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2006 Legislative Update

2006 Legislative Update. Fixed Date Conformity Extended to 12/31/05. No recognition: Federal bonus depreciation 5 year federal NOL carryback 2001/2002. Changes & Status Quo Taxable year 2006. Virginia Fixed Date Conformity. Conforms to: Fed Energy Tax Incentives Act ‘05

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2006 Legislative Update

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  1. 2006 Legislative Update

  2. Fixed Date Conformity Extended to 12/31/05 No recognition: Federal bonus depreciation 5 year federal NOL carryback 2001/2002 Changes & Status QuoTaxable year 2006

  3. Virginia Fixed Date Conformity • Conforms to: • Fed Energy Tax Incentives Act ‘05 • Katrina Emergency Tax Act ‘05 • Gulf Opportunity Zone Act ’05 • http://www.tax.virginia.gov • Tax bulletin 06-01 (3/16/06)

  4. Tobacco Quota Buyout Payments or Tobacco Transition Program Payments Tobacco Payments related to Settlement Agreements Tobacco Payments 1999 fwd Code 41 New Subtraction Code 48

  5. Tobacco Quota Buyout • No subtraction by individual if claimed by Corp • Unless on VK-1 from S Corp • Limitation: amount included in FAGI

  6. Filers receiving installment payments Subtract payment received preceding year Filers receiving lump sum Subtract 10% of gain recognized for fed purposes, beginning with following year Then 10% each year Tobacco Quota Buyout Payments

  7. Expanded CreditLow Income Individuals • Claim > of ADJ credit OR 20% EITC on federal return • Filers • Nonrefundable • Form 760 Oval New

  8. New CreditLong-Term Care Insurance • 15% of premiums paid in taxable year • 1st 12 months policy coverage • Carry unused credit 5 yrs

  9. New CreditLong-Term Care Insurance Credit if: Premiums deducted for federal or VA purposes - even if some premiums paid for 1st 12 months coverage - must choose between credit and deduction

  10. Voluntary Contributions • Virginia Military Family Relief Fund • New option • Refund or separate payment • Not seen on return • Legal limitation – only 25 options allowed on the return for any given year

  11. Will Appear on Brown v. Board of Education Scholarship Program Fund Form 760 Commonwealth Cancer Centers Voluntary Contributions

  12. Expired Contribut Virginia Transplant council ions Virginia 4-H Foundation Voluntary Contributions

  13. 760 Moved Oval Deceased TP/spouse New Oval EITC on federal Deleted Oval Accelerated Refund 760 Preparer Identification All returns and all preparers FEIN or PTIN or SSN Form Changes

  14. 2007 Upcoming Changes • Subtraction for Certain Death Benefits • Deduction for Certain Tangible Personal Property • Estate Tax Eliminated (Not Fiduciary Income Tax)

  15. Extension Provisions Automatic filing extension- 6 mos 90% PAYMENT STILL REQUIRED

  16. Extension Penalty • 2% per month • Maximum 12% • Interest on any tax balance due

  17. Extension Penalty • Extension ends • Nov 1 for calendar year filer or Date return filed • Whichever is EARLIER

  18. LATE PAYMENT PENALTY • Return can be subject to: 1. Extension Penalty & 2. Late Payment Penalty

  19. LATE PAYMENT PENALTY Filed within extension period & Tax Not paid =Late Payment Penalty

  20. LATE FILING PENALTY • Generally: • Individual after 11/1 • PTE after 10/15 • $200/month • Max$1200 (six months)

  21. New Business Tax 2007 • Virginia Communications Taxes • 5% of service charge • Uniform E-911 • Replaces most local tax and fees • http://www.tax.virginia.gov/CT

  22. PREPARERTIPS & TOOLS • Hotline (804) 367-9286 • New service hrs (phones): 8:00 A.M. – 5:00 P.M. Mon-Fri • http://www.tax.virginia.gov

  23. PREPARERTIPS & TOOLS 2007 Sales Tax Holiday August 3 through 5

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