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Letter to Sec. Layne on Conformity to the CARES Act

July 30, 2020 

Secretary Aubrey L. Layne Jr., CPA 
Office of the Secretary of Finance 
Patrick Henry Building 
1111 East Broad Street 
Richmond, VA 23219 

RE: Conformity to the CARES Act 

Dear Secretary Layne: 

In light of the upcoming special session of the Virginia General Assembly scheduled to begin on Aug. 18, 2020, the Virginia Society of Certified Public Accountants (VSCPA) Tax Advisory Committee requests the administration and the General Assembly address conformity with tax provisions in the Coronavirus Aid, Relief and Economic Security (CARES) Act as part of their deliberations.   

As you may be aware, the VSCPA has Guiding Principles of Virginia Tax Policy, which were adopted by both the Tax Advisory Committee and the VSCPA Board of Directors. With respect to tax conformity, our guiding principles state that Virginia’s tax laws should conform with federal tax laws whenever possible. In addition, consideration should be given to any lag time for Virginia to adopt federal tax changes, and the complexity and uncertainty such a delay creates for Virginia taxpayers. 

The Committee reviewed the various tax provisions within the CARES Act and identified the following items which will impact Virginia taxpayers if not addressed promptly: 

  • Increased Net Operating Loss (NOL) Carryback and Utilization — CARES Act. § 2303; Internal Revenue Code (IRC) § 172
  • Modification of Limitation on Use of Excess Business Losses — CARES Act. § 2304; IRC § 461(l)
  • Modifications of Limitation on Deductibility of Business Interest — CARES Act. § 2306; IRC § 163(j)
  • Accelerated AMT Credit Recovery — CARES Act § 2305; IRC § 59
  • Technical Amendments Regarding Qualified Improvement Property (QIP) — CARES Act. § 2307; IRC § 168 

All items cited above have either retroactive or immediately effective provisions and are therefore already affecting Virginia taxpayers and tax planning activities. While we recognize the Commonwealth has historically not conformed with respect to NOLs, it is our recommendation and request Virginia will conform with the remainder of the provisions listed above. In particular, the QIP provision and the modification of the limitation on the use of excess business losses items contain technical corrections to the language passed in the Tax Cuts and Jobs Act (TCJA), making it important for Virginia to address these two issues. 

We recognize the impact to the state budget will be a critical component of the decision regarding whether to conform to these provisions. However, we strongly encourage conformity to the extent possible. In cases where conformity is not possible from an economic and financial standpoint, it is extremely important for that decision to be made in the upcoming special session so guidance can be developed and appropriate tax planning can occur. 

The VSCPA is the leading professional association in the Commonwealth dedicated to empowering CPAs to thrive. Founded in 1909, the VSCPA has more than 13,000 members who work in public accounting, industry, government and education. Please feel free to contact me or VSCPA Vice President, Advocacy Emily Walker, CAE, at (804) 612-9428 or [email protected] if we can be of further assistance. 


Vivian J. Paige, CPA 
2020–2021 Tax Advisory Committee Chair 
Virginia Society of CPAs  

CC: Mr. Clark Mercer, Mr. Craig M. Burns, Sen. Janet Howell, Del. Luke Torian, Del. Vivian Watts