Virginia income taxes
Payments are due after delay for COVID-19 crisis.
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.