk-In will close July 1 this year, when the change goes into effect, and then begin closing on June 1 in 2014 and future years. The Department is realigning its customer service resources due to approved budget reductions and the increase in electronic filing by taxpayers. The Cashiers Office at the Westmoreland Street location is not affected by the change to the Customer Walk-In and payments can still be made there year around.
Update on Exemptions for Nonprescription Drugs and Proprietary Medicines
In response to a number of recent inquiries, Tax Bulletin 13-5, issued March 15, 2013, provides an overview and updated examples with respect to the exemptions from the Retail Sales and Use Tax provided for nonprescription drugs and proprietary medicines. This bulletin supersedes Tax Bulletin 98-4.
Penalty Relief for Farmers, Fishermen and Merchant Seamen
In response to recent action by the IRS, the Virginia Department of Taxation is providing relief from the estimated tax underpayment penalty for farmers, fishermen, and merchant seamen who are unable to file and pay their 2012 individual income taxes by the March 1 deadline. In order to receive an automatic waiver of the estimated tax underpayment penalty, farmers, fishermen and merchant seamen must file their returns and pay the entire tax due by April 15, 2013. For more information, see Tax Bulletin 13-2 (P.D. 13-12).
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 Electronic Filing and Payment Requirement
The 2012-2014 Appropriations Act requires corporations subject to the income tax filing requirements for the Virginia Form 500 to file their returns and make their payments electronically, beginning January 1, 2013. The new provision affects only corporation income tax filers, and does not apply to pass-through entities that file their returns on Virginia Form 502. The electronic filing and payment requirement applies to any Form 500 filed for taxable years beginning on or after January 1, 2012, extension payments and return payments for taxable year 2012, and estimated tax payments for taxable year 2013. Any corporation that is not able to comply with the requirement by January 1, 2013 may request a hardship waiver. For details, visit our Corporation Income Tax information page.
Corporation Income Tax Changes for 2012
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. A single sales factor apportionment formula will be phased in over a three-year period beginning as a triple-weighted sales factor, followed by a quadruple-weighted sales factor, and then a single sales factor for taxable years beginning on and after July 1, 2015. See the Schedule 500A Instructions or the 502A Instructions for further information and qualifications.
Telework Expenses Tax Credit: The Telework Expenses Tax Credit is a new individual and corporate income tax credit for employers who incur eligible telework expenses pursuant to a telework agreement or conduct telework assessments. This credit is equal to the amount of expenses incurred during the calendar year that ends during the taxable year, not to exceed $50,000 each year. Taxpayers may claim this credit for taxable years beginning on or after January 1, 2012. To qualify for a credit, the employer must enter into a signed telework agreement with the teleworking employee on or after July 1, 2012, but before January 1, 2017. This telework agreement must be in accordance with policies set by the Department of Rail and Public Transportation (DRPT) available on the Telework!VA website.
Submit Form TEL-1 to the Department of Taxation between September 1 and October 31 of the year preceding the taxable year for which the tax credit is earned to reserve a portion of the credit. Confirm the amount of eligible expenses actually incurred by filing Form TEL-2. by April 1 of the year following the calendar year when the eligible expenses were incurred. Once Form TEL-2 is approved, the Department will send a certification letter for the amount of Telework Expenses Tax Credit that can be claimed on your Virginia return.
For more on this new credit and modifications to existing credits, see What’s New for Tax Credits.
Telework Expenses Addition: Taxpayers claiming the Virginia Telework Expenses Tax Credit are not allowed to exclude those expenses from Virginia Income. To the extent excluded from federal taxable income, any expenses incurred by a taxpayer in connection with the Telework Expenses Tax Credit must be added to the Virginia return.
Historic Rehabilitation Tax Credit Subtraction: To the extent included in federal taxable income, any amount of gain or income recognized by a taxpayer in connection with the Historic Rehabilitation Tax Credit is allowed as a subtraction on the Virginia return.
Retail Sales Tax Electronic Filing and Payment Requirement
SPECIAL EXTENSION FOR JULY RETURNS AND PAYMENTS: To provide additional time to transition to the electronic filing requirement, the Department of Taxation is extending the Sales Tax filing deadline for retail sales tax returns (Forms ST-9 and ST-9CO) to August 24, 2012.
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.
- Dealers who file on a monthly basis must file and pay electronically beginning with the return for the month of July 2012, which is due to be filed by August 20, 2012.
- Dealers who file on a quarterly basis will not be subject to the requirement in 2012. Instead, those dealers must file and pay electronically beginning with the return for the quarter ending September 30, 2013, which is due to be filed by October 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 monthly filers effective for the month of July 2012, and for quarterly filers effective for the quarter of July 2013 through September 2013.
We offer three online filing and payment options: eForms, Business iFile, and Web Upload. Learn more about these options (link takes you to a short video presentation.)
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, providing your business name, Virginia tax account number, contact person, phone number, e-mail address (optional), mailing address, the reason for the request, and the date when you can file and pay your retail sales taxes electronically. Fax your request to:
Virginia Department of TaxationP.O. Box 27423
Richmond, Va. 23261
Fax: (804) 367-3015
For questions, contact a Customer Service Representative at (804) 367-8037.
Motor Vehicle Rental Tax - Change in Administration, Effective 7/1/12
Legislation enacted by the 2011 Session of the General Assembly transfers the administration and collection of the Motor Vehicle Rental Tax (“Rental Tax”) from the Department of Motor Vehicles (DMV) to the Department of Taxation, effective July 1, 2012.
Rentors: The tax rate and collection process will not change; only the forms and reporting procedures will be impacted. Rentors should receive notices detailing the changes in the near future.
Localities: The Rental Tax returns for the month of June 2012 will be filed with DMV as usual, and local revenue distributions for the quarter ended June 30, 2012 will be processed by DMV. Beginning with the month of July 2012, the Rental Tax returns and payments will be filed with the Department of Taxation.
Be sure to check our website regularly for updates and details on the Rental Tax changes. If you have any questions, please contact RentaltaxUnit@tax.virginia.gov.
2012 Land Preservation Credit Cap Announced
Beginning with the 2008 calendar year, the $100 million cap for the Land Preservation Tax Credit must be increased to account for inflation. For the 2012 calendar year, the cap for the Land Preservation Tax Credit will be increased to $111,054,000. Tax Bulletin 12-2 explains the new cap amount for 2012.
Advancement of Virginia's Fixed-Date Conformity to the Internal Revenue Code
Under emergency legislation (House Bill 2150; Chapter 4 of the 2013 Acts of Assembly) passed by the 2013 General Assembly and signed by Governor McDonnell on February 15, 2013, Virginia's fixed-date of conformity to the terms of the Internal Revenue Code will advance from December 31, 2011, to January 2, 2013. The legislation extends conformity to the temporary enhancements to the federal earned income tax credit (“EITC”) to Taxable Year 2012, and allows Virginia to conform to the federal American Taxpayer Relief Act of 2012 for Taxable Year 2012. Tax Bulletin 13-3 provides instructions on how to reconcile this legislation with 2012 Virginia income tax returns.
Long-Term Capital Gain Subtraction
Effective for taxable years beginning on or after January 1, 2011, any income taxed as a long-term capital gain for federal income tax purposes, or any income taxed as investment services partnership income (otherwise known as investment partnership carried interest income) for federal tax purposes is allowed as a subtraction on the Virginia return. This subtraction is allowed if the income is attributable to an investment in a “qualified business” as defined in Va. Code § 58.1-339.4 or in any other technology business approved by the Secretary of Technology and the business has its principal office or facility in the Commonwealth and less than $3 million in annual revenues for the fiscal year preceding the investment. The investment must be made between the dates of April 1, 2010, and June 30, 2013.
Manufacturer's Apportionment - Alternative Election
For taxable years beginning on or after July 1, 2011, qualifying manufacturing corporations may elect to determine their Virginia taxable income by using an apportionment formula with a triple-weighted sales factor. A single sales factor apportionment formula will be phased in over a three year period beginning as a triple-weighted sales factor, followed by a quadruple-weighted sales factor, and then a single sales factor for taxable years beginning on and after July 1, 2014. See Schedule 500A instructions for further information and qualifications.
Employer W-2 Electronic Filing Requirements
Employers who furnish 50 or more employee withholding statements during the calendar year must file their W-2 statements electronically. Web Upload is the ONLY accepted method for electronic filing of W-2/1099R statements to VA TAX. Employers with less than 50 employee W-2s may continue to file these on paper; but are encouraged to file electronically also.
Employers required to file W-2s electronically and those with less than 150 employees that choose to file their W-2s electronically must use Web Upload to submit W-2 information to the Department of Taxation. No form of Magnetic Media is accepted.
Pass-Through Entity VK-1 Schedules
The Department of Taxation now 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.
Last Updated 6/14/2013 10:7