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09/14/17


Virginia Tax Amnesty: If You Owe This is Your Chance to Get Current Or Suffer Penalties

By: Michael Y. Goldberg

Related Attorney(s): David S. De JongEric J. RollingerMark W. SchweighoferJeremy M. Vaida

Media Type: Alert

Earlier this year, Governor Terry McAuliffe signed into law House Bill 2246 providing for a Tax Amnesty program for those with delinquent tax issues in the Commonwealth. Virginia is the sixth state to offer a tax amnesty program in 2017. They have become popular as “win-win” programs that help raise money for the state and give delinquent taxpayers huge breaks to get current. The program takes place from now until November 14, 2017 and applies to all personal and business taxes. Given the short window for the program, it is important that you act quickly if you wish to participate. 

The Benefits


The program authorizes the Tax Commissioner to waive all of the assessed or assessable civil or criminal penalties and half of the interest. Penalties can be severe. For example, a 30 percent penalty applies to both the civil late filing penalty and the civil late payment penalty. If you participate in the program, you will receive a full waiver of these huge penalties and half of the interest.

To further incentivize participation in the program, there will be an added 20 percent penalty, in addition to the normal penalties noted above, for those with amnesty-qualified liabilities who do not participate.  Therefore, if you are eligible to participate, and do not do so, liabilities will grow as a result of nonparticipation. Accordingly, it is extremely important to take action now. 

Partial Participation


For the full benefit of amnesty, all principal and half of the interest must be paid during the amnesty period. However, even if you cannot pay the full amount, amnesty can apply in part. You would not be required to satisfy all outstanding bills and delinquent returns in order to participate. However, you would need to be careful in how you submit amnesty payments as, if you do not specifically direct payments, Virginia will apply them to their smallest amnesty balances first. Remaining periods will be subject to the added 20 percent penalty if an installment agreement is not set up during the amnesty period. Thus, if you cannot pay all balances, it will be important to strategize as to which periods should be paid in full. 

 

Eligibility


Most individuals and businesses may participate in the Amnesty program, even if there was participation in a prior amnesty. Examples of eligible taxes include income taxes, sales and use taxes, withholding taxes and converted assessments on responsible officers (VA withholding). If you already owe Virginia you will receive a notice from the Department of Taxation of eligible periods. If you do not have an outstanding balance, you will not receive notice and you must move proactively in order to take advantage of the program’s benefits. 

Stein Sperling attorneys are well versed on the Virginia Amnesty program. Please call a member of our tax law department at 301-340-2020 to discuss how this program might benefit you.


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