Vir­ginia in­come taxes

Pay­ments are due after de­lay for COVID-19 cri­sis.

Richmond Times-Dispatch - - FRONT PAGE - BY MICHAEL MARTZ mmartz@times­dis­patch.com (804) 649-6964

Vir­ginia in­come tax pay­ments were due on Mon­day, as the state tries to fig­ure out how big the hole will be in its bud­get when the fis­cal year ends on June 30.

The state tax dead­line nor­mally lags the date for fil­ing fed­eral in­come taxes, but the coron­avirus cri­sis has turned the fil­ing sea­son up­side down for tax­pay­ers and the ac­coun­tants who ad­vise them.

Fed­eral taxes nor­mally come first, on April 15, but now are due July 15. Gov. Ralph Northam pushed the state dead­line back from May 1 to June 1 to give tax­pay­ers more time, but still al­low col­lec­tion of rev­enues es­sen­tial to bal­anc­ing Vir­ginia’s bud­get as re­quired by the state con­sti­tu­tion.

For cer­ti­fied pub­lic ac­coun­tants, the most im­por­tant ad­vice for tax­pay­ers is “to make sure they un­der­stand the state and fed­eral dead­lines are dif­fer­ent,” said Emily Walker, vice pres­i­dent for ad­vo­cacy at the Vir­ginia So­ci­ety of Cer­ti­fied Pub­lic Ac­coun­tants. “They’re al­ways dif­fer­ent, it’s just this time they’re re­versed.”

Vir­ginia’s dead­line is for tax pay­ments from those who ex­pect to owe the state money. State tax­pay­ers au­to­mat­i­cally have an ex­ten­sion to file their in­come tax re­turns on Nov. 1, but they are re­quired now to pay 90% of what they ex­pect to owe then.

“If you’re a tax­payer who or­di­nar­ily owes, pay at­ten­tion to the dead­line,” Walker said.

Northam de­layed the dead­line for a month and waived any penal­ties. The Gen­eral As­sem­bly voted on April 22 to ap­prove a bud­get amend­ment that the gov­er­nor sought to also waive any in­ter­est charges on late pay­ments.

Still, Vir­ginia tax­pay­ers are ac­cus­tomed to “piggy-back­ing” their state taxes on their fed­eral re­turns, Walker said. “It does def­i­nitely cre­ate a few chal­lenges for Vir­ginia.”

“It’s not ideal, but for the most part CPAs have learned over the years as long as they know what the rules are, they are able to live within them,” she said.

Vir­gini­ans had filed more than 3.3 mil­lion in­di­vid­ual in­come tax re­turns through Satur­day, but tax­pay­ers filed more than 4.2 mil­lion re­turns last year. The state has re­ceived pay­ments from 480,602 tax­pay­ers.

For state gov­ern­ment, the bot­tom line is a con­sti­tu­tional re­quire­ment to bal­ance the bud­get by the end of the fis­cal year, even as a po­ten­tial $1 bil­lion rev­enue short­fall looms be­cause of the eco­nomic fall­out from re­stric­tions on pub­lic life and busi­ness to slow the spread of COVID-19 through Vir­ginia’s pop­u­la­tion.

De­lay­ing the tax dead­line un­til after July 1 “would have re­quired us to make dra­matic bud­get cuts just to bal­ance the bud­get,” Sec­re­tary of Fi­nance Aubrey Layne said Mon­day.

The fed­eral gov­ern­ment does not face a bal­anced bud­get re­quire­ment, and its fis­cal year ends Sept. 30, three months after the con­clu­sion of the state fis­cal year.

“That’s a huge part of the prob­lem and re­ally com­pli­cates things,” Walker said at the CPA so­ci­ety.

Vir­ginia is heav­ily de­pen­dent on the rev­enues it col­lects from April 1 through

June 30 to pay for spend­ing bud­geted through­out the en­tire year. The state col­lects 30% of its rev­enues in the last quar­ter of the fis­cal year.

State rev­enues fell about $700 mil­lion in April, com­pared to the same month a year ago, and they con­tin­ued to de­cline in May, Layne said. But the key to the bud­get gap will be how much in­come taxes that Vir­gini­ans pay in June, es­pe­cially those who don’t with­hold taxes from their pay­checks.

“It’s all about non-with­hold­ing,” Layne said.

Layne

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