A reminder: For the 2013 filing season, the Department's Customer Service telephone service hours for customers calling with general and account-specific questions are between 8:30 a.m. and 5 p.m. Monday through Friday. The Department's Live Chat service will be available even longer - from 8 a.m. to 8 p.m. Monday through Friday and from 8:30 a.m. to noon on Saturdays. Extended Live Chat hours are expected to end in early May.

The Department's contact information can be found here.

This is a reminder that 2012 Form 502 Pass-Through Entity (PTE) calendar year returns are due to be filed by April 15, 2013. 

While the Form 502 return and schedules must be filed on paper, the Department suggests that you file VK-1s electronically via Web Upload, eliminating the need to print and mail them.

Web Upload is a free, easy, and secure way to electronically submit VK1s. Simply upload your electronically-stored VK-1 data, and mark the "Check if VK-1s filed via Web Upload" box on Form 502.

All Web Upload file types are supported. Excel files may only contain up to 65,536 records (this is an Excel limitation). Visit the Web Upload page of the Department's website for complete information on submitting your VK-1 file.

If you are subject to the withholding requirement for nonresident owners, remember that your withholding tax payment must also be made by April 15, 2013. This applies even if you choose to take advantage of the automatic six-month filing extension.

For more information about PTE filing requirements, see the Instructions for Form 502.

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 of Taxation offers the following tips for reporting the tax on Form 502:

• Keep in mind that the tax payment for 2012 is due on April 15, 2013, 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 Form 502 is being filed after April 15.  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.

Although pass-through entities are generally required to withhold tax on the Virginia taxable income that they pass through to their nonresident owners, Virginia law provides the following exemptions from the requirement.  If an owner or entity is exempt, DO NOT withhold tax from their Virginia distributions.

• At the entity level, publicly traded partnerships are not required to withhold from their nonresident owners.  In addition, pass-through entities that file unified Virginia income tax returns on behalf of their nonresident owners are exempt from the withholding requirement.
• At the owner level, no withholding is required for owners that are pass-through entities, or for other individual and corporate owners that are exempt from paying federal income taxes, or individual owners who will have sufficient credits for taxes paid to other states to offset their Virginia income tax liabilities.  In addition, exemptions are provided for non-captive REITs and for nonresident landlords who own four or fewer dwelling units in Virginia.
• Virginia law also provides for an exemption based on undue hardship.  The entity must request the exemption in writing, and be able to demonstrate that the withholding requirement will result in undue hardship with respect to the administrative costs associated with compliance.  The amount of the tax itself is not considered to be a cost of compliance with respect to consideration for granting a hardship waiver.  Requests for hardship exemptions may be faxed to the Department at (804) 786-2645. 

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