July 28, 2021
Craig M. Burns
Virginia Department of Taxation
P. O. Box 546
Richmond, VA 23218-0546
Via email: [email protected]
RE: Research & Development Tax Credit Application Deadlines
Dear Commissioner Burns:
The Virginia Society of Certified Public Accountants (VSCPA) Tax Advisory Committee has received feedback from VSCPA members regarding the new timelines associated with the Research & Development tax credit application process due to legislation from the 2020 General Assembly.
The Committee believes the new timeline created some unintended consequences and challenges for certain users of the R&D tax credit program and their tax professionals. The new timeline means calendar year filers are unable to receive approvals prior to the Oct. 15 filing deadline, forcing them to either file late and request penalty abatement or file timely and subsequently amend. Either of these options place undue burden on impacted taxpayers and reduces the benefit and attractiveness of the program
The Committee appointed a special task force to discuss various opportunities to address the challenges and create more equity in the program. The resulting recommendation is to allow taxpayers to claim the credit prospectively, similar to Maryland and Pennsylvania’s treatment. It is our belief that this change could be adopted administratively and would not require a legislative change.
Alternatively, the Committee recommends reverting the application deadline to July 1 for the smaller entities, while keeping the new timeline in place for the larger entities which requested the change. The Committee also recommends simplifying the application process for the smaller pool and rely on management representations. This solution could potential save the Department time, money and staffing resources, allowing you to focus on the larger applicants with higher risk.
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, 2021–2022 Tax Advisory Committee
Virginia Society of CPAs
CC: Secretary of Finance Joe Flores
Patrick Cushing — VSCPA Legislative Counsel