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Virginia Tax Conformity

Posted by Julia W. Rogers Posted on Jan 15 2020

Taxpayers in the Commonwealth of Virginia generally file their personal income tax returns using the Federal Adjusted Gross Income as a starting point. This method provides for clarity and ease of administration for both taxpayers and the Virginia Department of Taxation. This method of computing Virginia income tax is known as conforming to the Federal AGI and is often referred to as Tax Conformity.

All of the above sounds simple enough - with one exception. The Virginia  tax code maintains a static conformity - in other words, the Virginia tax code states that it conforms with the Federal tax code as of a certain date. Accordingly, the Virginia General Assembly must review the tax conformity issues each year !! to determine if the Commonwealth will continue to conform as of the most recent date or if exceptions will be required.

Once again, we are waiting on the General Assembly to act on this important legislation. As of mid-January, we've already filed business returns for several clients outside of Virginia - but all of our Virginia returns are on hold.