Virginia Offers Tax Amnesty

The Virginia Department of Taxation is currently running a 62-day amnesty program from September 13, 2017 through November 14, 2017.

Covered Taxes

The amnesty program applies to nearly all taxes administered by the Department of Taxation including, but not limited to, the following:

• Corporate Income Tax
• Individual Income Tax
• Pass-Through Entity Information Return
• Sales and Use Taxes
• Employer Withholding
• Communications Taxes
• Bank Franchise Tax
• Recordation Tax
• Estate and Inheritance Taxes

The eligibility period for the amnesty program varies based on the type of tax. In order to qualify, tax bills must be related to an amnesty eligible period and have an assessment date on or before June 15, 2017, while returns must be applicable to an eligible period.

Benefits and Program Details

• All penalties and one half of interest will be waived.  
• Penalty-only assessments will be waived automatically.
• Most taxpayers who are eligible for amnesty benefits will receive a notice through the mail.
• The entire outstanding balance for a particular tax bill must be paid prior to the conclusion of the amnesty program.
• Taxpayers with pending appeals may receive amnesty benefits; however, amnesty payments for taxes currently under appeal constitute withdrawal of the appeal and waiver of rights to future administrative and judicial appeals.

Ineligible for Amnesty Benefits

Taxpayers are not eligible for amnesty benefits related to:

• Bills and accounts paid before September 13, 2017;
• Bills with an assessment date after June 15, 2017;
• Local tax assessments;
• Tax liabilities of taxpayers under criminal investigation or prosecution for filing a fraudulent return or failing to file a return with the intent to evade tax;
• Tax liabilities involving an active jeopardy or fraud assessment; or
• Tax liabilities attributable to an issue that is the subject of a decision of a Virginia court rendered on or after January 1, 2016, specifically issues presented in Kohl’s Department Stores, Inc. v. Department of Taxation (intangible expenses) and Corporate Executive Board v. Department of Taxation (alternative method of allocation and apportionment). 

Post-Amnesty Penalty

Liabilities eligible for amnesty which remain after the conclusion of the amnesty program will be subject to a 20% post-amnesty penalty. The penalty applies to unpaid taxes (not to outstanding balances of penalties or interest). The 20% post-amnesty penalty will be in addition to all other penalties.

Takeaways

Taxpayers should determine if it may be beneficial to participate in the Virginia amnesty program to resolve their outstanding tax issues.