Pass-Through Entities Provision Included in Tax Plan

Update: Legislation tabled until 2005 (2-11-04)

A provision that requires pass-through entities' information returns to be filed with the Virginia Department of Taxation, effective for taxable years beginning on and after January 1, 2004, was included in the Tax Reform Compromise Act of 2004 (H.B. 5018). The legislation requires every pass-through entity doing business in Virginia, or having income from Virginia sources, to file a return with the Virginia Department of Taxation on or before the fifteenth day of the fourth month following the close of its taxable year. The tax reform bill will go into effect July 1.

An earlier proposal, H.B. 149, was unanimously tabled by the House Committee on Finance in February, but the language was picked back up and used in the tax plan. The VSCPA supported H.B. 149 to broaden the current tax filing requirements to cover pass-through entities treated as partnerships for federal income tax reporting requirements.