The second emergency funding package, passed on Dec. 27, allowed companies receiving the federal aid to deduct expenses from their taxes for the first time, even though the money was not taxed at the federal level. The assembly eventually passed a compromise that would allow companies that received the loans or grants from the Rebuild VA program to deduct up to $ 100,000 in expenses from their taxes by 2020.
The legislation also gave approximately $ 121 million in tax breaks to individual taxpayers to comply with changes to federal income tax law. The Assembly passed the law by two-thirds of the votes in both houses so that the law could take effect immediately after it was signed by the governor instead of July 1st.
“Obviously we’re excited to have it finally signed,” said Emily Walker, vice president of advocacy for the Virginia Society of Certified Public Accountants.
Accountants and other tax advisors have been waiting for guidance from the Treasury Department, which will not act until the governor has put the laws into law. Accountants can now also customize their tax return processing computer software to reflect changes in Virginia tax law.
Some companies have faced a Monday deadline for filing federal returns, although Virginia does not require those returns to be filed by April 15. Tax returns are due May 1st for most Virginia taxpayers. However, this could be delayed if the IRS changes the deadline for filing the federal return to July 15, as it did last year because of the pandemic.