Overview of Virginia Income Taxes
The Virginia Department of Taxation is responsible for collecting state income taxes from residents and nonresidents who own property or earn income in the commonwealth. If you received a tax assessment from the Department of Taxation, failure to appeal your assessment within the statutory period or failure to pay your past due taxes can have serious negative legal implications. The Virginia Debt Collection and Set-off Act allows the Department of Taxation to withhold your tax refunds. The U.S. Department of Treasury can also set-off your federal tax refunds. Finally, you may be listed on the public Virginia Delinquent Debtor List if you are a business owner. We may be able to help you dispute your income taxes or enter into a payment plan once you discuss your case with by contacting our office.
Virginia Tax Statutes of Limitations
The Code of Virginia and the Administrative Tax Code set a mandatory statute of limitations in which the department must cease its collection efforts to collect past-due taxes. Under Virginia law, the commonwealth can pursue tax collection efforts for three years. After three years, the Code of Virginia and the Administrative Tax Code prohibit the department from pursuing unpaid taxes against taxpayers. The three-year statute of limitations does not apply to taxpayers who failed to file their tax returns or filed fraudulent returns. In these cases, the commonwealth has an unlimited amount of time to pursue collection efforts against delinquent taxpayers.
In Virginia, taxes are due on May 1 each year. If May 1 falls on a holiday or weekend, taxes are due on the next business day. This means that the Department of Taxation has three years from the date taxes were due to pursue collection efforts against delinquent taxpayers. The Virginia General Assembly enacted new tax laws in 2005 giving taxpayers automatic six-month extensions of time to file their state tax returns. Although you may receive an automatic six-month extension to file your taxes, you must remit at least 90 percent of what you owe by the original tax deadline. Failure to pay at least 90 percent will lead to an assessment of interest and late payment penalties against you. However, the commonwealth is generally limited to collecting 12 percent in late payment penalties based on the unreported or under-reported tax amount.
If you fail to pay your taxes by the May 1st deadline, the commonwealth will pursue interest and late penalty payments from you. Under Virginia law, interest assessments are not discretionary and set at 2 percent above the Department of Treasury’s annual rate.
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