Battle over tax code could delay returns to thousands of Virginians

Revised bill moves forward after bill preventing potential delay died Monday

RICHMOND, Va. – Thousands of Virginians could have to wait longer than usual to get money back from the government on their state tax returns, and disagreements among lawmakers are the reason why.

Republican-backed emergency legislation failed Monday in the House of Delegates. It would have brought Virginia in line with new federal tax law. Now, Virginia can’t process returns until July 1.

On Tuesday, a similar Republican-sponsored bill passed the House without the emergency clause. It’s off to the Senate.

There’s a lot of confusion right now for tax filers, said Richmond CPA David Robinson.

“Oh, it’s a big mess. The one thing about taxes is, they should be certain,” he said. “This uncertainty brings tax stress.”

He says if people file now, the benefit is they are going to have their spot in line for processing,
but the amount they pay or get back may change by the time the Virginia Department of Taxation is able to process it.

“The advice would be, if you can wait a little bit, just wait a little bit,” Robinson said.

He thinks no matter which plan lawmakers choose, it should separate the federal and state rules on itemizing. This is one issue lawmakers are discussing.

Robinson believes giving people the chance to itemize on one but not the other would not only help wealthier Virginians, but also low-income earners, for whom it could mean the difference between getting a few hundred more dollars back or getting nothing back at all.

Robinson also added that the tax code changes will cost taxpayer money -- from sending out adjustment letters to people whose amount they either are owed or need to pay has changed, and in man hours of state workers.

Another aspect of the Virginia tax code lawmakers are discussing is where to place the standard deduction amounts.

Republicans have said their goal is to provide tax relief to middle-class families. The plan that passed the House sets aside the windfall from the federal law changes to later be returned to the taxpayers.

Democrats are critical of the plan, saying it furthers the president’s policy, favoring wealthier Virginians and not doing enough to help low- to moderate-income families. They have said the plan is “irresponsible” and includes “false promises.”

Democrats also want to use the windfall from the federal changes to bolster the state’s reserves and fund other programs.