Some businesses have had to wait for their corporate refunds as the state took a harder look at their returns,聽聽said. But he added that the delays had nothing to with the state wanting to speed up refunds to individuals.
The corporate refund delays, which were mentioned in a footnote in Cummings' 59-page financial report to the General Assembly, became an issue last week when Cummings told legislators that the tax department had shifted staff from reviewing corporate filings to handling individual tax returns.聽
That rekindled worries that Gov. Glenn Youngkin's administration had pressed officials to speed checks to individual taxpayers to arrive ahead of Election Day in 2022 and 2023.聽聽
But the corporate tax refunds delays were caused by a squeeze: a trend in recent years that more corporate returns required more intensive reviews and in addition coming as nine of the top experts who handle complicated corporate filings left the state government, Cummings said in a letter Wednesday to House Speaker Don Scott Jr., D-Portsmouth.
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Fiscal year 2024鈥檚 corporate tax refunds roughly doubled to $400 million, and a bit more than half the increase聽鈥 some $110 million聽鈥 involved refunds issued after the more detailed secondary review that tax officials launch when initial checks spot substantial errors on a return, or when a company has not filed a tax return before or is seeking a large refund, Cummings said.
Of refunds issued after a secondary review, a total of $1 million involved taxes paid before 2019, $1.2 million from 2019 returns, $4.6 million from 2020 returns and $37 million from 2021 returns, Cummings said.
These were the equivalent of about 2% of corporate income tax collections in .
The rest of the refunds, some $66 million, were paid in time, he said.
Most companies sought extensions to October 2023 for their 2022 tax filings, he noted, which means reviews of refunds owed may still be in process on schedule if they have not in fact already been paid.
Cummings鈥 footnote about the delayed refunds did not disclose the amount but said they were a factor in last year鈥檚 decline in net corporate income tax collections.
That prompted some sharp words from Lt. Gov. Winsome Earle-Sears, saying it was hurting small business.
Cummings said the delays were due to a shift of tax department staff to process individual refunds.
When Scott asked for more details, Cummings replied that after checking into the matter, none of the tax department staff responsible for reviewing corporate filings was shifted to work on individual refunds.
鈥淔rom 2020 to 2024, nine staff departed who were supporting the secondary review process for business returns,鈥 Cummings said. 鈥淭his included the departure of three long-tenured specialists who were dedicated to reviewing corporate income returns.鈥
Cummings said the tax department has recently trained several employees and assigned them to handle corporate returns.
鈥淭here is a large amount of variability from year to year in both gross corporate collections and refunds due to changes in taxpayer behavior and the timing of Virginia Department of Taxation鈥檚 handling of larger, more complex or disputed returns," Cummings said.
