Lavender fields

Analysis

Virginia clarifies payment extension and interest waiver do not apply to partnership nonresident withholding tax

Multistate Tax alert | May 4, 2019

This tax alert summarizes non applicability of payment extension and interest waiver on partnership nonresident withholding tax.

Overview

On April 27, 2020, the Virginia Department of Taxation (Department) published Tax Bulletin 20-5 which addressed 2020 legislation that automatically waives the accrual of interest for certain Virginia income and sales tax payments that have been extended in response to COVID-19. The Department further clarifies that the interest waiver and payment extension previously announced do not apply to pass-through entity nonresident withholding tax.

Relief under Virginia Tax Bulletin 20-4

Pursuant to the previously issued Tax Bulletin 20-4, on March 19, 2020 Governor Ralph Northam announced an extension of the due date for certain tax payments. Tax Bulletin 20-4 provides that “[a]ny income payments due during the period from April 1, 2020 to June 1, 2020 can now be submitted to the Department at any time on or before June 1, 2020 without penalty.”1 As a result, the Department is automatically waiving any late payment penalties if the tax due is paid in full by June 1, 2020.

red flowers in ice

Relief under Virginia Tax Bulletin 20-5

Pursuant to budget amendments enacted by the General Assembly (Item 3-5.23 of House Bill 29, Chapter 1283 of the 2020 Acts of Assembly, and Item 3-5.22 of House Bill 30), Virginia will waive the accrual of interest for certain Virginia income and sales tax payments that are paid on extension in response to the coronavirus disease 2019 (COVID-19) crisis. Tax Bulletin 20-5 explains this relief stating that certain income payments originally due during the period from April 1, 2020 to June 1, 2020 may now be submitted to the department without the accrual of interest as otherwise required for late payments.2

purple flower in ice

Clarification relief does not apply to pass-through entity nonresident withholding tax

The interest waiver and payment extension apply to income tax paid with a pass-through entity composite tax return. However, the Department clarified in Tax Bulletin 20-5 the relief does not apply to pass-through entity nonresident withholding tax. As such, interest and penalties may be imposed if the nonresident withholding tax was not paid by the original due date (4/15/2020 for calendar year pass- through entities).

yellow flowers in ice

Considerations

Taxpayers that deferred payment of pass-through entity nonresident withholding tax beyond the original April 15, 2020 due date should discuss with their state tax advisors.

purple flower

Contacts:

If you have any questions regarding the information in this alert, please contact any of the following Deloitte Tax professionals:

Greg Bergmann, partner—Multistate, Deloitte Tax LLP, Chicago, +1 312 486 9811

David Vistica, managing director—Multistate, Deloitte Tax LLP, Washington, +1 202 370 2268

Back to top

References

1 Tax Bulletin 20-4 can be found here.

2 Tax Bulletin 20-5 can be found here.

Multistate Tax alert archive

The Multistate Tax alert archive includes external tax alerts issued by Deloitte Tax LLP's Multistate Tax practice during the last three years. These external alerts highlight selected developments involving state tax legislative, judicial, and administrative matters. The alerts provide a brief summary of specific multistate developments relevant to taxpayers, tax professionals, and other interested persons.

View the list of archived Multistate Tax alerts.

bulb filament
Did you find this useful?