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Virginia Department of Taxation Presentation to the Virginia Tech Income Tax School 2007. Tax Professionals’ Hotline (804) 367-9286 www.tax.virginia.gov. Virginia Department of Taxation 2007 Legislative Update. Kim Jarvis Felecia Jones. Topics for Review. News you can use

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Virginia Department of Taxation

Presentation to the

Virginia Tech Income Tax School

2007

Tax Professionals’ Hotline (804) 367-9286

www.tax.virginia.gov


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Virginia Department of Taxation 2007 Legislative Update

Kim Jarvis

Felecia Jones


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Topics for Review

  • News you can use

  • Legislative updates

  • Changes to forms

  • Up and Coming

  • Hints

  • Tip and Tools


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Electronic Filing

Thank you! This is Virginia’s first year to surpass 50% electronic filing. Almost seventy percent of the Virginia returns filed electronically were filed by tax preparers. The annual electronic filing increases reported below are a benefit to taxpayers and the Commonwealth alike.


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OUCH !!!

  • Increased direct deposits rejected-bad account numbers

    • Type too fast?

    • Deposit slips?

    • Last Year’s data?

  • Increased returned paper checks on ELF


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2007 Refund Performance

  • 97.36% refunds processed within 12 days

  • 99.69% electronic refunds processed with 12 days

  • 93.5% paper refunds processed within 12 days


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LegislativeUpdates

2007


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Fixed Date Conformity

  • Date moved to December 31, 2006

  • Resulted in changes to Itemized Deductions Worksheet

  • Updated worksheet on our website


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Subtraction for Death Benefits

  • 2006 – House Bill 1535

  • Effective for taxable year 2007

  • Applies to payments from annuity contracts included in FAGI


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Deduction for Certain S Corporation Income

  • Effective for taxable year 2007

  • Applies to income received from S Corp subject to bank franchise tax


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Deduction for Sales Tax PaidEnergy Efficient Items

  • Effective for taxable year 2007

  • Deduction = 20% of sales and use tax paid up to $500 p/tax year

  • Energy efficient equipment/appliances for home use – Virginia Code Section 58.1-322 (D)(12)


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Deduction for Organ / Tissue Donor Expenses

  • Effective for taxable year 2007

  • Unreimbursed expenses up to $5,000

  • Reduced by any amount deducted on federal return


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Agricultural Best Management Practices Credit

  • Provisions expanded for 2007

  • Now includes owners of equine animals that create need for best practices.


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Neighborhood Assistance Credit

  • Credit reduced to 40% of donation

  • New provisions for donations to Schools for Students with Disabilities Funds

  • Virginia Department of Education administers and certifies credits


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Virginia Estate Tax

  • Repealed for date of death on or after July 1, 2007

  • Website updated with detailed information

  • Does not affect fiduciary income tax



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Forms Changes

  • Subtractions and deductions separated

  • Two-digit Subtraction codes

  • Three-digit Deduction codes


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Forms Changes

  • Line 12 = Total deductions

    • Oval for Child Care on Handprint form


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Forms Changes

OSC

  • ALL out-of-state credits must be claimed on OSC


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2007Subtractions vs. Deductions

  • Subtraction = VAGI

  • Deduction = VTI

  • Categories corrected for 2007


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Up and Coming

2008

and

Beyond


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Personal Exemption

  • Effective 2008 :

    $900 to $930


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Filing Threshold

  • Increase for all filing status

  • Phase-in 2008


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Taxable Year 2009

  • Virginia College Savings Plan

  • Livable Home Tax Credit


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Withholding Tax – Monthly Filers

  • Due date changes, effective January 2008

  • New due date is 25th day of following month for ALL months

  • Affects only monthly filers


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Withholding Tax - PTE

  • Effective for taxable year 2008

  • PTE’s must withhold 5% for nonresident owners


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Sales Tax Holidays

  • Two new Holidays added


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Protective Claim Alert Davis v. Kentucky

  • Involves tax treatment of income from other municipalities

  • Virginia has similar provisions

  • U.S. Supreme court will hear case in 2008

  • Could affect taxpayers who have added back income on other states’ obligations on their Virginia returns.


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Protective Claim Alert

Address protective claims to:

Virginia Department of Taxation

Attention: Davis Protective Claims

Post Office Box 760

Richmond, VA 23218-0760


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Protective Claims in General

  • Submit amended return with cover letter

  • Addressed to:

    • Tax Commissioner

      Post Office Box 2475

      Richmond, VA 23219-2475



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TOP 10 ERRORS FROM 2006 RETURNS

  • 1. Change indicators not filled in

  • 2. Social security numbers incorrect or missing

  • 3. Missing schedules

  • 4. Duplicate returns

  • 5. Payment discrepancies


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TOP 10 ERRORS FROM 2006 RETURNS

  • 6. Missing W-2s, or Schedule INC

  • 7. Incorrect amounts claimed for withholding

  • 8. No birth date

  • 9. Itemized deductions

  • 10. Codes omitted




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Hotline Users

  • Commissioners of the Revenue

  • Directors of Finance

  • Treasurers

  • Professional Tax Preparers


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Hotline Telephone Number(804) 367-9286

  • Direct Hotline Number

  • Calls Answered in Order Received

  • Wait Time Less than Regular Call Queue


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Hotline Call Volume

  • 2004 – 2006 Average calls Offered 11,556

  • 2007 Average calls Offered 16,649

  • Percentage Increase 44.07%


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Hotline Services Level

  • 2004-2006 Average Service Level 90.3%

  • 2007 Average Service Level 92.8%


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Hotline Service Level

  • 2004 – 2006 Average Calls Handled 10,435

  • 2007 Average Calls Handled 15,445

  • Percentage Increase 48.01%


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Hotline Staffing

  • 2004 – 2006 Average Staffing Level

    • 2 CRS

    • 1 Team Leader

      TAX ADDED STAFF AT PRACTIONER’S REQUEST

  • 2007 Average Staffing Level

    • 5 CRS

    • 1 Team Leader


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Hotline Benefits

  • Experienced Staff to Answer Questions

  • More Consistent Answers

  • Issues Easier to Identify

  • Escalation Procedure


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Hotline Requirements

  • Return Must be Notated as

    “Discuss with Preparer”

  • Or Tax Account must have Preparer as Power of Attorney (POA)


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Hotline Can

  • Research Account

  • Identify / Resolve Issues

  • Check on Status of Refunds / Mail

  • Help Navigate TAX Web Site

  • Assist with the Code of Virginia


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Hotline Cannot

  • Handle Offer in Compromise (OIC) over the telephone – Must be written request

  • Request Waiver of Penalty and Interest – Must be written request

  • Request Movement of money in Tax Account – Must be written request by Taxpayer


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Hotline Reminder

  • THE HOTLINE IS FOR YOU

    PLEASE USE IT



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Tax Professionals Page

  • What features are helpful ?

  • What features could be improved ?

  • What features could be added ?

  • Other Comments ?

    Password VA_TAX


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DO NOT:

  • SEND ACCOUNT INFORMTION VIA EMAIL

  • ESPECIALLY SSNs OR FEINs


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Website Redesign Project

  • Improve site navigation

  • Update and expand content

  • Initial implementation in January 2008



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Extension Penalty

Extension Penalty

  • To avoid an extension penalty, the filer must pay at least 90% of the final tax liability by the original due date.

  • If this requirement is not met, the return is subject to an extension penalty of 2% per month or part of a month on the tax due with the return, from the original due date through the date of filing.


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Late Payment Penalty

Late payment penalty

  • If the return is filed less than six months after the due date, but the tax is not paid, the late payment penalty will apply from the date the return is filed.

  • The late payment penalty is imposed at the rate of 6% per month or part of a month from the due date, or the date filed on extension, until the date the tax is paid, to a maximum of 30% of the tax due.

  • The late payment penalty is computed and assessed by the Department of taxation.


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Late filing Penalty

Late filing Penalty

  • Late filing penalty on any individual income tax return filed more than six months after the due date at the maximum rate of 30%.

  • A return that is subject to the late filing penalty at the point of initial assessment will not be subject to either the extension penalty or the late payment penalty.


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PTE: Late filing Penalties

  • 6 months from due date

    or

  • 30 days from federal extended due date

  • Late filing voids extension

  • Late filing penalty maximum $1,200




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