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Member Thoughts: The Importance of Conformity for Tax Practitioners

December 27, 2018

By Art Auerbach CPA
Arthur Auerbach, CPA, Atlanta

Picture of Art Auerbach

Tax practitioners are never short on interesting issues to deal with, but this has been a unique year even by those standards because of the Tax Cuts and Jobs Act and its impact on state taxation. Last year’s Virginia tax conformity bill just dealt with issues that impact 2017 returns, which means 2018 returns are still in a state of uncertainty. You don’t need me to tell you why that’s bad for your practice and your clients, but I wanted to pass along some background anyway.

I live in Georgia now, but when I lived in Herndon, I was active in the VSCPA’s advocacy efforts and saw the conformity process play out each year. Conformity tended to be a pretty simple issue to resolve, but that’s not the case this year. This year, conformity is politically charged because of federal tax reform, and that’s a big problem.

Nobody knows yet what the impact of the Tax Cuts and Jobs Act will be in Virginia (or in Georgia, or anywhere else), and no one will until 2018 returns are filed. With all the increases in withholding taxes, it remains up in the air what’s going to have to be refunded when people file their returns. Right now, we won’t know that until early or late spring, if we get resolution at all. That’s a problem.

Furthermore, Virginia’s budget year ends June 30. Any delay in getting conformity passed and enacted means less time for the Commonwealth to assess tax revenue for the 2018 filing season. And that’s not even the worst-case scenario. There’s a chance we don’t get conformity done at all. That means a lot more work for you, a lot more complexity and cost for your clients and less revenue for vital government services.

If you don’t want your busy season running into July and August, you want to get a conformity date as soon as possible. Now’s the time to contact the legislators who represent you and your clients and tell them why we need a conformity bill. Anything they want to do with tax reform can go in a separate bill, but we need to get 2018 returns filed so that people who are entitled to refunds can get them.

From one practitioner to another, if you want to have an easier busy season, contact your member in the legislature and let them know how important getting a conformity date set early in the session is to you. It’s important for you, it’s important for your clients, and it’s important for the state government. Let’s get in touch with our legislators and get it done.