Virginia Department of Taxation What s New for 2014 (and some helpful tips!) 1
Agenda Tips and Tools for Tax Professionals New Services and Process Changes Legislative Changes Forms Changes Questions 2
Virginia Department of Taxation Tips and Tools for Tax Professionals 3
Tips and Tools for Tax Professionals For the Information You Need: Visit us at www.tax.virginia.gov New in 2014: Tax Professionals Site Redesigned 4
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Tips and Tools for Tax Professionals Tax Professionals Content Structure Tax Preparers and Payroll Service Providers Online Filing Services Approved e-file Software Resources Documents and Forms 6
Tips and Tools for Tax Professionals Tax Professional Content Structure efile Developers Approved efile Software efile Documents and Specifications Resources Substitute Forms Resources Substitute Forms Specifications 7
Tips and Tools for Tax Professionals Tax Preparers & Payroll Service Providers Content New this year! Guide for Taxable Year 2014 Form Changes What s New for Individual and Business Taxes? Legislative Summary Reports Early Release Forms 8
Tips and Tools for Tax Professionals Other Key Website Features What s New for Individuals and Businesses Laws, Rules & Decisions a comprehensive, searchable policy library Online Services Page Where s My Refund? Check status of individual income tax refunds Contact and mailing information www.tax.virginia.gov 9
Tips and Tools for Tax Professionals e-alerts Sign up today and stay informed Have latest tax information delivered directly to your email inbox, with information tailored based on topics you select 10
Tips and Tools for Tax Professionals Individual Income Tax Avoid Problems and Delays Has your client received a bill in error? When return and return payment are not submitted together, sometimes problems arise! If return has been filed and payment was not made with filing, instruct your clients to always use 760PMT or 760PFF voucher when submitting paper check. When submitting payment with 760PMT or 760PFF voucher, always include SSN and taxable year. If payment is for a joint return, include each spouse s SSN on payment voucher. Never submit payment with copy of previously filed return. Use 760PMT or 760PFF. File and pay electronically and reduce errors. 11
Tips and Tools for Tax Professionals Individual Income Tax Avoid Problems and Delays Wondering where your clients refunds have gone? Verify your clients bank account information every year. Taxpayers frequently close bank accounts and open new ones! As of October 8, 2014, for calendar year 2014: 23, 857 direct deposit refunds had been rejected by receiving banks! Verify your clients addresses every year. Thousands of paper checks and debit cards are returned each year as undeliverable. Many end up as unclaimed property! Let your clients know about Department s offset programs. 12
Tips and Tools for Tax Professionals Individual Income Tax Avoid Problems and Delays Make sure return is submitted with all required documentation When efiling, always attach the documentation when prompted by the software!!!!! Miscellaneous attachments cannot be identified systematically and when used to attach required documents will result in a missing document letter being mailed to your client. 13
Tips and Tools for Tax Professionals Individual Income Tax Avoid Problems and Delays Verify estimated or extension payments to ensure what is reported matches agency s records. Make sure you use correct addition, subtraction and deduction codes. 14
Tips and Tools for Tax Professionals Visit us at www.tax.virginia.gov Or call Tax Professionals Hotline (804) 367-9286 15
New Services & Process Changes New Services & Process Changes 16
New Services & Process Changes Coming January 2015: Electronic Pickup of 1099G/INT forms Available online at www.tax.virginia.gov by mid-january 2015 for returns filed in 2014 Taxpayers who checked 1099G box on Taxable Year 2013 return will no longer receive paper 1099Gs. NOTE: All taxpayers may pick up 1099Gs electronically. Taxpayers will be able to enter SSN, FAGI, and other information to authenticate. 17
New Services & Process Changes Coming January 2015: Electronic Pickup of 1099G/INT forms Taxpayers unable to access Internet for any reason may contact the Department. We will provide information, or if desired, send taxpayer copy of 1099G/INT. Stop hunting for misplaced paperwork. Encourage your clients to opt for electronic pickup of 1099G/INT information. Help us make government more efficient! 18
New Services & Process Changes Introducing 500EZ eform New Online Corporate Return Filing Service 100% of corporation s business must be in Virginia Federal taxable income (FTI) cannot exceed $25,000 Total additions to or subtractions from FTI equal $1,000 or less No NOL deduction for year being filed No 500CR credits Corporation is not required to pay Federal Alternative Minimum Tax Corporation is not required to file Forms 500T or 500EL (Telecommunications or Electric Cooperatives) Corporation does not claim any Fixed Date Conformity Adjustments Taxpayers who meet above criteria may file using 500EZ eform. 19
New Services & Process Changes Coming Soon: 502EZ eform New Online Pass-Through Entity (PTE) Return Filing Service 100% of the PTE's business must be in Virginia 100% of the PTE's income must be from Virginia sources PTE's commercial domicile must be in Virginia PTE can have no more than 10 owners PTE may not claim credits or have Fixed Date Conformity adjustments Total income must be $0 to $25,000 Total additions and total subtractions must each equal or be less than $1,000 Taxpayers must meet above criteria to file using 502EZ eform. 20
New Services & Process Changes New Electronic Filing Mandate Pass-Through Entities (Form 502) Beginning on January 1, 2015 (Taxable Year 2014) PTEs will be required to file returns and make payments electronically. Hardship waiver process will be available. 21
New Services & Process Changes Handling Tax Returns for Deceased Taxpayers If filing a joint return, and only one taxpayer is deceased: Refund check will automatically be issued to the surviving spouse Make sure you indicate correctly which taxpayer is deceased The primary taxpayer is the taxpayer listed first on the return being filed, regardless of which taxpayer was listed first on the prior year return. 22
New Services & Process Changes Handling Tax Returns for Deceased Taxpayers If the Personal Representative, as appointed by the courts, is signing the return, Form 1310 is not required: The refund check will be made payable to Estate of the decedent The Personal Representative may cash or deposit the check by providing the court appointment papers to the bank 23
New Services & Process Changes Handling Tax Returns for Deceased Taxpayers If no Personal Representative, will be appointed by the courts, use Form 1310 to request that the refund check be made payable to the claimant: The Form 1310 will be carefully reviewed If accepted, the refund check will be made payable to the claimant Now under consideration developing a new Virginia version of the federal Form 1310 for taxable year 2015 to automate process. 24
New Services & Process Changes Virginia Power of Attorney and Declaration of Representative (Form PAR 101) Form PAR 101 authorizes an individual to represent a taxpayer before Virginia Department of Taxation, and to: Receive and inspect confidential tax information Perform any and all acts taxpayer can perform with respect to tax matters specified on PAR 101 form Form must be filled out completely and signed OR it will be rejected and the taxpayer notified. 25
New Services & Process Changes Virginia Power of Attorney and Declaration of Representative (Form PAR 101) This authority does not include the power to: Receive refund checks Substitute another representative Sign certain returns Consent to disclosure of tax information 26
New Services & Process Changes Virginia Power of Attorney and Declaration of Representative (Form PAR 101) Avoid Delays and Rejected Forms Register as Authorized Agent in advance. Registration is required to receive copies of correspondence in automated manner. Complete and submit Form R-7. Form is only to be submitted once and does not need to accompany each PAR 101. Notify the Department if your address changes provide your AAN. NOTE: AAN is not same as Federal CAF or Enrollment Card Number. 27
New Services & Process Changes Virginia Power of Attorney and Declaration of Representative (Form PAR 101) To discuss matters regarding a specific return, PAR 101 may not be required provided your client indicated on return that Department was authorized to discuss return with preparer. 28
New Services & Process Changes Income Tax Treatment of Same-Sex Marriage (Tax Bulletin 14-7) Same-sex couples who are legally married under any state law may file joint Virginia income tax returns for Taxable Year 2014. Same-sex married couples may amend Virginia income tax returns for previous three taxable years to file joint returns. 29
Legislative Changes - Highlights 30
Legislative Changes - Highlights Employer Withholding: Change in Due Date Due date for Employer s Annual Summary of Virginia Income Tax Withheld (Form VA-6 and Form VA-6H) along with required wage statements (Forms W-2 and 1099) has been changed from February 28 to January 31. This will allow for faster and more secure processing of income tax refunds.. 31
Legislative Changes - Highlights Conformity to Enhanced Federal Earned Income Tax Credit (EITC) Enhanced EITC increases credit percentage for individuals with three or more qualifying children and reduces EITC marriage penalty. Legislation extends Virginia s conformity to enhanced federal EITC provisions to Taxable Years 2013 through 2017. Reference: 2014 HB 1085 & SB 288 32
Legislative Changes - Highlights Individual Income Tax Taxable Year 2014 Individuals may designate all or a portion of refunds to be deposited into one or more 529 Accounts. Deposits, along with standard and special contributions, will be reported on new Schedule VAC. See Guide to Taxable Year 2014 Form Changes for details. Reference: 2013 HB 2145 & SB 1220 33
Legislative Changes - Highlights Individual Income Tax Taxable Year 2014 First-Time Home Buyer Savings Accounts Bank account may be designated as tax-exempt, first-time home buyer savings account. Distributions from account may only be used for paying or reimbursing down payment and allowable closing costs for purchase of single-family residence in Virginia by qualified beneficiary. 34
Legislative Changes - Highlights Individual Income Tax Taxable Year 2014 First-Time Home Buyer Savings Accounts Capital gains and interest income attributable to account may be subtracted (code 54) from Virginia taxable income of account holder. $50,000 of principal may be contributed to account. Maximum amount of principal and interest that may be retained in accounts is limited to $150,000. Such subtractions must be recaptured in the taxable year(s) in which distributions from account are used for non-eligible costs. An addition (code 17) is required for any capital loss related to an account that was deducted for federal income tax purposes. Reference: 2014 HB 331 35
Legislative Changes - Highlights Corporate Income Tax Taxable Year 2014 Domestic International Sales Corporations Exempts Interest Charged-DISCs from Virginia Corporate Income Tax Shareholders will be subject to Virginia income taxation on any dividends received from IC-DISC. Reference: 2014 HB 480 & SB 515 36
Legislative Changes Long-Term Care Insurance Tax Credit Repealed for taxable years beginning on or after January 1, 2014 Credit will remain on Schedule CR to allow taxpayers to claim credits earned in prior years that were carried over and are still eligible to be used (5-year carryover period) Reference 2013 HB 2047 37
Legislative Changes Education Improvement Scholarships Tax Credit Taxpayers may now claim credit for taxable year in which they make monetary or marketable securities donations to qualified scholarship foundations, instead of claiming credit for following taxable year. Applies to monetary or marketable securities donations that are made in taxable years beginning on or after January 1, 2014 Reference: 2014 SB 269 38
Legislative Changes Other Tax Credit Changes Research and Development Expenses Tax Credits Increased credit cap to $6 million and increased amount of credits each taxpayer may claim. Pass-through entity may now claim credit directly and is not required to pass credit through to its owners. Motion Picture Production Tax Credit Increased credit cap to $6.5 million beginning in Fiscal Year 2015. Neighborhood Assistance Tax Credit Increased credit cap to $16 million for Fiscal Year 2015 and to $17 million for Fiscal Year 2016. Made various technical changes to credit. Virginia Port Tax Credits Increased credit cap for International Trade Facility Tax Credit to $1.25 million. Reduced credit cap for Barge and Rail Usage Tax Credit to $500,000. Made various technical changes to credit. For more details, please refer to agency s Legislative Summary available at www.tax.virginia.gov. 39
Legislative Changes Retail Sales and Use Tax Satellite Television Programming Equipment Effective July 1, 2014, imposes RS&UT on separately stated charges for equipment leased or sold by provider of satellite television programming to customers of such programming Equipment sold to provider of satellite television programming for subsequent sale or lease to its customers deemed a sale for resale Accelerated Sales Tax Phase-Out Continued For 2015, applies to dealers with taxable sales of $26 million & up For 2016, applies to dealers with taxable sales of $48.5 million & up 40
Form Changes 2014 Forms Changes Highlights 41
Form Changes - Highlights And 60 years later 42
Form Changes - Highlights 43
Form Changes - Highlights Guide to Taxable Year 2014 Form Changes New for 2014 available at www.tax.virginia.gov Designed for Tax Professionals Provides detailed information on legislative changes and form changes Includes tips for preparing returns All Taxable Year 2014 annual income tax forms included Please check it out. We d like your feedback! 44
Form Changes - Highlights Individual Income Tax Form Changes Layout changes SSNs moved next to names Filing Status now a code box, no longer checkboxes Form 760 Only one spouse s VAGI reported for STA New line added to report Overpayment Credit for prior year separated from estimated payments New line for claiming Political Contribution Credit separated from credits claimed on the Schedule CR 45
Form Changes - Highlights Individual Income Tax Form Changes New field(s) for providing last 5 digits of Virginia driver s license number. Not required, will be used as additional identifier to minimize identity theft. Consumer use line moved to main return, from Schedule ADJ New Schedule VAC used for voluntary contributions (removed from Schedule ADJ) and for Virginia College Savings Plan contributions New code for use with Schedule OSC to indicate taxpayer was part of unified/composite filing in another state 46
Form Changes - Highlights Other Changes Form 502 for pass-through entities: New lines added for credits that may be claimed by PTE instead of being passed through to owners Form 760 Instructions: Booklet layout changed to improve readability (2 columns per page) Updates for taxable year and other routine changes 47
Thank you Questions, Comments & Suggestions Lee Mikelson Director, Business and Analytic Services Lee.mikelson@tax.virginia.gov 804-786-0582 We d like to hear from you. Let us know how we can improve. We re always looking for ways to improve our processes! 48