In early 2015, Virginia passed House Bill 1400, legislation that requires retailers/dealers with sales and/or purchases totaling $2.5 million dollars or more in the 12-month period ending June 30, 2015 to submit accelerated sales and use tax payments in June 2016. Determining whether a retailer/dealer owes an accelerated payment involves a calculation of aggregate sales and purchases for all business locations. Whether a retailer/dealer files separate, combined, or consolidated returns does not impact this determination.
Retailers/dealers impacted by this legislation must pay 90% of the sales tax owed for the month of June 2015, less any dealer discounts and prepaid wireless fees. Electronic payments will be due June 30, 2016, and payments made by check must be postmarked on or before June 27, 2016. Retailers/dealers should pay any difference between the accelerated payment and actual liability for the month by July 20, 2016. If there is any overpayment, it will be refunded.
Penalties
Failure to comply with the time and payment requirements of the Accelerated Sales and Use Tax provisions will result in a penalty of 6% of tax underpayment. No other penalty for delinquent returns or payments will apply. False or fraudulent returns carry a penalty of 50% of the tax amount originally due.
Hardship
In the event of undue hardship resulting from the accelerated payment obligation, in individual circumstances, the Virginia Tax Commissioner may waive the requirement or allow a taxpayer to pay a lesser amount. Taxpayers must request a waiver from the Tax Commissioner in writing, demonstrating the nature of the hardship with documentation and financial records. In cases of proven undue hardship, the Tax Commissioner may allow the taxpayer to make an accelerated payment of only 90% of the taxpayer’s average monthly tax liability for the first quarter of the year. Further information on undue hardship can be found on the Virginia Tax Commissioner website.