It’s not a normal tax refund, but almost 350,000 Virginia taxpayers are running out of time to receive a one-time payment this fall as part of the state’s response to federal tax reform.

Gov. Ralph Northam sounded the alarm on Tuesday for taxpayers to file their tax returns by July 1 to qualify for a one-time refund of $110 for individuals and $220 for married couples by mid-October.

“With the filing deadline fast approaching, I urge all Virginians who still need to submit state individual income taxes to file now so they can qualify for the Tax Relief Refund,” Northam said in a written announcement. 

Secretary of Finance Aubrey Layne had raised the issue a day earlier before the House Appropriations Committee, which fashioned the tax relief package with the Senate Finance Committee and Northam administration earlier this year. The package is designed to compensate Virginia taxpayers who may pay more in state taxes as an unforeseen consequence of the Tax Cuts and Jobs Act that President Donald Trump signed 18 months ago.

Layne, a certified public accountant, said about 348,000 Virginia taxpayers who typically seek an extension to file their tax returns won’t be eligible for the special refund if they wait until after July 1, the start of the fiscal year. The state tax department has a tight deadline for certifying excess revenues to be returned to taxpayers by Oct. 15 under the new law.

He anticipates the state will issue 2.7 million refund checks to taxpayers, beginning in mid-September.

House Appropriations Chairman Chris Jones, R-Suffolk, commended Layne and the state tax department on Tuesday “for being proactive and showing they’ll be able to meet the schedule that was included in the legislation.” 

The special refund will be given to most taxpayers, except those whose tax liability is met with state tax credits. The state will issue the refunds to taxpayers who have paid the state at least the amount of the refund in taxes, after deductions or tax credits, including the earned income tax credit. Northam had proposed a budget change that would have allowed taxpayers to be eligible for the refund if their tax liability was at least that much before applying tax credits, but the Senate rejected the proposal during the General Assembly veto session in early April, even though the House approved it. 

Whether taxpayers received a regular refund doesn’t matter; those with a tax liability of at least $110 for individuals and $220 for married couples are eligible for the special refund.

Northam and Layne also warned taxpayers that the state will apply the one-time refund to any outstanding debts they owe to state and local governments, state courts or the IRS under Virginia’s debt set-off program.

“If you owe it, we will get it,” Jones said at the Appropriations Committee meeting on Monday.

State tax officials also cautioned that taxpayers could face delays if the state flags their returns for potential fraud or requires further documentation.

“We don’t want anyone who hasn’t filed to wait until the last minute to do so,” Tax Commissioner Craig Burns said in the governor’s announcement on Tuesday.
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