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2020 SESSION

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HB 1220 Income tax, state; amended return notice, interest accrual period.

Introduced by: Kathy K.L. Tran | all patrons    ...    notes | add to my profiles | history

SUMMARY AS PASSED HOUSE:

State income tax; amended return notice; interest accrual period. Provides that if the Department of Taxation is made aware that a taxpayer is required to file an amended federal income tax return, the Department would be required to notify such taxpayer in writing regarding whether an amended Virginia income tax return is also required to be filed. This requirement would apply with respect to taxpayers subject to the individual income tax, corporate income tax, and the income tax imposed on estates and trusts. This bill would give the Department the discretion to waive interest due on an underpayment of income taxes or the pass-through entity nonresident withholding tax if a return was submitted in good faith and the understatement of the amount in the return was not due to any fault of the taxpayer. Under current law, the Department is required to waive any applicable penalties in this situation, but does not have the authority to waive interest.

SUMMARY AS INTRODUCED:

State income tax; amended return notice; interest accrual period. Provides that any taxpayer who is required to file an amended federal income tax return shall receive written notice from the Department of Taxation whether such requirement also requires the taxpayer to file an amended state tax return with the corresponding updated information. This written notice shall detail the amount of additional taxes owed by the taxpayer, if any, as a result of the amended federal filing and the amount of overpayment that shall be refunded to the taxpayer, if any, or a request for the taxpayer's information needed by the Department to compute the amount of additional taxes owed or to be refunded. The bill shortens the interest accrual period for good faith state income tax return filings with understatements of the amount owed to the period from the time a bill and notice of additional tax assessment is mailed by the Department of Taxation to a taxpayer until such assessment is paid. Current law defines the interest accrual period as from the time the return was required by law to be filed until paid.