Virginia Department of Taxation

Virginia Department of Taxation
What’s New for 2014
(and some helpful tips!)
1
Agenda
• Tips and Tools for Tax Professionals
• New Services and Process Changes
• Legislative Changes
• Forms Changes
• Questions
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Virginia Department of Taxation
Tips and Tools for Tax Professionals
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Tips and Tools for Tax Professionals
For the Information You Need:
Visit us at www.tax.virginia.gov
New in 2014:
Tax Professionals Site
Redesigned
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Tips and Tools for Tax Professionals
Tax Professionals Content Structure
• Tax Preparers and Payroll Service Providers
• Online Filing Services
• Approved e-File Software
• Resources
• Documents and Forms
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Tips and Tools for Tax Professionals
Tax Professional Content Structure
• eFile Developers
– Approved eFile Software
– eFile Documents and Specifications
– Resources
• Substitute Forms
– Resources
– Substitute Forms Specifications
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Tips and Tools for Tax Professionals
Tax Preparers & Payroll Service Providers Content
• New this year!
Guide for Taxable Year 2014 Form Changes
• What’s New for Individual and Business Taxes?
• Legislative Summary Reports
• Early Release Forms
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Tips and Tools for Tax Professionals
Other Key Website Features
• What’s New for Individuals and Businesses
• Laws, Rules & Decisions – a comprehensive,
searchable policy library
• Online Services Page
• “Where’s My Refund?” Check status of
individual income tax refunds
• Contact and mailing information
www.tax.virginia.gov
V I R G I N I A D E PA R T M E N T O F TA X AT I O N 9
Tips and Tools for Tax Professionals
e-Alerts
• Sign up today and stay informed
• Have latest tax information delivered
directly to your email inbox, with
information tailored based on topics you
select
V I R G I N I A D E P A R T M E N T O F T A X A T I O N10
Tips and Tools for Tax Professionals
Individual Income Tax
Avoid Problems and Delays
Has your client received a bill in error? When return and return
payment are not submitted together, sometimes problems arise!
— If return has been filed and payment was not made with filing,
instruct your clients to always use 760PMT or 760PFF voucher
when submitting paper check.
— When submitting payment with 760PMT or 760PFF voucher, always
include SSN and taxable year. If payment is for a joint return,
include each spouse’s SSN on payment voucher.
— Never submit payment with copy of previously filed return. Use
760PMT or 760PFF.
File and pay electronically and reduce errors.
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Tips and Tools for Tax Professionals
Individual Income Tax
Avoid Problems and Delays
• Wondering where your clients’ refunds have gone?
 Verify your clients’ bank account information every year.
Taxpayers frequently close bank accounts and open new
ones! As of October 8, 2014, for calendar year 2014:
23, 857 direct deposit refunds had been
rejected by receiving banks!
 Verify your clients’ addresses every year. Thousands of
paper checks and debit cards are returned each year as
“undeliverable.” Many end up as unclaimed property!
 Let your clients know about Department’s offset programs.
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Tips and Tools for Tax Professionals
Individual Income Tax
Avoid Problems and Delays
• Make sure return is submitted with all required
documentation
– When efiling, always attach the documentation when
prompted by the software!!!!!
– Miscellaneous attachments cannot be identified
systematically and when used to attach required
documents will result in a “missing document” letter
being mailed to your client.
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Tips and Tools for Tax Professionals
Individual Income Tax
Avoid Problems and Delays
• Verify estimated or extension payments to ensure
what is reported matches agency’s records.
• Make sure you use correct addition, subtraction
and deduction codes.
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Tips and Tools for Tax Professionals
Visit us at
www.tax.virginia.gov
Or call
Tax Professionals Hotline
(804) 367-9286
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New Services & Process Changes
New Services &
Process Changes
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New Services & Process Changes
Coming January 2015:
Electronic Pickup of 1099G/INT forms
• Available online at www.tax.virginia.gov by mid-January
2015 for returns filed in 2014
• Taxpayers who checked 1099G box on Taxable Year 2013
return will no longer receive paper 1099Gs. NOTE: All
taxpayers may pick up 1099Gs electronically.
• Taxpayers will be able to enter SSN, FAGI, and other
information to “authenticate.”
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New Services & Process Changes
Coming January 2015:
Electronic Pickup of 1099G/INT forms
Taxpayers unable to access Internet for any reason may
contact the Department. We will provide information, or if
desired, send taxpayer copy of 1099G/INT.
Stop hunting for misplaced paperwork.
Encourage your clients to opt for electronic pickup of
1099G/INT information.
Help us make government more efficient!
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New Services & Process Changes
Introducing 500EZ eForm
New Online Corporate Return Filing Service
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100% of corporation’s business must be in Virginia
Federal taxable income (FTI) cannot exceed $25,000
Total additions to or subtractions from FTI equal $1,000 or less
No NOL deduction for year being filed
No 500CR credits
Corporation is not required to pay Federal Alternative Minimum Tax
Corporation is not required to file Forms 500T or 500EL
(Telecommunications or Electric Cooperatives)
• Corporation does not claim any Fixed Date Conformity Adjustments
Taxpayers who meet above criteria may file using 500EZ eForm.
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New Services & Process Changes
Coming Soon: 502EZ eForm
New Online Pass-Through Entity (PTE) Return Filing Service
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100% of the PTE's business must be in Virginia
100% of the PTE's income must be from Virginia sources
PTE's commercial domicile must be in Virginia
PTE can have no more than 10 owners
PTE may not claim credits or have Fixed Date Conformity
adjustments
• Total income must be $0 to $25,000
• Total additions and total subtractions must each equal or be less
than $1,000
Taxpayers must meet above criteria to file using 502EZ eForm.
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New Services & Process Changes
New Electronic Filing Mandate
Pass-Through Entities (Form 502)
• Beginning on January 1, 2015 (Taxable Year
2014) PTEs will be required to file returns and
make payments electronically.
• Hardship waiver process will be available.
V I R G I N I A D E P A R T M E N T O F T A X A T I O N21
New Services & Process Changes
Handling Tax Returns for Deceased Taxpayers
• If filing a joint return, and only one taxpayer is
deceased:
• Refund check will automatically be issued to the
surviving spouse
• Make sure you indicate correctly which taxpayer is
deceased
• The primary taxpayer is the taxpayer listed first on
the return being filed, regardless of which taxpayer was
listed first on the prior year return.
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New Services & Process Changes
Handling Tax Returns for Deceased Taxpayers
• If the “Personal Representative”, as appointed by
the courts, is signing the return, Form 1310 is not
required:
• The refund check will be made payable to “Estate of”
the decedent
• The Personal Representative may cash or deposit the
check by providing the court appointment papers to
the bank
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New Services & Process Changes
Handling Tax Returns for Deceased Taxpayers
• If no “Personal Representative”, will be
appointed by the courts, use Form 1310 to request
that the refund check be made payable to the
claimant:
• The Form 1310 will be carefully reviewed
• If accepted, the refund check will be made
payable to the claimant
Now under consideration – developing a new Virginia version of the
federal Form 1310 for taxable year 2015 to automate process.
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New Services & Process Changes
Virginia Power of Attorney and Declaration of
Representative (Form PAR 101)
• Form PAR 101 authorizes an individual to
represent a taxpayer before Virginia
Department of Taxation, and to:
—Receive and inspect confidential tax information
—Perform any and all acts taxpayer can perform with
respect to tax matters specified on PAR 101 form
Form must be filled out completely and signed OR it will
be rejected and the taxpayer notified.
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New Services & Process Changes
Virginia Power of Attorney and Declaration of
Representative (Form PAR 101)
• This authority does not include the power
to:
– Receive refund checks
– Substitute another representative
– Sign certain returns
– Consent to disclosure of tax information
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New Services & Process Changes
Virginia Power of Attorney and Declaration of
Representative (Form PAR 101)
Avoid Delays and Rejected Forms
• Register as Authorized Agent in advance. Registration is
required to receive copies of correspondence in
automated manner.
– Complete and submit Form R-7. Form is only to be submitted
once and does not need to accompany each PAR 101.
– Notify the Department if your address changes – provide
your AAN.
– NOTE: AAN is not same as Federal CAF or Enrollment Card
Number.
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New Services & Process Changes
Virginia Power of Attorney and Declaration of
Representative (Form PAR 101)
• To discuss matters regarding a specific
return, PAR 101 may not be required
provided your client indicated on return that
Department was authorized to discuss return
with preparer.
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New Services & Process Changes
Income Tax Treatment of Same-Sex Marriage
(Tax Bulletin 14-7)
• Same-sex couples who are legally married under
any state law may file joint Virginia income tax
returns for Taxable Year 2014.
• Same-sex married couples
may amend Virginia income
tax returns for previous three
taxable years to file joint returns.
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Legislative Changes - Highlights
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Legislative Changes - Highlights
Employer Withholding: Change in Due Date
• Due date for Employer’s Annual Summary of
Virginia Income Tax Withheld (Form VA-6 and Form
VA-6H) along with required wage statements
(Forms W-2 and 1099) has been changed from
February 28 to January 31.
• This will allow for faster and more secure
processing of income tax refunds.
.
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Legislative Changes - Highlights
Conformity to Enhanced Federal Earned Income
Tax Credit (EITC)
• Enhanced EITC increases credit percentage for individuals
with three or more qualifying children and reduces EITC
marriage penalty.
• Legislation extends Virginia’s conformity to enhanced
federal EITC provisions to Taxable Years 2013 through
2017.
• Reference: 2014 HB 1085 & SB 288
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Legislative Changes - Highlights
Individual Income Tax – Taxable Year 2014
• Individuals may designate all or a portion of refunds to be
deposited into one or more 529 Accounts.
• Deposits, along with standard and special contributions, will
be reported on new Schedule VAC.
• See Guide to Taxable Year 2014 Form Changes for details.
• Reference: 2013 HB 2145 & SB 1220
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Legislative Changes - Highlights
Individual Income Tax – Taxable Year 2014
First-Time Home Buyer Savings Accounts
• Bank account may be designated as tax-exempt, first-time
home buyer savings account.
• Distributions from account may only be
used for paying or reimbursing down
payment and allowable closing costs for
purchase of single-family residence in
Virginia by qualified beneficiary.
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Legislative Changes - Highlights
Individual Income Tax – Taxable Year 2014
First-Time Home Buyer Savings Accounts
• Capital gains and interest income attributable to account may be
subtracted (code 54) from Virginia taxable income of account
holder.
– $50,000 of principal may be contributed to account.
– Maximum amount of principal and interest that may be retained in
accounts is limited to $150,000.
– Such subtractions must be recaptured in the taxable year(s) in which
distributions from account are used for non-eligible costs.
•
An addition (code 17) is required for any capital loss related to an account
that was deducted for federal income tax purposes.
•
Reference: 2014 HB 331
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Legislative Changes - Highlights
Corporate Income Tax – Taxable Year 2014
Domestic International Sales Corporations
• Exempts Interest Charged-DISCs from Virginia Corporate
Income Tax
• Shareholders will be subject to Virginia income taxation on
any dividends received from IC-DISC.
• Reference: 2014 HB 480 & SB 515
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Legislative Changes
Long-Term Care Insurance Tax Credit
• Repealed for taxable years beginning on or after
January 1, 2014
• Credit will remain on Schedule CR to allow taxpayers to
claim credits earned in prior years that were carried over
and are still eligible to be used (5-year carryover period)
• Reference 2013 HB 2047
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Legislative Changes
Education Improvement Scholarships Tax Credit
• Taxpayers may now claim credit for taxable year in which
they make monetary or marketable securities donations
to qualified scholarship foundations, instead of claiming
credit for following taxable year.
• Applies to monetary or marketable securities donations
that are made in taxable years beginning on or after
January 1, 2014
• Reference: 2014 SB 269
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Legislative Changes
Other Tax Credit Changes
•
Research and Development Expenses Tax Credits – Increased credit cap
to $6 million and increased amount of credits each taxpayer may claim.
Pass-through entity may now claim credit directly and is not required to
pass credit through to its owners.
•
Motion Picture Production Tax Credit – Increased credit cap to $6.5
million beginning in Fiscal Year 2015.
•
Neighborhood Assistance Tax Credit – Increased credit cap to $16 million
for Fiscal Year 2015 and to $17 million for Fiscal Year 2016. Made various
technical changes to credit.
•
Virginia Port Tax Credits – Increased credit cap for International Trade
Facility Tax Credit to $1.25 million. Reduced credit cap for Barge and Rail
Usage Tax Credit to $500,000. Made various technical changes to credit.
For more details, please refer to agency’s Legislative Summary available at
www.tax.virginia.gov.
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Legislative Changes
Retail Sales and Use Tax
Satellite Television Programming Equipment
• Effective July 1, 2014, imposes RS&UT on separately stated
charges for equipment leased or sold by provider of satellite
television programming to customers of such programming
• Equipment sold to provider of satellite television programming
for subsequent sale or lease to its customers deemed a sale for
resale
Accelerated Sales Tax Phase-Out Continued
• For 2015, applies to dealers with taxable sales of $26 million & up
• For 2016, applies to dealers with taxable sales of $48.5 million & up
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Form Changes
2014 Forms Changes
Highlights
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Form Changes - Highlights
And 60 years later…
42
Form Changes - Highlights
43
Form Changes - Highlights
Guide to Taxable Year 2014 Form Changes
• New for 2014 – available at www.tax.virginia.gov
• Designed for Tax Professionals
• Provides detailed information on legislative changes and
form changes
• Includes tips for preparing returns
• All Taxable Year 2014 annual income tax forms included
Please check it out. We’d like your feedback!
V I R G I N I A D E P A R T M E N T O F T A X A T I O N44
Form Changes - Highlights
Individual Income Tax Form Changes
• Layout changes – SSNs moved next to names
• Filing Status now a code box, no longer checkboxes
• Form 760 – Only one spouse’s VAGI reported for STA
• New line added to report Overpayment Credit for prior year
– separated from estimated payments
• New line for claiming Political Contribution Credit –
separated from credits claimed on the Schedule CR
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Form Changes - Highlights
Individual Income Tax Form Changes
• New field(s) for providing last 5 digits of Virginia driver’s
license number. Not required, will be used as additional
identifier to minimize identity theft.
• Consumer use line moved to main return, from Schedule ADJ
• New Schedule VAC used for voluntary contributions (removed
from Schedule ADJ) and for Virginia College Savings Plan
contributions
• New code for use with Schedule OSC to indicate taxpayer was
part of unified/composite filing in another state
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Form Changes - Highlights
Other Changes
• Form 502 for pass-through entities: New lines added for
credits that may be claimed by PTE instead of being passed
through to owners
• Form 760 Instructions: Booklet layout changed to improve
readability (2 columns per page)
• Updates for taxable year and other routine changes
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Thank you
Questions, Comments & Suggestions
Lee Mikelson
Director, Business and Analytic Services
Lee.mikelson@tax.virginia.gov
804-786-0582
We’d like to hear from you. Let us know how we can improve.
We’re always looking for ways to improve our processes!
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