Current through Register Vol. 41, No. 3, September 23, 2024
A. In general. Every corporation which
expects its income tax to exceed $1,000 for the taxable year is required to
file a declaration of estimated tax and to pay the tax in installments during
the taxable year. The payments of estimated tax are considered payments on
account of the income tax for the taxable year and shall be applied toward
payment of the income tax upon filing of the income tax return for the taxable
year. The declaration of estimated tax may be amended with each installment and
subsequent payments adjusted accordingly. No refund of estimated tax can be
made until the income tax return is filed except in extraordinary
circumstances. For example, if a credit union pays estimated tax without
realizing that it is exempt from income tax under § 58.1-401 of the Code
of Virginia, it would be entitled to a refund of estimated tax because a credit
union is not required to file an income tax return.
B. Who to file.
1. A declaration of estimated tax shall be
made by every corporation which is subject to the Virginia income tax under
§ 58.1-400 of the Code of Virginia if its income tax less the credit
allowable under §§ 58.1-430 (relating to credit for investments under
the Neighborhood Assistance Act of 1981) and 58.1-431 of the Code of Virginia
(relating to the Energy Income Tax Credit) can reasonably be expected to exceed
$1,000.
2. The term "estimated tax"
means the amount which the corporation estimates as the amount of the income
tax for the taxable year less the amount which the corporation estimates as the
sum of any credit allowable against the income tax under §§ 58.1-430
and 48.1-431 of the Code of Virginia. For the purpose of determining if a
declaration of estimated tax is required, a refund of income tax for prior
taxable year, which the corporation requests be applied toward the estimated
tax for the subsequent taxable year, is not an allowable credit but a payment
of the estimated tax. For example, a corporation which estimates its 1984
income tax to be $2,500, its Energy Income Tax Credit to be $1,000 and which
has a refund from 1983 of $300 has an "estimated tax" of $1,500. The $300
refund may be applied toward the first quarterly installment payment of $375
(1,500/4).
C. Contents
of declaration.
1. The declaration of
estimated tax shall be made on form 500-ES. For the purpose of making the
declaration, the estimated tax should be based upon the amount of federal
taxable income for the federal estimated tax plus the estimated net Virginia
modifications. Such amounts of federal taxable income and net Virginia
modifications should be determined upon the basis of facts and circumstances
existing as at the time prescribed for the declarations as well as those
reasonably to be anticipated for the taxable year.
2. Copies of form 500-ES will so far as
possible be furnished taxpayers by the Department. A taxpayer will not be
excused from making a declaration, however, by the fact that no form has been
furnished. Taxpayers not supplied with the proper form should make application
therefor to the Department in ample time to have their declarations prepared,
verified, and filed with the Department on or before the date prescribed for
filing the declaration. If the prescribed form is not available a statement
disclosing the estimated income tax should be filed as a tentative declaration
within the prescribed time, accompanied by the payment of the required
installment. Such tentative declaration should be supplemented, without
unnecessary delay, by a declaration made on the proper form.
D. Short taxable year. If a
corporation expects its income tax less allowable credits to exceed $1,000 for
a short taxable year then such corporation shall make a declaration of
estimated tax. If the short taxable year results from a change in accounting
period, the tax shall be placed on an annual basis to determine if the
annualized tax exceeds $1,000. The tax shall be placed on an annual basis by
multiplying the expected income tax less allowable credits by 12 and dividing
by the number of months in the short taxable year.
E. Consolidated and combined returns.
1. Affiliated groups of corporations which
have properly elected, or received permission, to file Virginia income tax
returns on a consolidated or combined basis shall also make declarations of
estimated tax on a consolidated or combined basis.
2. Corporations registering with the State
Corporation Commission for the privilege of doing business in Virginia will
receive a "Combined Registration Application" to register the corporation for
Sales and Use, Withholding, Litter and Income taxes. Corporations which have
decided to file their Virginia income tax returns on a consolidated or combined
basis at the time of registration should so indicate on the application. An
affiliated group of corporations makes an election to file returns on a
separate, consolidated or combined basis when two or more members of the
affiliated group file their first income tax returns. Thereafter the affiliated
group must obtain permission from the Department to change the method of
reporting. Members of the affiliated group which become subject to Virginia
income tax in subsequent years must use the method of reporting previously
elected by the group. For additional information on separate, consolidated and
combined returns see
23VAC10-120-320 through
23VAC10-120-327. The filing of a
registration application or declaration of estimated tax is not an election of
a method of reporting.
Statutory Authority
§§ 58.1-203 and 58.1-500 of the Code of Virginia.
