State and local taxes impact almost every taxpayer. S.A.L.T developments in any one jurisdiction can be frequent and sometimes confusing. Where multiple jurisdictions are involved, staying current with state and local tax developments can be overwhelming for any taxpayer.
To assist you with staying current on a periodic basis, Baker Donelson's S.A.L.T. Select Developments will identify one or more recent state and local tax developments from Virginia.
May 2024
Guidelines/Deadline for Retroactive Taxable Year 2021 PTE Election: The Virginia Department of Taxation (Department) recently issued Guidelines, Document No. 24-12, with respect to a pass-through entity (PTE) having the option to pay an elective income tax (PTET) for taxable year 2021. By way of brief background, the Virginia General Assembly enacted legislation in 2022 that permitted a PTE to make an election for PTET, such legislation being effective for taxable years beginning on or after January 1, 2021; and also allowed the corresponding refundable income tax credit to certain PTE owners for income tax paid by the PTE if the PTE makes the election and pays the elected income tax imposed at the entity level. During the 2023 Session, the General Assembly removed the requirement that the PTE be 100 percent owned by a natural person or persons eligible to be shareholders of an S corporation in order to make the election to pay the PTET. These changes are effective for taxable years beginning on or after January 1, 2021. The Guidelines published by the Department state that they are intended to provide guidance to taxpayers regarding the elective income tax and corresponding refundable credit. The Guidelines set the criteria for making the election retroactive for the 2021 year as well as address the required filing by PTE of the retroactive taxable year 2021 PTET returns and the accompanying schedules and making any tax payments electronically. The Guidelines provide that an electing PTE is required to pay in full the PTET owed by the time they file their 2021 Form 502 PTET and must file that Taxable Year 2021 Form 502 PTET by September 16, 2024. The Guidelines provide that no retroactive Taxable Year 2021 PTET returns will be accepted after that date, and there are no extensions or late filing options. The Guidelines contain various other information regarding this retroactive option. Further, the Guidelines include information for an eligible owner claiming a refundable PTE credit against a Virginia income tax. More information can be found here.