The Virginia Tax Amnesty Program begins on September 13, 2017, and runs through November 14, 2017. Individuals and businesses are generally eligible to participate in the Tax Amnesty Program for taxes that are administered or collected by the Department of Taxation. 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 delinquent returns must be applicable to an eligible period under the program. The Department of Taxation lists eligibility periods for corresponding tax types, available here.
Taxpayers who have understated income or overstated exemptions or deductions must file an amended return during the amnesty period and pay any additional tax owed in order to receive amnesty benefits. In exchange for a taxpayer’s payment of outstanding tax liabilities and one half the amount of interest due, the Department of Taxation will waive all penalties and one half of the accrued interest. After November 14, 2017, any tax liability that was eligible for the Tax Amnesty Program but remains unpaid will be subject to a 20% post-amnesty penalty. The penalty applies to unpaid taxes only, not to outstanding balances of penalties or interest. The 20% amnesty penalty will be in addition to all other penalties.
Tax amnesty benefits will not apply to:
- Bills and accounts paid before September 13, 2017;
- Federal tax assessments;
- Local tax assessments;
- Bills with an assessment date after June 15, 2017, (certain exceptions apply for bills issued during the amnesty period;
- All obligations of a taxpayer under criminal investigation or prosecution for filing a fraudulent return or failing to file a return with the intent to evade the tax;
- All obligations of a taxpayer with an active jeopardy or fraud assessment; and
- Any tax liability attributable to an issue that is the subject of a decision of a Virginia court rendered on or after January 1, 2016. This specifically applies to tax liability arising under the issues presented in the following cases:
- Kohl’s Department Stores, Inc. v. Department of Taxation, Case No. 760CL, 12-774 (Cir. Ct, City of Richmond) (February 3, 2016) (regarding intangible expenses under Va. Code § 58.1-402A 8)
- Corporate Executive Board v. Department of Taxation, Case No. CL13-3104 (Cir. Ct., Arlington County (November 30, 2015) (dismissed by Va. S. Ct. June 9, 2016) (regarding alternative method of allocation and apportionment under Va. Code § 58.1-421)
The Department of Taxation published final Tax Amnesty Program guidelines available here. These guidelines include specific program information, examples, and the program’s impact on various special situations taxpayers may be facing.