Tax Type
Individual Income Tax
Description
OPERATION DESERT STORM
Topic
Collection of Delinquent Tax
Collection of Tax
Returns and Payments
Date Issued
04-01-1991
Tax Bulletin 91-3
OPERATION DESERT STORM
Governor Wilder has signed into law emergency legislation (HB 1698 and SB 791) to provide extensions and Other tax benefits to members of the armed forces and civilian support personnel serving in Operations Desert Shield and Desert Storm, as well as to members of the National Guard and military reservists called to active federal duty during the conflict.
This bulletin provides an Overview of these benefits, however, more detailed guidelines for taxpayers, tax practitioners, and local tax officials will be published shortly.
Desert Shield / Combat Zone Personnel
- Extensions: Military and civilian support personnel in the Middle East "combat zone" as designated by the President or who were in "Desert Shield service" prior to the designation of the combat zone will receive:
- the same individual income tax filing and payment extension as they receive for federal purposes, plus an additional 15 days, OR
- a 1-year extension (until May 1, 1992 for 1990 returns), whichever is later.
- Combat pay: Combat pay will be excluded from Virginia tax to the same extent it is excluded from federal tax (currently, enlisted personnel receive a total federal exclusion, while officers receive a $500 per month exclusion).
- Estimated tax: Estimated tax declarations and installment payments are not required during the period an individual enjoys the filing and payment extension above.
- Penalty and interest: Penalty and interest will not accrue during the extension period above. In addition, collection activities will be withheld during the period and the period of limitations for administrative and judicial remedies for appealing tax assessments will be extended. "DESERT STORM" should be written on any notice issued to combat zone personnel regarding tax collection or examination and the notice should be returned to the Department of Taxation.
- Refunds: Individuals may still file early to receive a refund; however, the extension will also expand the normal 3-year time limit for seeking individual income tax refunds. Also, like federal law, interest will be paid On 1990 refund returns filed by Desert Shield/Desert Storm personnel after May 1, 1991.
- Combat death: Again like federal law, current-year Virginia income taxes and all outstanding assessments for prior years will be waived if a member of the armed forces dies in a combat zone. Similar relief is also provided, consistent with federal law, for civilian and military employees of the United States who die in terroristic or military actions.
National Guard Members and Military/ Reservists Not in the Combat Zone
- Extension: The new Virginia law goes much further than federal law by granting an automatic 1 -year filing and payment extension for 1990 individual income tax returns for members of the National Guard and military reservists who were called into active federal service, regardless Of where they were stationed.
- To qualify, the National Guard member or reservist must be in active federal service on the due date of the return (May 1, 1991, unless filing on a fiscal year basis).
- Individuals using this extension should write "ACTIVE DUTY RESERVIST" at the top of their return and on the envelope.
- Estimated tax: Estimated tax declarations and payments will not be required during the period that a National Guard member or reservist enjoys the above extension.
- Refunds: Returns may still be filed early in order to receive refunds; however, interest will be paid on 1990 refund returns filed by active duty National Guard members or reservists after May 1, 1991.
Other Military Personnel
- Generally: Other benefits are available to members of the armed forces who did not serve in the combat zone, but who were outside the United States.
- Extensions: Any individual, including a member of the armed services, outside the United States or Puerto Rico on the due date of his or her return receives an automatic 2-month filing and payment extension to July 1, 1991. In addition, the Department of Taxation will grant an additional 6-month extension (until January 1, 1992) to any serviceman stationed Outside the United States and Puerto Rico, provided he Or she files an extension request and pays the tentative tax by July 1, 1991.
- Estimated tax: The due date for filing the final 1990 estimated payment has been extended from January 15, 1 991 to July 1, 1991.
Spouses
- Extensions apply equally to members of the armed forces and their spouses. However, service families may still wish to file early to receive refunds. If it is not possible to obtain a signed power of attorney form from a spouse in the combat zone, the Department of Taxation will accept a written statement that the husband or wife is serving in the zone and that the return is being filed on his or her behalf.
Collection Action
- The federal Soldiers and Sailors Relief Act Of 1940 provides for the deferral Of tax liabilities for military personnel in their first tour of duty, provided they request relief from interest accrual and collection and show that their ability to pay is "materially impaired" by military service. Virginia will follow the federal guidelines in determining "material impairment."
Rulings of the Tax Commissioner