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Virginia Department of Taxation

Virginia Department of Taxation. Locality Training 2005. Section One. Filing Season 2005. Returns Processed. Individual Return Error Statistics As Of July 29. Refunds Issued. Refunds Issued. Section Two. Your new toolkit: IRMS Integrated Revenue Management System.

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Virginia Department of Taxation

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  1. Virginia Departmentof Taxation Locality Training 2005

  2. Section One Filing Season 2005

  3. Returns Processed

  4. Individual Return Error StatisticsAs Of July 29

  5. Refunds Issued

  6. Refunds Issued

  7. Section Two Your new toolkit: IRMS Integrated Revenue Management System

  8. IRMS Training & User Support

  9. OUR GOALS: Provide quality, accessible IRMS training and on-line Help tools Keep you informed and prepared for IRMS changes IRMS Training & User Support

  10. Ongoing training needs addressed through Learning Management System (LMS) Refresh your IRMS knowledge Train new IRMS users Curriculums revised periodically Expect “cut over” date prior to each new IRMS release, where training materials are updated to match new or changed functionality IRMS Training

  11. Example of curriculum changes now being made: Removing lessons comparing STARS to IRMS Lesson content revised to include January ’06 Release functionality changes New lessons added for Set-Off related windows available to Commissioner of Revenue office staff with the January ’06 Release IRMS Training

  12. Procedures revised to reflect new processing-year changes User Guides revised to incorporate IRMS functionality changes and enhancements Job Aids revised and new ones published * All these resources available on-line inTax Agency Rules and Procedures (TARP) IRMS User Support

  13. TAX will continue to provide a comprehensive support program. “Just-in-Time” Training through the LMS On-line reference resources: TARP & on-line Performance Support System (PSS) Help Help from TAX staff IRMS Training & User Support

  14. New IRMS January ’06 Release scheduled to be in production Monday, 1/9/06 IRMS Training & User Support

  15. Highlights of January ’06 Release: Expanded Search functionality Search by taxpayer name and/or address in addition to SSN/FEIN Customer Address fields added to Customer Profile and Tax Account windows Accelerated Refund keying View address during keying Remove need to select Payment Method radio button IRMS Training & User Support

  16. Sales Tax distribution history information Additional search criteria to view all businesses that have paid Sales Tax in your locality “Pre-distribution” (entries not yet distributed) and “Distribution” (entries distributed for current month) views Access to additional Set-Off claim and payment information Access will be automatically granted – no access form required IRMS Training & User Support

  17. Look for an e-mail communication with detailed information on the enhancements and changes in the January ’06 Release Detailed description of new fields and functions Instructions to take a new or revised lesson in the Learning Management System when IRMS changes are significant Important that you share this information with each IRMS user in your office so they are prepared for the changes IRMS Training & User Support

  18. REMINDER: Submit a System Authorization Request (SA-IRMS-E) form to TAX promptly for: Staffing changes, including terminations New/changed e-mail addresses IRMS Support

  19. Section Three Topics for Review • Pass-Through Entities • Income Tax Provisions • Preparer Fraud Provisions

  20. Pass-Through Entities • Registration for PTEs • How does a PTE register to file Form 502? • Filing requirements • No requirement for investment entities • See Tax Bulletin 05-6 • Return issues • No “bottom line” for entity’s income • No adjustment/apportionment of separate line items on Form 502

  21. Income Tax Provisions • Fixed Date Conformity • HB 2411 and SB 856 advance the date of conformity to federal law to Jan. 7, 2005 • SB 897 allows Virginia to recognize federal deductions claimed for contributions made for tsunami relief efforts

  22. Income Tax Provisions • Fixed Date Conformity (cont.) • Virginia now conforms to provisions of the Working Families Tax Relief Act of 2004 and the American Job Creation Act of 2004 • Virginia law does not allow a 5-year carryback period for NOLs generated in 2001 or 2002, or deductions for bonus depreciation

  23. Income Tax Provisions • Extensions (cont.) • 90% payment requirement still applies • Extension penalty increases from 0.5% to 2% per month • Penalty on returns filed without an extension is 2% per month for first six months, IF the return is filed within six months from the original due date • e.g., calendar year return filed by Nov. 1

  24. Income Tax Provisions • Extensions (cont.) • HB 2325 – applies to individual and corporate income tax filers (including fiduciaries and PTEs) • Six-month FILING extension allowed – no paper extension request needed

  25. Income Tax Provisions • Extensions (cont.) • Extension invalid for returns filed more than six months after the due date – normal late filing penalty (30%) will apply • New Extension Payment Forms: • Form 760IP replaces Form 760E • Form 500CP replaces Form 500E • Form 502E for pass-through entities discontinued (no payment required for Form 502)

  26. Income Tax Provisions • Credits • Conservation Tillage Equipment • Equipment for reduction of soil compaction now included • Maximum annual credit increased from $2,500 to $4,000 • Land Preservation • Certain pre-2002 credits eligible for transfer • New valuation and appraisal requirements

  27. Credits (cont.) Neighborhood Assistance Act Maximum annual credit for individuals increased to $50,000 Rent Reduction Credit provisions extended through 12/31/10 Restrictions on new credits Income Tax Provisions

  28. Credits (cont.) Enterprise Zones Enterprise Zone Act expired 7/1/05; replaced with a grant program Zones in effect as of 6/30/05 will continue until the end of their 20-year designation period Business tax credit and real property investment tax credit will continue for certain businesses Major Business Facility Job Tax Form 304 must now be filed 90 days before the return due date Due date for Form 304 for businesses in severely economically distressed areas is April 1, 2006 Income Tax Provisions

  29. Credits (cont.) Qualified Equity and Subordinated Debt Investment Tax Lower annual revenue required to qualify Credit no longer available to professional/institutional investors Penalty provisions adjusted to align with other states and avoid disincentives Income Tax Provisions

  30. Individual Income: 2004 Provisions Effective for 2005 Standard Deduction Single filers $3,000 (no change) Married filing jointly $6,000 (formerly $5,000) Married filing separately $3,000 (formerly $2,500) Filing Threshold Single filers $7,000 (formerly $5,000) Married filing jointly $14,000 (formerly $8,000) Married filing separately $7,000 (formerly $4,000) Income Tax Provisions

  31. Individual Income: 2004 Provisions Effective for 2005 Personal Exemptions 2005 legislation moved effective date up to 2005 Yourself $900 Your Spouse $900 Dependents $900 Exemptions for age and blindness remain at $800 Income Tax Provisions

  32. Subtraction for Federal & Virginia Government Employees SB 866 clarifies the salary requirements for the subtraction The subtraction is available only to employees of the federal and Virginia governments whose total salary from ALL employment is $15,000 or less Income Tax Provisions

  33. Subtraction for Federal & Virginia Government Employees (cont.) For example, an individual who earned $10,000 in a federal government job and $15,000 in a private-sector job in 2005 would NOT be eligible for the subtraction The subtraction amount for eligible individuals is the amount of government salary up to $15,000 Income Tax Provisions

  34. Refund Check-offs: Process Changes HB 2303 creates a new process for limiting voluntary contributions (refund check-offs) Only 25 contributions may be made on the return forms (provision from 2004 legislation) Income Tax Provisions

  35. Refund Check-offs: Process Changes (cont.) An entity must receive at least $10,000 for each of the three preceding tax years in which it was listed on the return TAX will make an annual report on voluntary contributions to the Chairs of the House and Senate Finance Committees Income Tax Provisions

  36. Refund Check-offs: Process Changes (cont.) New check-off: Office of Commonwealth Preparedness Check-offs removed from return: UVA Center for Politics George Mason Law & Economics Center Virginia Foundation for the Humanities Income Tax Provisions

  37. Senate Bill 1225 Adds definition of “income tax preparer” to §58.1-302 Key elements = compensation, return, claim for refund Definition excludes: Typists, copy persons, other mechanicals Tasks done for employer or as a fiduciary Appeals and protective claims in response to assessments Response to waiver request after audit Preparer Fraud Provisions

  38. New Code Section: §58.1-348.1 Class 6 Felony (1-5 Years and/or $2,500 fine) if preparer: Knowingly and willfully aids, assists, counsels or advises preparation or presentation of a return, affidavit, claim or other document that he knows is fraudulent or false in any material matter Preparer Fraud Provisions

  39. New Code Section: §58.1-348.2: Injunctive Relief Civil action in Circuit Court: Enjoin further engaging in the prohibited conduct, OR Enjoin practicing livelihood as a tax preparer if: Continually or repeatedly engages in prohibited conduct Injunction against prohibited conduct would not be sufficient to prevent interference with proper tax administration Preparer Fraud Provisions

  40. New Code Section: §58.1-348.2 Prohibited Conduct: Any conduct subject to IRC §§6694 or 6695, or to criminal penalties under IRC or under Title 58.1 of the Code of Virginia Any other fraudulent or deceptive conduct that substantially interferes with proper tax administration Preparer Fraud Provisions

  41. What’s covered under IRC §6694? Understatement due to unrealistic positions No realistic possibility of being sustained on merits Knew or should have known of such position Did not disclose such position Frivolous claims Willful or reckless conduct Willful attempt to understate the liability Reckless or intentional disregard of rules or regulations Preparer Fraud Provisions

  42. What’s Covered Under IRC §6695? Failure to furnish copy to taxpayer Failure to sign return Failure to furnish identifying number Failure to retain a copy or list of returns Failure to file correct information returns Failure to be diligent in determining eligibility for EITC Endorsing or negotiating a taxpayer’s check Preparer Fraud Provisions

  43. What’s Covered Under IRC and Virginia Criminal Provisions? Fraud & false statements (IRC §7206 & VA Code §58.1-348.1) Fraudulent execution of bonds, permits or entries, or other documents Concealment of property Withholding, falsifying, or destroying records Preparer Fraud Provisions

  44. §58.1-348.2: Injunctive Relief Injunctive relief regarding livelihood – prima facie case if: Previously enjoined from preparing US income tax returns Previously enjoined from preparing another state’s income tax returns Must have been enjoined within five years preceding the petition for injunction Preparer Fraud Provisions

  45. Any Questions ?

  46. Return Processing Section Four

  47. ReturnProcessingHoward’s Holiday Halogens

  48. General Theme - Use TARP TARP Processes and Tasks are dynamic–revised as soon as necessary Howard Overbey will send e-mail when TARP changes are published TARP includes Processes and Tasks, Forms, Job Aids and User Guides Tasks may contain links to related Forms or Job Aids ReturnProcessing

  49. IRMS processes the “bottom line” differently than STARS The “Amount You Owe” line is the amount the locality is taking responsibility for assessing/collecting Incorrect handling of this line will result in duplicate billing “Amount You Owe” job aid available in TARP Amount You Owe

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