During a discussion today about the issue of whether and how Virginia should amend its taxes in response to recent federal changes, the question came up: just what is the situation today? I was reminded that the conformity bill that originally passed in the 2018 General Assembly was subsequently amended at the request of the Governor with very little fanfare. Has Virginia actually conformed?
Here is the language now in the Code of Virginia.
The original introduced bill set a conformity date of December 1, 2017, well before Congress acted. The bill that then passed the House and Senate set the date at December 31, after the new federal law was signed, but included language that limited conformity only to the new federal provisions that had an impact on 2017 taxes (see paragraph 6c.) The Governor’s Amendment advanced that conformity date to February 9, 2018 – but did not change the language that prevented conformity from just about every provision that applies to tax year 2018. So as I read the bill, Virginia still has not conformed to the “Tax and Job Cuts Act”.
The official summary for the bill on the legislative website, which was written after the Governor’s Amendment, seems to agree: “The bill conforms only to certain provisions of Public Law 115-97, known as the Tax Cuts and Jobs Act, that affect taxable years prior to 2018.” (Emphasis added). That leaves Virginia’s posture toward all of the new rules and definitions for 2018 and beyond still to be determined.
As you can see by reading the current law, Virginia has already lost its purity as a conformity state with all the exceptions in the Code. I still expect a strong inclination on the part of many of Virginia’s elected leaders to keep all the new revenue produced for the state, thus offsetting some of the federal tax cuts, and to consider selective de-conformity as a method to add to that revenue.There are currently no comments highlighted.