Bulletin Number
VTB 98-2
Tax Type
Corporation Income Tax
General Provisions
Description
Payment of tax; Electronic funds transfer
Topic
Returns and Payments
Date Issued
03-16-1998
PAYMENT OF TAXES BY ELECTRONIC FUNDS TRANSFER
IS NOW MANDATORY
FOR SOME BUSINESS TAXPAYERS
The 1997 General Assembly passed legislation (House Bill 2900, Chapter 193, Acts of Assembly) which allows the Tax Commissioner to require certain business taxpayers to pay their state taxes by electronic funds transfer (EFT). This requirement applies to business taxpayers paying corporate income tax, retail sales and use tax, and withholding tax. If a taxpayer's average monthly liability exceeds $20,000, the taxpayer is required to remit that tax by EFT.
The $20,000 monthly liability threshold applies separately to each tax. For example, if a taxpayer's average monthly withholding tax liability exceeds $20,000, but the taxpayer's average monthly liability for corporate income tax and sales and use tax does not, the taxpayer is only required to remit withholding taxes by electronic funds transfer. Taxpayers may voluntarily choose to pay any of these three types of taxes by EFT even if they are not mandated.
The Department met with various industry representatives and interested parties to obtain input for developing the guidelines to determine which taxpayers are required to pay by EFT.
Identification of Mandatory Electronic Funds Transfer Taxpayers
Withholding Tax: In March, the Department initially identified and is notifying those taxpayers currently filing withholding tax returns having an average monthly liability exceeding $20,000. The return filing period of July 1996 through June 1997 was used to identify those taxpayers. Qualified taxpayers will be required to make EFT payments beginning with their July 1998 payment.
After the initial notification, the Department will identify and notify additional mandatory withholding taxpayers every November. The return filing period of July through June will be used to identify those taxpayers. Qualifying taxpayers will be required to make EFT payments beginning with their January payment.
Withholding tax accounts identified as mandatory EFT filers for tax year 1998 will be sent two VA-16 forms in May. For tax year 1999 and future tax years, mandatory EFT filers will receive new withholding tax coupon booklets containing four VA-16s and one VA-6.
Sales and Use Tax: In March, the Department initially identified and is notifying those taxpayers currently filing sales and use tax returns having an average monthly liability exceeding $20,000. The return filing period of January 1997 through December 1997 was used to identify those taxpayers. Qualified taxpayers will be required to make EFT payments beginning with the August 1998 payment made for the July 1998 return.
After the initial mandatory EFT notification, the Department will identify and notify additional mandatory EFT sales and use taxpayers every May. The return filing period of January through December will be used to identify those taxpayers. Qualified taxpayers will be required to make EFT payments beginning with the August payment made for the July return.
Mandatory and voluntary EFT taxpayers will continue to get sales and use tax coupon booklets since these taxpayers are required to file returns when they make EFT payments.
Corporate Income Tax: Corporate income tax accounts will be examined in March,1998 to identify those taxpayers who meet the monthly average $20,000 threshold. To determine if a corporation meets the $20,000 monthly criteria, the annual net tax liability will be divided by twelve.
Following the initial determination in 1998, the Tax Department will evaluate additional calendar corporate accounts every January, with the first EFT payment becoming due in April. Fiscal corporate accounts will be evaluated each month with their first EFT payment becoming due three and one half months from their fiscal year end.
Taxpayers are encouraged to begin making EFT payments as soon as they are registered for EFT in order to ensure a smooth transition by the required due date.
For additional information: Contact the Office of Customer Services, Virginia Department of Taxation, P. O. Box 1115 Richmond, Virginia 23218 1115, (804) 367-8037.
Tax Bulletins