VSCPA Task Force Comments on Drafts of Pass-Through Entity Withholding Tax Forms

July 10, 2008

Commissioner Janie Bowen
Office of the Commissioner
Virginia Department of Taxation
P.O. Box 1115
Richmond, VA 23218-1115

Via e-mail

Re: Drafts of PTE Withholding Tax Forms

Dear Commissioner Bowen,

We want to thank the Virginia Department of Taxation (TAX) for the opportunity to comment on your draft pass-through entity (PTE) withholding tax forms.

We are writing to you representing the Virginia Society of CPAs (VSCPA) Taxation Advisory Task Force (Task Force). This letter represents the opinion of this expert group only, and does not represent a position of the VSCPA or its membership.

The Task Force has the following comments regarding the proposed forms:

  1. The Task Force strongly recommends adding a “decoding” page to the VK-1 form. The federal K-1 has a code page that goes to the recipients of the K-1, enabling the recipients and/or their preparers to decode the information. Since Virginia has some very unique additions and subtractions, tax return preparers and the recipients of the VK-1s are requesting a similar “decoding” page for the VK-1.
  2. In some instances, retirement accounts or other tax exempt entities holding partnership interests have a tax liability for the partnership interests. Since this is determined at the federal level and corresponds to a filing of Form 990-T, state taxability for the form VK-1 recipient conforms to federal rules. However, in other instances, an interest in a pass-through entity will not be subject to taxation. If there is a way the pass-through entity can determine the impact on the VK-1 recipient for exemption from withholding, then there should be an exemption code to go with it.  
  3. The Task Force also suggests establishing a timeline for the electronic filing of these returns.

Again, we thank TAX for its work in this area and its commitment to providing user-friendly resources for Virginia taxpayers and preparers. We ask that you consider our suggestions in finalizing these forms.

If you have any questions or concerns, please don’t hesitate to contact a member of the Task Force listed below or VSCPA Government Affairs Director Emily Walker at ewalker@vscpa.com or (804) 270-5344.

Thank you again for your consideration.

Sincerely,

VSCPA Taxation Advisory Task Force

Art Auerbach, CPA: aauerbach@goodmanco.com 
Damon DeSue, CPA: ddesue@dollartree.com
Duane Dobson, CPA: Duane.Dobson@gt.com
Teresa Jordan, CPA: teresa.jordan@yhbcpa.com
Rebecca McCoy, CPA: Rebecca.mccoy2007@gmail.com
Julia Rogers, CPA: jrogers@biegler.net
Monique Valentine, CPA: valentim@agc.org
Mark Van Deveer, CPA: markv12@juno.com

Cc: Amber Stanwix, Virginia Department of Taxation

LAST UPDATED 7/10/2008

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