United States

Virginia enacts tax amnesty program for fiscal year 2017-18

Department to provide program dates and guidelines at a later time

TAX ALERT  | 

On Feb. 20, 2017, Virginia Gov. McAuliffe signed House Bill 2246, providing for a ‘tax recovery’ period, or tax amnesty program to be held within the next fiscal year. The specific dates to enroll will be determined by the Tax Commissioner at a future time, but will take place between July 1, 2017, and June 30, 2018. The program will run for no less than 60 days and no more than 75 days, as to be determined by the Tax Commissioner.

Pursuant to House Bill 2246, the program is to be administered by the Virginia Department of Taxation and will be available to any taxpayer that is required but has failed to file a return or to pay any tax administered or collected by the department. Taxes administered locally, such as Business, Professional and Occupational License taxes, or BPOL taxes, and business tangible personal property taxes, are not covered under the amnesty.

The primary benefits of the program include waiver of all civil or criminal penalties assessed or assessable, and waiver of 50 percent of the interest assessed or assessable, resulting from nonpayment, underpayment, nonreporting or underreporting of tax liabilities.

No taxpayer currently under investigation or prosecution for filing a fraudulent return or failing to file a return with the intent to evade tax is eligible to participate in the program. No taxpayer is eligible to participate in the program with respect to any assessment outstanding for which the date of assessment is less than 90 days prior to the first day of the program or with respect to any liability arising from the failure to file a return for which the due date of the return is less than 90 days prior to the first day of the program. Amnesty is not available with respect to individual income tax, corporate income tax, or estate and trust tax if that liability is attributable to taxable years beginning on or after Jan. 1, 2016.

Takeaways

Gov. McAuliffe first proposed the tax amnesty program at his December 2016 address to the Joint General Assembly Money Committees. It will be the Commonwealth’s first amnesty program held since 2009. The Tax Commissioner will be establishing further rules and guidelines for the program and may require participants in the program to complete an amnesty application, or other forms, and taxpayers may be required to furnish additional information as required. Virginia taxpayers should speak to their tax advisors to discuss program eligibility and tax planning for the upcoming amnesty.

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