Virginia taxpayers will not get much relief in filing their taxes during the coronavirus pandemic. In fact, they’re expected to file on time, and in some instances, pay interest on payments they owe.
Virginia, Idaho and Mississippi are the only three states in the U.S. that are not matching the Internal Revenue Services’ extended federal tax filing and payment deadline of July 15. The federal agency put the new deadline in place in March pursuant to the Stafford Act, which authorizes the delivery of technical, financial, logistical and other assistance to states and localities during declared major disasters or emergencies.
According to officials at a Washington-based tax policy organization, when a state fails to conform to the new federal filing deadline, it denies its taxpayers the benefits of that extension, as taxpayers usually prepare federal tax returns first, as a basis for their state returns.
“Virginia has done the least to help taxpayers with delayed filings or delayed payments than any other state,” said Jared Walczak, director of state tax policy with the Tax Foundation.
Walczak said although Virginia requires that state tax returns be filed by May 1, the payment deadline has been extended until June 1. But even with an extension on tax payments, Walczak said interest starts to accrue on the amount you owe.
“Virginia is the only state in the nation that is doing that,” said Walczak. “Everywhere else, there is at least some relief on both filing and payment deadlines.”
Idaho and Mississippi both moved their original April 15 deadlines, but did not extend them to match the new federal date. Mississippi gave its taxpayers another month, to May 15, and Idaho moved its filing date to June 15.
Walczak said Virginia officials say the May deadline remained in place because of concerns by state government officials that revenue would not flow to localities within the state if a shift of collections was made into the next fiscal year, which begins July 1.
“This is a valid concern, but it’s a concern that is of equal importance in every other state,” said Walczak. “In other states—some of them in far worst fiscal condition than Virginia—they have decided they can manage this. Practically every other state has found a way to deal with this.”
In light of the COVID-19 pandemic and the economic uncertainties currently facing many Virginia families, state Sen. Richard Stuart, R–Stafford, believes the May 1 tax filing deadline should be extended.
Stuart cited several imminent issues that Virginians will soon face, including the possibility of higher energy bills as a result of the Regional Greenhouse Gas Initiative, a cap-and-trade program under which energy generation plants in the state steadily reduce carbon emissions. In February, the Democratic-led Virginia Senate and House of Delegates passed legislation to allow the commonwealth to join that coalition.
“In a horrible economic environment, this is going to be a real burden on Virginians,” Stuart said.
Walczak said other states who have conformed to the IRS’ new deadline have determined it’s not only important that taxpayers get some financial breathing room during the coronavirus pandemic, but equally important in helping to meet the shelter-at-home requirements put in place during the pandemic.
On March 30, Gov. Ralph Northam issued a statewide stay-home order to protect the health and safety of Virginians and mitigate the spread of COVID-19. Walczak said he believes small business owners traveling in town to gather receipts, or citizens driving to drop off materials at tax preparers’ offices are inconsistent with the governor’s order to remain in place.
“It’s a significant ask of people in a time where we’re also asking them to stay home as much as possible,” said Walczak.
Walczak believes more taxpayers will file online this year than ever before, and encourages Virginia taxpayers to file by May 1 and make payments to avoid interest.
“If there’s a need for some amendment, that’s better than not paying at all,” said Walczak. “If you are able to pay your taxes in Virginia by May 1, do so, even though the payment deadline is technically June 1. You will save yourself the interest that can accrue during that period.”