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2008 Legislative Update Presentation (PPT 88 kb)

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The document summarizes changes to Virginia's income tax laws and forms for 2008. It outlines new requirements for large tax preparers to file electronically unless exceptions apply. It also discusses updates to personal exemptions, filing thresholds, tax credits for biodiesel, military personnel, and more. Changes to business taxes are summarized, including new requirements for pass-through entities to withhold taxes on nonresident owners.

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Virginia Tech 2008 Virginia Department of Taxation www.tax.virginia.gov (804) 367-9286
Virginia Income Tax Highlights 2008
2008 Income Tax HB 678 – Large Preparers – Electronic Filing Eliminates the option for large income tax return preparers ( 100 or more clients ) to file returns using 2D barcoded paper returns. Now all large income tax return preparers must file returns electronically unless the return includes attachments or schedules that cannot be accepted through electronic means.
2008 Income Tax Tax Commissioner may waive the requirement to file electronically if there is undue hardship, or taxpayers may opt out of electronic filing. Tax Preparer hardship waiver form 8454P Taxpayer waiver form 8454T
2008 Income Tax Any forms that cannot be accepted through electronic means may still be filed using the 2D barcode.
2008 Income Tax Current year amended returns can be e-filed.
2008 Income Tax VA’s Individual e-File program will be converted to the Modernized e-File platform (MeF) before the IRS shuts down legacy system in 2012 Target date - January 2010
2008 Income Tax e-File programs for Corporate and PTE returns under development Corporate implementation Spring 2009 PTE implementation Summer 2009
2008 Income Tax HB 912 & SB 582 – IRC Conformity Date Advanced The date is advanced from December 31, 2006 to December 31, 2007 . The advancement allows the benefits of the following acts of Congress to flow through to Virginia taxpayers: Small Business and Work Opportunity Tax Act of 2007 Tax Mortgage Forgiveness Debt Relief Act of 2007; and House Resolution 4118 (Exempts Hokie Spirit Memorial Fund payments) See Tax Bulletin 08-1 for further information
2008 Income Tax Personal Exemption Effective 2008 $900 to $930 Remember: This does not apply to exemptions for age or blindness.
2008 Income Tax Increase for filing thresholds 2008 VAGI Single or Married filing separately $11,250 Joint $22,500
2008 Income Tax HB 238 and SB 286 – Exemption for Launch Services Effective for taxable years beginning on and after January 1, 2008 Exempt gain from the sale of launch services to space flight participants (including training) if the services are performed in Virginia or the launch is from a Virginia airport or spaceport. Also exempt gain on resupply service contracts with the Commercial Orbital Transportation Services division of NASA.
2008 Income Tax HB 139 – Biodiesel and Green Diesel Fuels Credit 1¢ per gallon (up to $5,000) The first three years of production Transferable 3 year carryover
2008 Income Tax HB 1024 - Filing Extensions for Military Personnel The due date for Virginia income tax is extended until 90 days after the completion of the member’s non-combat deployment outside the United States.
2008 Income Tax Neighborhood Assistance Act Credit HB 680 - Automobile Donations SB 700 - Credit Provisions Expanded to include marketable securities
2008 Income Tax Livable Home Tax Credit Effective for taxable year 2008, The Home Accessibility Features for the Disabled Credit was renamed and expanded Applies to purchases of supplies and other items needed to retrofit existing housing or new construction The credit is limited to $500 per taxable year
2008 Income Tax HB 849 – Land Preservation Credit Specifies when a taxpayer is deemed to consent to disclosure of certain tax information when credits are transferred. Also addresses procedural issues affecting pass-through entities similar to IRS procedures, such as the statute of limitations and waivers, audit notice requirements, and participation in administrative proceedings. Amendments are taxpayer-friendly – appeal rights are expanded and made more efficient when credits have been transferred to many taxpayers. 
2008 Income Tax HB 662 – Land Preservation Credit Confidentiality Ensures the confidentiality of the copy of an application for land preservation tax credits filed with the Department of Conservation and Recreation.
Forms Changes for 2008 Form 760 and Other Income Tax Returns A new oval indicates that the return includes pass-through entity withholding taxes, and that a completed VK-1 showing the amount of tax withheld is attached to the return The oval for the Child and Dependent Care deduction has been removed from Line 12 of the handprint (green paper) form. Handprint filers must use Schedule ADJ to claim the deduction
Forms Changes for 2008 Schedule ADJ The Credit for Low Income Individuals has been moved to page 2 Information for amending a return has been removed from the Schedule ADJ. See the return instructions for details.
Business Tax Updates
Household Employers Effective January 1, 2009 Annual filing status for household employers Quarterly wages less than $5,000
Household Employers Registration begins January 1, 2009 By using Form R-1H or By using iReg
Household Employers First payment February 28, 2010 Check website for updates
PTE Withholding Effective January 1, 2008 PTE’s required to withhold tax on behalf of nonresident owners ALL nonresident owners, not just individuals
PTE Withholding Entity Exceptions: Disregarded entities Publicly traded partnerships Hardship cases Unified return filers
PTE Withholding Owner Exceptions: Individuals exempt from paying federal and/or Virginia income tax, including out of state credits. Other entities exempt from federal income tax. Corporations exempt from Virginia income tax. Parties included in a unified return.
PTE Withholding Tax = 5% of owner’s VA taxable income Less- owner’s nonrefundable credits
PTE Withholding Payment due on original filing due date (usually April 15) Automatic extension does not apply Must be at least 90% of final liability
PTE Withholding Use Form 502V to pay with return Use Form 502W to pay tax separately
PTE Withholding Forms Withholding tax will be reconciled on page 2 of Form 502 Tax will be paid on Form 502V or Form 502W 502 and VK-1 will carry codes for exceptions VK-1 will serve as “W-2”
PTE Withholding Forms, cont’d. Income tax forms have been revised to show PTE withholding: 760 760PY 763 770 500 Watch the website for updates! www.tax.virginia.gov
PTE Withholding Penalties will be assessed in the same manner as those for income taxes Extension Late Payment Late filing
PTE Withholding Extension Penalty Payment made by due date Payment less than 90% of actual liability Return filed within extension period
PTE Withholding Extension Penalty, cont’d. 2% per month on tax due with return Applies from due date through date filed Maximum penalty is 12%
PTE Withholding Late Payment Penalty Return filed within extension period Tax due not paid when return filed
PTE Withholding Late Payment Penalty, cont’d. 6% per month on tax due with return Applies from due date, if no tax paid Applies from date filed if a portion of tax paid by the due date Maximum penalty is 30%
PTE Withholding Late Filing Penalty Tax not paid by original due date Return filed after extension period ends Penalty is 30% of tax due with return Extension and late payment penalties do not apply
PTE Withholding PTE withholding penalties are applied in addition to the $1,200 penalty for late filing of Form 502
Thank you www.tax.virginia.gov (804) 367-9286

More Related Content

2008 Legislative Update Presentation (PPT 88 kb)

  • 1. Virginia Tech 2008 Virginia Department of Taxation www.tax.virginia.gov (804) 367-9286
  • 2. Virginia Income Tax Highlights 2008
  • 3. 2008 Income Tax HB 678 – Large Preparers – Electronic Filing Eliminates the option for large income tax return preparers ( 100 or more clients ) to file returns using 2D barcoded paper returns. Now all large income tax return preparers must file returns electronically unless the return includes attachments or schedules that cannot be accepted through electronic means.
  • 4. 2008 Income Tax Tax Commissioner may waive the requirement to file electronically if there is undue hardship, or taxpayers may opt out of electronic filing. Tax Preparer hardship waiver form 8454P Taxpayer waiver form 8454T
  • 5. 2008 Income Tax Any forms that cannot be accepted through electronic means may still be filed using the 2D barcode.
  • 6. 2008 Income Tax Current year amended returns can be e-filed.
  • 7. 2008 Income Tax VA’s Individual e-File program will be converted to the Modernized e-File platform (MeF) before the IRS shuts down legacy system in 2012 Target date - January 2010
  • 8. 2008 Income Tax e-File programs for Corporate and PTE returns under development Corporate implementation Spring 2009 PTE implementation Summer 2009
  • 9. 2008 Income Tax HB 912 & SB 582 – IRC Conformity Date Advanced The date is advanced from December 31, 2006 to December 31, 2007 . The advancement allows the benefits of the following acts of Congress to flow through to Virginia taxpayers: Small Business and Work Opportunity Tax Act of 2007 Tax Mortgage Forgiveness Debt Relief Act of 2007; and House Resolution 4118 (Exempts Hokie Spirit Memorial Fund payments) See Tax Bulletin 08-1 for further information
  • 10. 2008 Income Tax Personal Exemption Effective 2008 $900 to $930 Remember: This does not apply to exemptions for age or blindness.
  • 11. 2008 Income Tax Increase for filing thresholds 2008 VAGI Single or Married filing separately $11,250 Joint $22,500
  • 12. 2008 Income Tax HB 238 and SB 286 – Exemption for Launch Services Effective for taxable years beginning on and after January 1, 2008 Exempt gain from the sale of launch services to space flight participants (including training) if the services are performed in Virginia or the launch is from a Virginia airport or spaceport. Also exempt gain on resupply service contracts with the Commercial Orbital Transportation Services division of NASA.
  • 13. 2008 Income Tax HB 139 – Biodiesel and Green Diesel Fuels Credit 1¢ per gallon (up to $5,000) The first three years of production Transferable 3 year carryover
  • 14. 2008 Income Tax HB 1024 - Filing Extensions for Military Personnel The due date for Virginia income tax is extended until 90 days after the completion of the member’s non-combat deployment outside the United States.
  • 15. 2008 Income Tax Neighborhood Assistance Act Credit HB 680 - Automobile Donations SB 700 - Credit Provisions Expanded to include marketable securities
  • 16. 2008 Income Tax Livable Home Tax Credit Effective for taxable year 2008, The Home Accessibility Features for the Disabled Credit was renamed and expanded Applies to purchases of supplies and other items needed to retrofit existing housing or new construction The credit is limited to $500 per taxable year
  • 17. 2008 Income Tax HB 849 – Land Preservation Credit Specifies when a taxpayer is deemed to consent to disclosure of certain tax information when credits are transferred. Also addresses procedural issues affecting pass-through entities similar to IRS procedures, such as the statute of limitations and waivers, audit notice requirements, and participation in administrative proceedings. Amendments are taxpayer-friendly – appeal rights are expanded and made more efficient when credits have been transferred to many taxpayers. 
  • 18. 2008 Income Tax HB 662 – Land Preservation Credit Confidentiality Ensures the confidentiality of the copy of an application for land preservation tax credits filed with the Department of Conservation and Recreation.
  • 19. Forms Changes for 2008 Form 760 and Other Income Tax Returns A new oval indicates that the return includes pass-through entity withholding taxes, and that a completed VK-1 showing the amount of tax withheld is attached to the return The oval for the Child and Dependent Care deduction has been removed from Line 12 of the handprint (green paper) form. Handprint filers must use Schedule ADJ to claim the deduction
  • 20. Forms Changes for 2008 Schedule ADJ The Credit for Low Income Individuals has been moved to page 2 Information for amending a return has been removed from the Schedule ADJ. See the return instructions for details.
  • 22. Household Employers Effective January 1, 2009 Annual filing status for household employers Quarterly wages less than $5,000
  • 23. Household Employers Registration begins January 1, 2009 By using Form R-1H or By using iReg
  • 24. Household Employers First payment February 28, 2010 Check website for updates
  • 25. PTE Withholding Effective January 1, 2008 PTE’s required to withhold tax on behalf of nonresident owners ALL nonresident owners, not just individuals
  • 26. PTE Withholding Entity Exceptions: Disregarded entities Publicly traded partnerships Hardship cases Unified return filers
  • 27. PTE Withholding Owner Exceptions: Individuals exempt from paying federal and/or Virginia income tax, including out of state credits. Other entities exempt from federal income tax. Corporations exempt from Virginia income tax. Parties included in a unified return.
  • 28. PTE Withholding Tax = 5% of owner’s VA taxable income Less- owner’s nonrefundable credits
  • 29. PTE Withholding Payment due on original filing due date (usually April 15) Automatic extension does not apply Must be at least 90% of final liability
  • 30. PTE Withholding Use Form 502V to pay with return Use Form 502W to pay tax separately
  • 31. PTE Withholding Forms Withholding tax will be reconciled on page 2 of Form 502 Tax will be paid on Form 502V or Form 502W 502 and VK-1 will carry codes for exceptions VK-1 will serve as “W-2”
  • 32. PTE Withholding Forms, cont’d. Income tax forms have been revised to show PTE withholding: 760 760PY 763 770 500 Watch the website for updates! www.tax.virginia.gov
  • 33. PTE Withholding Penalties will be assessed in the same manner as those for income taxes Extension Late Payment Late filing
  • 34. PTE Withholding Extension Penalty Payment made by due date Payment less than 90% of actual liability Return filed within extension period
  • 35. PTE Withholding Extension Penalty, cont’d. 2% per month on tax due with return Applies from due date through date filed Maximum penalty is 12%
  • 36. PTE Withholding Late Payment Penalty Return filed within extension period Tax due not paid when return filed
  • 37. PTE Withholding Late Payment Penalty, cont’d. 6% per month on tax due with return Applies from due date, if no tax paid Applies from date filed if a portion of tax paid by the due date Maximum penalty is 30%
  • 38. PTE Withholding Late Filing Penalty Tax not paid by original due date Return filed after extension period ends Penalty is 30% of tax due with return Extension and late payment penalties do not apply
  • 39. PTE Withholding PTE withholding penalties are applied in addition to the $1,200 penalty for late filing of Form 502