May 26, 2020
Craig M. Burns
Virginia Department of Taxation
P. O. Box 546
Richmond, VA 23218-0546
Via email: [email protected]
RE: Impact of tax penalty relief on pass-through entity withholding
Dear Secretary Layne:
The Virginia Society of Certified Public Accountants (VSCPA) Tax Advisory Committee would like to request that penalty relief be granted for nonresident withholding payments on pass through entities (PTEs) which were due on April 15.
Over the past several weeks, we have heard from several members who relied on the guidance in Tax Bulletin 20-4, which did not clearly specify that nonresident withholding tax payments reported on Form 502 were not eligible for the payment extension to June 1. This was later clarified in Tax Bulletin 20-5, issued on April 27, which was after the April 15 payment deadline, making no recourse available.
We recognize the Virginia Department of Taxation (TAX) considers the PTE withholding payments to be conceptually similar to the employer withholding tax. However, many taxpayers and tax practitioners view PTE withholding as individual income tax payments. Given the uncertainty and confusion created by the COVID-19 crisis, we feel it would be appropriate to allow penalty relief for those who reasonably relied on Tax Bulletin 20-4 in taking advantage of the payment extension.
The Virginia Society of Certified Public Accountants (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
Chair, 2020–2021 Tax Advisory Committee
Virginia Society of CPAs
CC: Secretary of Finance Aubrey L. Layne, CPA
Patrick Cushing — VSCPA Legislative Counsel