Corporate Income Tax and Pass-Through Entity Income Tax

Corporate Income Tax and Pass-Through Entity Income Tax returns for the taxable year ending on November 30, 2012 must be filed on or before March 15, 2013. Even though Virginia law provides for an automatic six-month extension, it is an extension to file, not an extension to pay. At least 90 percent of the total tax liability for the taxable year must be paid on or before the due date of the return. Visit the Department's website for more information.

The automatic six-month extension to file Corporate Income Tax returns for the taxable year ending on May 31, 2012 ends on March 15, 2013.   In order to take advantage of Virginia's automatic extension, the return must be filed on or before the end of the extension period.

Sales Tax

Monthly Sales Tax returns and payments for the month of February 2013 are due on March 20, 2013. Remember, if your client files any of the below returns, a filing is required even if no tax is due (except for the Business Consumer Use Tax, CU-7).

• Retail Sales Tax Returns (ST-9 and ST-9CO) - Monthly filers are required to file and pay electronically.
• Out of State Dealer's Use Tax Return (ST-8)
• Communications Tax Return (CT-75)
• Digital Media Fee Return (DM-1)
• Business Consumer Use Tax Return (ST-7)
• Vending Machine Dealer's Sales Tax Return (VM-2)
• Motor Vehicle Fuel Sales Tax Return (FT-102)
• Public Facilities Sales Tax Return (PF-1)
• Watercraft Sales and Use Tax Return (WCT-2)
• Aircraft Sales and Use Tax Return (AST-2)
• Motor Vehicle Rental Tax and Fee Return (MVR-420) 

Employer Withholding Tax

Employers who file Employer Withholding Tax returns and payments monthly must file their February 2013 return and payment on or before March 25, 2013.  Remember, if your client is required to file, a return is required even if no tax is due.

File your clients' returns and submit their payments electronically.

Visit the Department's website for more information on electronic filing.  The Department offers eForms, Business iFile, Web Upload and other Online Services. 

Corporate Income Tax

The 2012-2014 Appropriations Act (Item 273 of House Bill 1301, 2012 Special Session I, Chapter 3) requires all corporations to file their estimated tax payments, annual income tax returns, and final payments electronically, beginning on January 1, 2013.  This includes Taxable Year 2012 returns, tax due payments, and extension payments, as well as Taxable Year 2013 estimated payments.

• The annual Corporate Income Tax return must be filed through the Federal/State e-File program, which is supported by numerous commercial software applications. For a list of approved commercial e-File software and more information regarding electronic filing, visit the Corporate Income Tax page of the Department's website.
   
• Tax due payments can be made through the e-File system as a direct debit or by an ACH Credit transaction initiated through the corporation's bank.
   
• The Department provides two secure online options for electronically submitting estimated and extension payments: e-Forms and Business iFile. For more information regarding these payments and to determine the method that works best for you visit "Extensions and Estimated Payments" on the Corporate Income Tax page of the Department's website.  Estimated tax payments and extension payments can also be submitted by an ACH Credit. 

If you have clients that are unable to meet these requirements by the effective date, you may request a hardship waiver on behalf of any affected client.  In cases involving multiple clients, the preparer can submit one Waiver Request Form for all of the affected clients by attaching a list of the corporations' names and FEINs, and indicating whether the preparer has a Power of Attorney on file for each client with the Department.

PTE

Even though there is no VK-1 electronic filing requirement, you may submit your clients' VK-1s electronically using Web Upload. Simply upload your clients' electronically-stored VK-1 data; there is no printing, packing, and mailing of paper documents when using Web Upload.  You can even submit all of your clients' files in one easy upload. Form 502 and Schedules 502ADJ and 502A must still be filed on paper.  When submitting the VK-1s electronically, simply mark the "VK-1s filed by Web Upload" box on Form 502, so that the electronic VK-1s and paper Form 502 will be associated during processing.

Sales Tax

Quarterly Retail Sales and Use Tax Returns (ST-9 and ST-9CO) are required to be filed and paid electronically beginning with the July - September 2013 return, which is due on October 21, 2013.  Review and compare the various online filing options for submitting return and payment information to determine which electronic filing system best meets your needs. Taxpayers unable to file and pay electronically by the effective date may request a hardship waiver.

As a general rule, pass-through entities are required to withhold tax on the Virginia taxable income that they pass through to their nonresident owners.  The Department offers the following tips for reporting your clients' pass-through entity withholding taxes on Form 502: 

• The tax payment for Taxable Year 2012 is due on or before April 15, 2013 for any pass-through entity that files on a calendar year basis, even if the entity takes advantage of the automatic six-month filing extension for its Form 502.

• The tax is reported and reconciled on Page 2, Section 1, of Form 502.

• • On Line 1, enter the total tax actually withheld for nonresident owners.  Do not include tax amounts that would have been withheld for owners who are exempt from the withholding requirement or personal estimated tax payments made by the owners themselves.
  • Line 2 must be completed if the Form 502 is being filed after the original due date (April 15 for calendar year filers).  Use this line to report the tax that was paid prior to filing Form 502.
  • Line 3 will reflect an overpayment if the payment amount on Line 2 is greater than the tax liability reported on Line 1.  If Line 2 is less than Line 1, enter the balance of tax due on Line 4.
  • If the return is filed after April 15 and the amount of tax due reported on Line 4 represents more than 10 percent of the total tax liability reported on Line 1, the entity may be subject to a penalty. 

For complete information on the withholding requirements for pass-through entities, see the Instructions for Form 502 on the Department's website.

Below are some of the more common problems that the Department encounters with corporate income tax returns.

• Use the proper return based on the entity type. Corporations should file Form 500, whereas a  pass-through entity should file Form 502. Also, choose the correct year's form for the return being submitted. All forms and instructions, including those for prior taxable years, are located on the Department's website.
• Always notify the Department and the State Corporation Commission of any corporate name changes. If the corporate name has changed from  the name used on the last return filed, please check the "Name Change" box on the return to notify the Department.
• If the physical address or mailing address is different from the  address used on the last return filed, please check the applicable "Address Change" box.
• Please be sure to verify that the nine-digit Federal Identification Number (FEIN) was entered correctly on the return and that it is the correct number assigned to the corporation.
• If you claim a subtraction, deduction or a credit, please be sure to attach the appropriate supporting schedule, such as Schedule ADJ or Schedule CR, to the return.  Also, provide any additional supporting documentation that is required, such as tax-credit certificates or statements.
• If estimated payments or extension payments are claimed on the return, please verify the amount of estimated or extension payments made during the year before filing the return.
• If your client is claiming a subtraction, deduction, or contribution, be sure to enter the valid codes on the Schedule ADJ.
• When submitting a paper tax return, ensure that the front and back pages are both sent (even if there are no entries on the back page).  Please note the new electronic filing requirement above.
• If the corporate return that you are submitting is a "final return," do not request an overpayment credit.  Request a refund instead.