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Virginia Lawmakers Approve Penalty Waiver for Late Tax Filings 

Posted on Apr. 27, 2020

The Virginia General Assembly has approved amendments to the state budget that will waive interest penalties for delayed tax filings caused by the COVID-19 pandemic.

On April 22, the legislature approved amendments proposed by Gov. Ralph Northam (D) to H.B. 29 and H.B. 30 that will abate interest on income tax payments made by June 1.

The amendments will also waive interest on late sales tax payments originally due March 20 if a penalty waiver was granted by the state tax department and the payment was submitted by April 20.

The governor said he proposed the changes “to ensure that we are able to respond to the pandemic between now and June 30.”

The state tax department extended the deadline for paying individual and corporate income taxes from April 1 to June 1. However, income tax filing deadlines have not been extended, according to the Virginia Department of Taxation’s website.

In an April 21 letter to Northam, the Council On State Taxation thanked the governor for his amendment to provide interest relief for late payments of income tax due between April 1 and June 1 and for February sales tax payments, and encouraged him to consider further administrative relief via executive order or a special legislative session.

COST also urged the state to conform to provisions of the federal Coronavirus Aid, Relief, and Economic Security Act that are designed to help businesses weather the economic downturn.

Noting that some individuals live in different jurisdictions from where they work, the letter requests that employers be given the option of continuing to treat employees as working at their regular work location for payroll tax purposes, including withholding personal income tax.

The letter also asks the state to clarify that telework required under shelter-in-place requirements won’t trigger nexus for tax purposes in Virginia.

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