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Virginia State Tax Updates

For the latest news and updates on Virginia state and local tax

April 7, 2021

Virginia Creates Housing Opportunity Tax Credit

For taxable years beginning on and after January 1, 2021 (but before January 1, 2026), Virginia will permit a housing opportunity tax credit that is equal to the amount of the federal low-income housing tax credit. Qualified taxpayers may claim a housing opportunity tax credit against Virginia tax liability prior to reduction by any other credits allowed for the taxpayer. The housing opportunity tax credit may be allocated by pass-through entities to some or all of its partners, members, or shareholders, regardless of whether or not the person is allocated or allowed any portion of any federal low-income housing tax credit. The credit is nonrefundable and can be carried forward up to five years.

April 1, 2021

Virginia Makes Reduction to Eligibility Requirements for Sales Tax Data Center Exemption

Virginia has amended the sales and use tax exemption for data centers in a distressed locality (L. 2021, S1423 (c. 368), effective 07/01/2021). More specifically, the job creation requirement to qualify for the exemption is reduced from 25 to 10 jobs, and the required capital investment is reduced from $150 million to $70 million for data centers that qualify for the reduced jobs requirement. Please consult state regulations for the definition of “distressed locality.” The amendment bill requires all data centers claiming the exemption to report certain information to the Virginia Economic Development Partnership Authority and the Department of Taxation.

March 25, 2021

Virginia Advances Date of Conformity to the Internal Revenue Code, but Decouples from Certain provisions of the CARES Act and CAA

Legislation was enacted to advance Virginia’s date of Internal Revenue Code conformity from December 31, 2019 to December 31, 2020, which allows the State to generally conform to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act (H.R.748) and the Consolidated Appropriations Act, 2021 (H.R.133) (“the CAA”). However, Virginia specifically decouples from three provisions of the CARES Act that: (1) suspend certain net operating loss (“NOL”) limitations for tax years 2018, 2019, and 2020; (2) suspend the excess business loss limitation for tax years 2018, 2019, and 2020; and (3) increase the business interest limitation for tax years 2019 and 2020. Further, Virginia decouples from the provision of the CAA that permanently reduces the medical expense deduction threshold.

March 23, 2021

Virginia Update on Extension of Filing Deadline

The Virginia Department of Taxation announced that the state’s individual income tax filing deadline has been extended to May 17, 2021. Individuals should file and pay by Monday, May 17. This extension does not apply to estimated payments. ( The Virginia individual income tax filing deadline has been extended to May 17, Va. Dept. Taxn., 03/19/2021 .)

March 17, 2021

Required Unitary Group Filing May Be Owed to Virginia by June 1, 2021

Virginia is considering a budget bill (HB 1800, not yet signed) whereby corporations that are members of a unitary business would be required to file a report containing the unitary combined net income of the group with the Virginia Department of Taxation. The report would be based on the 2019 tax year and would include, at a minimum, the difference in tax owed as a result of filing a unitary combined report compared to the tax owed under the current state filing requirements. The potential filing deadline for the report would be June 1, 2021; and the proposed bill sets forth a penalty of $10,000 for any corporation required to submit such report but fails to do so (or if there is a material omission or misstatement in connection with the filing).

April 15, 2020

Income Tax Filings

All income tax filings remain due May 1st; payments have been extended to June 1, 2020.

July 2019

Updated Sales Tax Requirements

Beginning July 1, 2019, marketplace facilitators are now required to collect and remit sales tax if sales total $100,000 or more or have more than 200 sales in the state.

SALT Updates

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