ADVOCACY
A long two-month road to tax conformity This year’s Virginia General Assembly had to wrestle with pandemic-related relief when debating conformity. Some years tax conformity happens quicker than others. This year, unfortunately, we had to wait until the end of February to get a full vote. The complexities presented by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Consolidate Appropriations Act (CAA) made this year’s conformity process especially challenging.
Tax conformity passed the House on Friday, Feb. 26 with only two dissenters and unanimously in the Senate the next morning, Feb. 27. The legislation advanced the date of conformity of Virginia’s tax code to the U.S. Internal Revenue Code from Dec. 31, 2019, to Dec. 31, 2020. The emergency clause, which allowed conformity to go into effect immediately upon Gov. Ralph Northam’s signature, was removed from earlier bill iterations, much to accountants’ dismay, but was added back into the final versions. With Northam’s signature on March 16, conformity became official. The conformity legislation allows Virginia to conform to most U.S. Internal Revenue Code provisions through Dec. 31, 2020, including:
• COVID-19-related retirement distributions. • Above-the-line charitable contributions deduction. • Deduction limitations for certain charitable contributions. • Exclusion of educational payments. • Extension of the $300 deduction for nonitemizers to taxable year 2021. • Enhancing the charitable deduction for individuals for certain contributions. • Temporary full business meals deduction. • Extension of exclusion for certain employer payments of student loans. • Depreciation of certain residential rental property over a 30-year period. • Temporary enhancement of the EITC. • Repeal of the deduction for qualified tuition.
DEADLINE DELAYS March brought a flurry of tax delays causing consternation for tax professionals. On March 17, the Treasury Department and IRS announced a federal income tax filing due date delay for individuals until May 17, 2021. But that was problematic because estimated tax payments were due as usual. We reached out to federal legislators advocating a further delay and also asked VSCPA members to contact their representatives. At press time, no further changes had been announced. After the federal delay, we asked Virginia to follow suit. On March 17, Gov. Northam directed the Virginia Department of Taxation to also extend the state’s individual income tax deadline to May 17. The news and information have come at us quickly over the past few months. We always post breaking taxrelated news on our social media channels. See page 3 to learn how to find us!
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DISCLOSURES
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SPRING 2021
