March 20, 2020
The Honorable Ralph Northam
P.O. Box 1475
Richmond, VA 23218
RE: Tax filing and payment due date extensions amid Coronavirus Pandemic
Dear Governor Northam:
The Virginia Society of Certified Public Accountants (VSCPA) would like to follow-up on the March 19, 2020, letter to Secretary Aubrey Layne, CPA, from the VSCPA Tax Advisory Committee related to providing tax penalty relief due to the uncertainty and challenges caused by the coronavirus (COVID-19) pandemic. We appreciate your announcement yesterday regarding penalty relief for tax payments received by June 1.
We write now because earlier today U.S. Treasury Secretary Steven Mnuchin announced that in addition to the federal extension of the payment deadline, the federal filing deadline would also be extended to July 15, 2020. The VSCPA now strongly recommends that Virginia extend both its filing and payment deadlines to July 15, 2020, in alignment with the federal extension.
In light of the new information from Treasury and the Internal Revenue Service (IRS), we surveyed our members for direct input and feedback about how disparate state and federal deadlines would impact them. Overwhelmingly, VSCPA members are in favor of Virginia extending its tax deadline to align with the federal deadline for the following reasons:
Virginia returns require the preparation of the federal return as the starting point before making Virginia-specific adjustments. Having a Virginia filing deadline that is earlier than the federal deadline essentially negates the federal extension.
Most tax filing software does not permit the state returns to be filed unless the federal return has been filed.
With many CPA firms and tax preparation services pushing staff to work remotely as well as clients following the recommendations to stay home/self-quarantine, the logistics of filing tax returns at this juncture is challenging at best. Not all clients have submitted their information nor do all clients have the ability to transmit or receive electronic data. This will only get worse if it becomes necessary for you to issue an order to shelter in place or self-quarantine.
There are staffing shortages for CPA firms resulting from social distancing measures. In particular, mandated school closures are a contributing factor for staff with young children, either by limiting their time while working remotely or forcing them to take leave due to lack of childcare options.
Taxpayers are confused about the difference between the state and federal filing deadlines. They are likely to assume that the federal extension also applies to Virginia and will take the extension not realizing that it will cause them to incur penalties in Virginia.
We recognize that minimizing the impact to the state budget is critically important to allowing the Commonwealth to continue to have the financial means to provide much needed services during this unprecedented crisis. However, we believe that the federal extensions have made it increasingly difficult for Virginia not to find a way to provide similar relief without creating tremendous compliance challenges for Virginia’s taxpayers and tax practitioners. We urge you to work with Sec. Layne and the General Assembly to quickly address this problem to prevent further chaos and confusion for Virginians.
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.
Gary R. Thomson, CPA
Virginia Society of CPAs
CC: Sec. Aubrey Layne, Jr. CPA, Mr. Craig M. Burns, Sen. Janet Howell, Del. Luke Torian, Del. Vivian Watts, Clark Mercer, Patrick Cushing