The following is a transcript of the VSCPA webinar with the Virginia Department of Taxation (TAX) from March 7, in which Kristin Collins, James Savage and Matt Huntley from TAX answered technical questions related to tax conformity and the Tax Cuts and Jobs Act (TCJA). This transcript has been edited for clarity and correctness.
Emily Walker: Hello, everyone, and welcome. This is Emily Walker, the Vice President of Advocacy at the VSCPA. We're glad that you could join us on our Q&A with the Virginia Tax Department.
We decided to hold this event because we've seen so many questions related to the tax conformity and tax reform bill that passed in the 2019 General Assembly session, and thought it might be helpful to give you an opportunity to really dialogue with some of the folks from the Tax Department. There are no slides for this event. We also won't have any polling questions or anything like that. We've sent some questions ahead of time to the Tax Department based on what you submitted to me, but if you have other questions, we ask that you put them in the chat box, and I will read them, or someone from the department will read them so that we can make sure that they get answered. If there's anything that for some reason can't be answered, we will work with the department to get the answers and get those out to the group.
We're also going to post a recording of this session on Connect, so that if you need to go back and re-listen to it, or others who couldn't participate today wanted access to the information, that will be available there as well. With that, I'm going to turn things over to Kristin Collins at the Tax Department to introduce herself and the rest of her team that are participating today. Then we can jump into some of the questions.
Kristin Collins: Good morning, everyone. I'm Kristin Collins. I'm the policy director at the Department of Taxation. I have with me today Matt Huntley, who is our lead analyst for the income tax team in my group, and James Savage, who is the senior analyst for that team. Matt and James have both been really involved tracking the federal legislation before the TCJA was enacted, analyzing it. They've been heavily involved in the discussions over the past year and in the legislation during this past session.
I think to start, we've gotten a few questions in advance, but I think it would be helpful maybe if we give a brief overview of the legislation that passed during the 2019 session, the conformity piece and then also the tax policy changes that were made in Virginia. I think Matt's going to start giving a brief overview of that.
Matt Huntley: Hey, good morning everyone. This is Matt Huntley. During the 2019 session, there were two identical bills that passed that advanced Virginia's data conformity. Those are House Bill 2529 and Senate Bill 1372. Those bills advanced our date of conformity to the Internal Revenue Code from Feb. 9, 2018, to Dec. 31, 2018. That allowed Virginia to conform generally to all the provisions of the Tax Cuts and Jobs Act, and the Bipartisan Budget Act of 2018. If you will recall, the 2018 General Assembly legislation didn't conform totally to the Tax Cuts and Jobs Act or the Bipartisan Budget Act. That legislation de-conformed from the provisions of that federal legislation that was effective for 2018 and after. We now, based on this 2019 legislation, fully conform to the Tax Cuts and Jobs Act, Bipartisan Budget Act, or almost fully conform. In that, we conformed to almost all the provisions to the extent that they flowed through to the Virginia return, unless an exception applies. We've had several questions about various facets of the Tax Cuts and Jobs Act, whether we conform or not. I just want to emphasize that unless an exception applies and it flows through to the Virginia return, we do fully conform to all the provisions.
We had some other questions that have been brought to our attention about whether we still require whatever election you made on your federal return regarding the standard or itemized deductions. You're still required to make that election on your Virginia return the same way. The original legislation, House Bill 2529, would have allowed you to, whatever you elected on your federal, you could do differently on your Virginia return, but that was changed later in the legislative process. The election you make on your federal return still must be the same as what you do on your Virginia return.
Getting a little further into the actual conformity legislation, there are few individual taxpayer changes that are effective for taxable year 2019 and after. Those include an increasing the Virginia standard deduction for individuals from $3,000 to $4,500, and for married filing jointly from $6,000 to $9,000. That change is effective beginning with taxable year 2019 through taxable year 2025. In the current legislation after that date, that will revert back to the current $3,000/$6,000 regime.
Also effective for taxable year 2019 and after for individual income taxpayers, the Pease limitation is going to come back just for Virginia tax purposes. Also the $10,000 federal limitation on the state and local tax deduction is going to be removed for taxable year 2019 and after. Also taxpayers who file before July 1st, 2018 will be entitled to a $110 refund for individuals or a $220 refund for married filing joint taxpayers. Those refunds will be issued between October 1st and October 15th, 2018. I think we're going to get further into that later in this Q&A. That's a summary of the individual provisions and how conformity works with respect to the Tax Cuts and Jobs Act and other federal provisions.
I'd like to turn it over to James Savage to go over some of the business changes that are effective for 2018 and after.
James Savage: Yeah, hello. James Savage, Virginia Department of Taxation. Essentially there were two changes that were made for business purposes. They are effective for 2018.
The first one was in the legislation allows an individual and corporate income tax deduction for 20 percent of the amount of business interest that was disallowed as a deduction for federal income tax purposes. Essentially the TCJA limited the amount of the deduction for business interest to 30 percent of your — essentially it's a measure of income, and of the taxpayer's income.
We've gotten some questions about this particular provision. The budget requires us to do a work group starting on June 1st of 2019 to look at this. Then we're also required to issue guidelines regarding the business interest limitation in the Tax Cuts and Jobs Act and also this 20 percent deduction. That would be required by Dec. 1 of 2019.
The one other provision that's in there, so this is the first one. It's a deduction for 20 percent of the business interest. The other provision in this legislation generally affecting businesses is this legislation expands Virginia's existing corporate income tax subtraction. It's currently allowed for Subpart F income. [It's going to expand it to apply to global intangible low tax income. That's a loaded phrase, a global intangible low tax income or GILTI. That's also effective for taxable year 2018 and thereafter.
The reasoning behind this is that allowing a subtraction for GILTI, for global intangible low tax income, is essentially consistent with Virginia's long-standing policy of generally exempting corporations from taxation on their foreign income. It was essentially a technical glitch of why this income wasn't caught by our pre-existing subtraction for corporations. This was why the General Assembly added this to clarify that. Those are essentially the two provisions affecting businesses that were made by this bill. This legislation was recently passed. I just want to mention, unlike a lot of the individual changes, they are effective for taxable year 2018.
At this point, can I hand it back over to you, Kristin, if that sounds good?
Kristin Collins: Sure. What we were thinking, we received several questions that were submitted in advance. I thought maybe we could talk through those first, and then I see there are a number of questions that are coming in live so we can address those after we go through the ones that were pre-submitted. If you have questions or need clarification as we go, just please type it in the message box. Emily, feel free to interrupt me and we can address anything that's relevant to what we're talking about.
Emily Walker: Sure.
Kristin Collins: Most of the questions that came in before today were really focused on the refunds that will go out in October of 2019. We'll go ahead and cover those questions first, and maybe we'll just alternate through some of the questions. But the first question is, by what method will we be dispersing the additional 2018 refunds? Will it be check, or direct deposit, or another means? Right now, the plan is to issue checks. That could change, but I don't think that it will. That's currently what we're looking at. I think that was really the intent of the legislature and then also that's a little bit more administratively feasible than trying to update peoples' bank account information and whatnot.
I guess related to that, or a general disclaimer, internally, our agency is still looking at how to implement some of these changes, in particular the refund issue, and then of course anything that will affect the 2019 return. We haven't started updating those returns yet. Some of our answers may be a little bit uncertain or vague, but I can tell you or we can tell you where we are in the process.
The second question is, what should taxpayers do if they need to change their information, their address or other information between the time they file their return and the time that the payments are dispersed? They can do that on our website. We have a webpage that's dedicated to that information, which I can provide to Emily, and she can send to you all. Your clients also have the option to call into our customer service line. If they're able to verify their identity, they can update it that way, and they can either mail or fax in the information to our agency. There's a number of options there, and those are standard currently how you would update your address.
Do you want to switch?
Matt Huntley: Sure. Well the third question we received, this is Matt Huntley again, if the filing status is married filing jointly, will one refund check for taxable year 2018 be issued or two? If one, is there a mechanism where taxpayers can request two, such as in case of a separation or a divorce? That'll still be handled under Virginia's current policy for handling that. That's under Virginia code 58.1-499(B). In order to receive two checks, basically you must have a final divorce decree. Submit that decree to the tax commissioner and all. Like I said, it would follow our current process for that. There would be no mechanism for getting two checks if it's just a separation or if you're getting a divorce and you don't yet have a final divorce decree. Do you want to do the next question?
James Savage: Oh, sure. The next question we received was, what is the meaning of the term final return? If you look at the legislation it says for anybody who filed a final return before July 1, 2019, they can be entitled to these October refunds of $110 for an individual, or $220 for a married couple filing jointly. It ties it into final return. Some people have been asking, what does that term exactly mean? It has a meaning under federal law related to people who are essentially deceased taxpayers, and that's not what this is related to.
James Savage: We have a term, “final return,” and our understanding is, it's really supposed to be about just having a completely filed return that you're normally required to file. Filing a complete finalized return, if you will by June 30, 2019, or before then. (UPDATE: TAX announced June 18 that it would accept returns through July 1, 2019, for purposes of the October refunds.) That's basically what we've just interpret it to mean.
James Savage: Then, let me see here. The next question that was asked is, are all taxpayers going to receive this additional refund subject to the timely filing requirement, or is it only those who are taking the standard deduction or only those who are itemizing? Essentially this refund that's going to be offered in October is not tied to doing the itemized or standard. You get it regardless, either way. All taxpayers who file by the deadline can be eligible for it, so long as they have sufficient tax liability.
Kristin Collins: Okay, so the next question is, why is there a deadline for filing or to get the extra refund? What if a taxpayer had to file an extension due to circumstances beyond their control? What if the taxpayer is out of the country? Unfortunately, the July 1st deadline is a statutory deadline. The General Assembly decided upon ... I think this was a big part of the discussions and the negotiations, having a refund, and having this timeline. That was what they decided upon. Administratively, we can't really do much about that. Since it is a statutory deadline, there are no exceptions under the law for that.
The money that will be generated from the individual provisions of the TCJA will go into the Taxpayer Relief Fund. To the extent there is additional money in the fund, either from this taxable year or in future taxable years, the General Assembly has discretion to use that money for future tax relief. One option for the General Assembly could be to provide similar refunds to taxpayers who did not file by July 1st. They could address that during that 2020 session. I don't know if they will, but that is an option. I think part of the intent was at some point you need a cutoff because we need a cutoff for looking at the money that comes in, and how many taxpayers are entitled to it to make sure that we know what the refund amount is, and who to issue that to. I think that was part of the rationale for that as well.
Emily Walker: Kristin, I'm just going to interject here because there is a related question which I think you basically have answered, but it was, I have many clients who cannot file before July 1 due to late receipt of K-1s, and what accommodations if any could be made for these taxpayers who will be missing out on the extra refund? I think that your answer just covered that, but I wanted to acknowledge that we had gotten that question. There was also one about who was eligible for it, regarding the type of deductions taken. I think that questions been answered also.
Kristin Collins: Right, yes. Anybody can get it regardless of whether they're claiming the standard deduction or itemized. There was some discussion during this session about limiting it only to standard deductors or itemizers, depending on who you ask, but it is open to everybody regardless of what election they make. Unfortunately, even if there's something like a taxpayer waiting on a K-1 or other information beyond their control, legislation has the July 1 deadline. We don't really have any discretion to do anything differently. If that ends up being an issue for your clients though, reaching out to the General Assembly and letting them know that's a concern could impact what they do in 2020 with any additional funds.
Emily Walker: Okay. To turn things back over to you guys, there is another related question here. Is this $110, $220 payment considered a refund of Virginia taxes previously paid? Will it be included on a 2019 1099-G?
Kristin Collins: Yeah, that's a good question. Yes. Yes, it is considered a refund and it would be counted on a 1099-G.
Emily Walker: Okay. Let's see, what if the client had a balance due on the 2018 Virginia return? Will they get a 2019 1099-G anyway?
Kristin Collins: Do you mean if they owed when they filed their return but then they're getting a refund in October? If that's the case, yes. They would make their payment when they submit their return, and then when they get the refund they would get a 1099-G for it.
Emily Walker: Okay. He says, yes, that was what he meant. Also, is the 7/1/2019 deadline subject to the mailbox rule, meaning if mailed by then qualifies, or does it need to arrive in Richmond by 7/1?
Kristin Collins: Yeah, so it would be subject to the mailbox rule. It would follow the typical rule. As long as it's mailed by then it would be counted.
Matt Huntley: Just for clarification, it's before 7/1.
Emily Walker: Right, it's actually by 6/30.
Matt Huntley: Yeah, just to make sure.
Kristin Collins: Thank you.
Emily Walker: Will nonresident filers receive their refund?
Matt Huntley: Yes.
Emily Walker: Then are taxpayers who have a state tax liability that is completely offset by the state tax credits entitled to the refund?
Kristin Collins: That's actually our next question on the list. That was a good segue. No. The law says that the individual shall only be allowed a refund up to the amount of the individual tax liability after applying any deductions, subtractions or credits.
If a taxpayer has a liability of more than $110 for a single individual but they have a credit that offsets that liability, they would not be entitled to the refund. But they do get it regardless of whether they owe or get a refund when they file their return. Estimated payments, withholding payments and that sort of thing are not taken into account in figuring the tax liability, but tax credits would be.
Emily Walker: I think that's all the related questions.
Matt Huntley: Yeah, and that's another thing...
Emily Walker: Go ahead.
Matt Huntley: That's another thing we don't have leeway with because it's specified in the legislation just for clarification on the deductions, subtractions and credits thing.
Kristin Collins: The next question is related to that as well, if the taxpayer has no taxable income, and no tax liability, and they file by July 1st, are they eligible for the refund? The answer is no. They have to have a tax liability. If somebody has ... Say they file a return and they have $50 of tax liability, they would be entitled to a $50 credit. They don't get the full credit amount if they don't have that full amount of tax liability, but they would get a credit up to the amount of their liability. That was a big part of the discussions during the session as well. I think there were some earlier versions that said, you only get the credit if you have at least that much liability. There were some versions that were going to make it basically refundable so you could get it in excess of your liability, and the agreement was you get a credit but only up to the amount of your liability. I think those are pretty much all the questions about the refunds.
There's another question, why are the refunds not being refunded until October? Again, that's what the General Assembly and the legislation dictated. I think they were trying to ... There's a couple different timelines in there. You have to file your returns before July 1st to qualify. The department or I guess the governor, but we will be working on this, has to certify by September 1st the amount of money that will go into that fund to pay the refund. Then the check has to be issued between Oct. 1 and Oct. 15. There needs to be time to allow for the estimating process, and there also needs to be time for Treasury to issue the checks.
Emily Walker: There was one more that just popped up asking is the refund based on 2018 or 2019 tax liability. It's '18, correct?
Kristin Collins: 2018. Yes. Matt has another point. You want to explain that as well?
Matt Huntley: Yeah, sure. Just for full disclosure, based on the legislation, this refund amount is funded by the amount that goes into this Taxpayer Relief Fund established by these two bills. All that's based on the amount of money that the state brings in as a result of this conformity legislation, because we're going to realize a revenue increase as a result of all this, conformity to TCJA in general.
If the amount of money that goes into that fund is not enough to fully fund $110, $220 refunds to everyone who's eligible, those amounts will be prorated down for everyone proportionately. Let's say it's only half funded, well everyone's going to get a $55 or $110 refund instead of the full $110 or $220. That's just something to keep in mind just in case that comes to fruition. Obviously we have no idea at this point. We won't really know that until after June 30th going forward. It's just something to keep in mind as a possibility.
Kristin Collins: If there aren't any other questions about the actual refunds, we can get into some of the other questions, which are more related to some of the other policy changes in the legislation. I don't think I see any other...There was a more general question whether the legislation sunsets in 2025. Generally yes, the ...
James Savage: The standard deduction increase would sunset after 2025.
Kristin Collins: Yeah, the effective dates are based on each individual provision. The standard deduction will sunset at the end of 2025, which is when the federal provisions are set to expire. The business provisions are permanent, and the SALT deduction is permanent, but it would only apply to the extent that's an issue at the federal level. If the $10,000 limitation goes away, that would no longer be necessary.
James Savage: Same with Pease limitation as well.
Kristin Collins: Right. If there aren't any other questions about the refund, one of y'all want to —
James Savage: Oh sure, I can jump in. The next question we received is, will Virginia tax be releasing supplementary information that tells taxpayers how to calculate the state income tax addback? If so, where shall we look for it on the website? Essentially this is a good question. We've been looking at this issue internally and actually this ... I believe this week, and I could see it's up there now, we have updated our Form 760, and the other instructions, the Form 760PY and Form 763 instructions. We've updated them all to address this issue, which is basically whether, and some of the other questions ask about this too, whether you need to prorate the amount of the Line 11 state and local income taxes claimed on your Schedule A. The answer is no.
We essentially allow you to order your deductions in whichever way is most advantageous. Our instructions now address this point, and basically allow you to order them in the way that's most beneficial. In other words, if you had enough real estate tax liability, you could count that toward meeting your $10,000, and not have any addback, for example. That could be beneficial to you. We have now addressed that in our instructions, just this week.
Matt Huntley: I'll go ahead. The next question is, as of today, this is from today, March 7th. As of today, is TurboTax, specifically TurboTax Premier, up to date with the latest interpretation of conformity? Along with that, what about the other software companies? The last we heard TurboTax is up to date. As far as other software companies, it would be up to you to contact them to figure that out. We don't necessarily have insight into that unless we ask.
Kristin Collins: I did talk to our processing manager about this question. We have shared with the software companies updates on the individual side, updated schemas, updated instructions. They have everything they need to update. Now whether or not they already have is another story. The bigger ones are probably a little bit quicker than some of the smaller vendors.
I believe on the corporate side, most of them have not yet made the updates for GILTI and the business interest deductions, so they're still working on those, but that's probably not as pressing for most taxpayers, but that's my understanding of where they all currently are.
If you have specific questions, it's always good to reach out to your software vendor just to make sure. If anything looks like it's not accurate through your software vendor, either reach out to them or reach out to us, and we're happy to answer questions about how it should work.
Matt Huntley: Moving on then, the next question, is Virginia allowing the Section 199A deduction that's allowed on the federal return, as a deduction on the Virginia return? Would this deduction be listed as an “other” subtraction? The section 199A deduction for qualified business income would not flow through to the Virginia return. That is an individual federal deduction, and it is a deduction from federal taxable income. Because the starting point for Virginia income tax liability is FAGI, it wouldn't come in there.
Also, this Section 199A deduction is not an itemized deduction for federal purposes. It wouldn't sneak in as an itemized deduction on your Virginia return. Therefore, that does not flow through onto the individual return for Virginia income tax purposes. Related to that, there's no exception in the conformity or any other legislation that would allow that deduction for Virginia purposes. In other words, it's just not allowed for Virginia purposes.
Kristin Collins: I think that responds to one of the questions that came up today about what will be done about the qualified business deduction on the federal return. The answer is it doesn't flow through to the Virginia return like Matt just said. I think that addresses that particular question.
James Savage: The last question we have here that we received in advance is, will personal exemption amounts increase in 2019? Or is it only the standard deduction amount that's going to increase? The answer is not based upon this legislation that passed, the personal exemption amounts are not changing. There was some discussion about it, but at the end of the day, the General Assembly decided not to increase the personal exemption amounts at this time. They just increased the standard deduction. But potentially maybe in the future, future General Assemblies might decide to increase it, but this legislation does not.
Kristin Collins: A related question that just popped up a minute ago is whether you still get your personal exemption on the Virginia return, when on the federal return you no longer do. You do still get it on the Virginia return. It's actually a really technical issue, and it's one as we were tracking the TCJA, we paid close attention to because it really mattered how they structured it. But they didn't repeal the federal personal exemption, they just set it at $0. The way Virginia law is written, you get the number of personal exemptions you're entitled to under federal law.
Even though you get zero on your federal return, you really get zero because it's a $0 personal exemption, not because you don't have personal exemptions, if that makes any sense. It's a more technical and quirky issue, but we paid a lot of attention to that as we were going through this process, because it would have made a huge difference in Virginia, how that was done.
Matt Huntley: Related to that, that's something we're going to track going forward, because if they ever do actually strike that language out of the federal code, then ours would go away. That's something we're going to keep watch on, to the extent we can.
Kristin Collins: Another question is whether Virginia is conforming for 2018 and not 2019 going forward. No. Last year the legislation was a little bit different than it usually is. It said it really conformed to the TCJA and the BBA only for 2017 taxable year, and then there were also a couple of exceptions in there. This time the General Assembly did what they more typically do in a conformity bill, which is they just advanced the date of conformity, and it conforms to everything going forward, except for the specific provisions that they addressed, things like the Pease limitation and the SALT limitation.
James Savage: One thing I'll add to that is the legislation did specify though that conformity is only effective for taxable years beginning on and after 2018, so it's going forward. The reason why we needed to make that clarification is that as you may remember last year, we de-conformed from the changes that the federal government made to the medical expense deduction which required some taxpayers to report an addition. This year, and going forward, we are fully conforming to the federal changes under the TCJA to the medical expense deduction. An addition will not be required, but we had to clarify that just to ensure that nobody thought that it was somehow retroactive, and you could somehow go back to 2017 and undo the addition. That's why this legislation specifies that the conformity is for taxable years 2018 and after. But it's 2018 and then going forward. It's not just for 2018.
Emily Walker: If I could just jump here and add one other clarifying point, this really deals with the federal tax code as it exists, as of December 31st, 2018. If congress acts in the interim, Virginia would need to do another conformity bill in order to pick up any additional changes. I'm sure most people realize that, but I just wanted to make that clarification also.
Matt Huntley: Yeah, definitely. Good point.
Emily Walker: I do still see a few questions here that I know I haven't deleted and I just want to make sure we're getting to all of them. I'm going to go back up to the top of the top box and just run down these. The first one was, what is the Section 179 limitation for 2018?
Kristin Collins: That's a federal limitation that they increased, effective for 2018. The deduction amount went from $500,000 to $1 million, and then the phase out threshold increased from $2 million to $2.5 million. I believe after 2018, it's indexed for inflation, both of those amounts. Virginia, by advancing the date of conformity, we do conform to those changes. Those will be the amount for Virginia purposes as well.
Emily Walker: To clarify in 2019 and subsequent years, if the real estate personal property taxes alone exceed $10,000, the taxpayer can claim the full amount.
Kristin Collins: Correct. They can claim the full amount of the real and personal property taxes, the local taxes after accounting for taking out the income tax piece, but yes.
Emily Walker: For taxpayers who have non-Virginia tax exempt interest, which is an addition on the Virginia return, can taxpayers still reduce that interest by the amount of investment advisory fees paid related to that income?
Kristin Collins: I don't know the answer to that off the top of my head. I'd have to look into it. I don't know if this is something that changed under the federal law or if that's existing law. There was nothing specific in Virginia's legislation this year that addressed this. If the rule changed for federal purposes, we would conform to it. Or if it didn't change, it would be still the old rule.
James Savage: Yeah, I'm not sure it might be related a little bit to the treatment of miscellaneous itemized deductions. I know there were some things that were limited there, and maybe that's one of them. But I'm not sure if that would, and how that would affect our addition.
Matt Huntley: Yeah, that's one we're just going to have to look into. We don't know off the top of our heads.
Emily Walker: If that's something that you could look into and maybe get the answer to me, I can post that to the online tax community that we have, or follow up directly with the person who asked it.
Kristin Collins: Okay.
Emily Walker: I know you did answer this one earlier, but perhaps this participant wasn't on the line at the time. It's will the refund be sent as a check or as an electronic payment? I think what I heard from you is that at this point you're planning for those to be check refunds.
Kristin Collins: Yes.
Emily Walker: Is there a master list somewhere of the federal provisions that Virginia does not conform to for 2018?
Kristin Collins: The exceptions are set forth in the instructions. It's actually not a very long list. If we did not conform to the TCGA it would have been a very, very long list. But we continue to de-conform from the things that we de-conformed from in the past, things like bonus depreciation, certain NOLs for certain years, those sorts of things, those haven't changed.
Other than that, there's really nothing to add to the list other than the Pease limitation, which will apply starting in 2019. That's not 2018, that's 2019. Then of course not a direct de-conformity, but the SALT deduction limitation that we will not include for Virginia purposes beginning in 2019. It's a pretty short list, but the instructions do lay it out what all those exceptions are to conformity.
Emily Walker: I think you've already answered this one, which is, is Virginia conforming to bonus depreciation. The answer to that is no.
Matt Huntley: Correct.
Emily Walker: Somebody chimed and said, just to confirm the Section 179 limitation for 2018 tax year is $1 million.
Kristin Collins: That is the maximum deduction amount, yes.
Emily Walker: Here's another one, which again you may have answered, but just to be clear, the individual taxpayer still gets a personal exemption plus a further exemption for each dependent. This runs counter to the federal statute that disallows this. Currently all we get on the federal side is the standard deduction.
Kristin Collins: Yeah, we did address that one a minute ago, and that was due to the way that federal law was drafted. They didn't actually repeal the provision, they just set it at $0, so you still get a personal exemption on the Virginia return.
Emily Walker: This one is, taxpayers have to be consistent with the standard deduction on their federal return versus Virginia for 2018. Does this treatment remain for 2019 and beyond?
Matt Huntley: Yes. Yes, they still must be consistent, and going forward as well at this point. I know that was,ike we said earlier, that was a question that some of the legislative proposals would have changed, but none of those got enacted.
Emily Walker: Some of the media reports made it confusing as to what actually ended up being passed as well.
Matt Huntley: That's right. Yup.
Emily Walker: On pass-through returns, we currently complete the nonresident withholding on income before the deduction of separately stated deductions such as 179. This year we are being told to separate business interest expense as another deduction for 163(j) purposes, which is the 163(j) limitation at the individual level. Any administration changes available so that we can deduct the other items for nonresident withholding?
Kristin Collins: We can look into that one. Yeah, that's not a question we've been asked before, but we can look into that.
Emily Walker: Okay, so I'm going to leave that one in the chat as well so that we can retrieve that question if we need to, just to make sure we get all the follow-up. That is the end of the list of questions currently in the chat box. Does anyone else have additional questions that you'd like to ask while we still have the Tax Department on the line? All right. I'm not seeing any additional questions.
Thank you to everyone for taking the time to join us today. Thank you to Kristin, Matt and James for your time as well in working through these questions. Guess I would say, to our members, if you think of other questions that you need answers to, please feel free to send them to me and I will make sure that they get answered. Pass them along to the folks in the department.
We just had a couple others pop in here, so let's go ahead and grab them while we can. For the business interest adjustment, is there any required disclosure on the past year entity for the potential addback? I.e., for federal purposes we must disclose excess business interest income, excess taxable income.
Matt Huntley: We'll have to look into that. We don't know at this point. We'll have to look into that a little bit.
Kristin Collins: Yeah, we'll look into that.
Emily Walker: Okay, so that's another one we'll do some follow up on.
Kristin Collins: Yeah, and that one is the business interest expense limitation and the 20 percent deduction that's allowed for Virginia purposes. That's all a little bit ... The IRS issued several hundred pages of regulations shortly before the session. We weren't really sure whether Virginia was going to conform. That's something we're still looking at the details of those rules. Like James mentioned a little bit earlier, the budget does require us to have a working group this year to look at some issues related to the business interest deduction, and we'll be issuing guidelines on that. Some of that is a little bit still ...
Even though it's effective on the 2018 return, unfortunately it's still being analyzed, and we're still working through some of that. But we do welcome feedback from you all if any of you are interested in those issues, if you want to participate in our work group, or just get on the email list to see where the discussions are headed, we're happy to include anybody who's interested.
Emily Walker: We also had one more, just to confirm Virginia will not conform to federal bonus depreciation. I can answer that one which that is correct. It's a constant conversation between Kristin and I. I will also add that. We'll see if we can do something about that in the future, but for now, it remains as it is.
Emily Walker: There's a last question, is there any way to sign up to be kept up to date on any last-minute changes?
Kristin Collins: Probably the best thing in terms of getting information from our agency is to sign up for our email list. If you go to our website, and I can find the link and send it to Emily so she can send it to you all to have, but there's place on our website where you can sign up for a number of different email lists. You can sign up to receive updates related to individual income tax, corporate income tax. There's ones specifically for tax practitioners, so I would recommend you all to sign up for that list.
I know, for example, our group in Policy Development, we send out a number of tax bulletins every year. We've already done four this year, which is more than we usually have. But we do one for conformity, and we'll do them for other changes. We did one the other day related to an extension for payments by farmers and fisherman, we did one recently related to some federal changes related to military spouses, those sorts of things. You would get those if you were on the tax practitioners list or the individual income tax list.
I would recommend signing up for that, and you also get other things from other parts of our agency as well. I think there's typically reminders about filing deadlines and that sort of thing as well, which doesn't come from our group, but our agency would send out. That's probably the best way to stay up to date on changes.
Of course, if you are interested in more administrative guidance like rulings and what not, our Laws, Rules and Decisions page is the best place to check for new guidance from the tax commissioner, like rulings and appeals letters.
Emily Walker: Okay, great. Well again, I'm seeing a lot of thank yous. I'm glad that this was valuable for our members. We appreciate everybody's time. Like I said, forward any additional questions that you think of as you go through this tax season to me, and I will be happy to pass them along to the department to get some answers. Thank you, everybody. I think that will wrap us up.
Kristin Collins: All right. Well thank you all for your time. It was nice talking to everybody.
James Savage: Yeah, thank you.