Virginia should pass conformity legislation early
22.05.12
By Nicholas Harrison, CPA A hot topic in the General Assembly each year is the extent to which Virginia conforms to the federal Internal Revenue Code (IRC) for purposes of state income taxation. The commonwealth has historically conformed to varying degrees, but generally lawmakers have passed this legislation fairly quickly.
This provides certainty to tax preparers early in their “busy season.” In recent years, however, the debate over conformity has at times continued further into the General Assembly session. This can have serious consequences for taxpayers, tax preparers and the Virginia Department of Taxation. Following is a brief discussion of the issues surrounding Virginia’s conformity to the IRC, and the impact of conformity on stakeholders.
Conformity and Virginia
The concept of conformity is frequently mentioned in the context of state personal and corporate income taxes, but not always fully understood. In sum, the concept of conformity refers to the degree to which a state’s tax code conforms to the IRC. In most states that levy a tax based on net income, the starting point in computing state taxable income is federal adjusted gross income (for individuals) and federal taxable income (for corporations).
Source: Virginia Business Magazine