Collection of state taxes; period of limitations on collection.
The bill's amendments are designed to streamline the operations of the Department of Taxation and ensure taxpayers are aware of their obligations within a specified timeframe. Additionally, it seeks to safeguard taxpayers from indefinite exposure to tax liabilities, as it limits the period during which the state can take collection action. The bill outlines that if there has been no contact with a delinquent taxpayer for six years and no lien has been filed, penalties and interest on their tax liabilities will cease to accrue. This change is intended to protect taxpayers from overwhelming debt due to accruing interest.
House Bill 2114 aims to amend the Virginia Code regarding the Department of Taxation's authority to collect state taxes by establishing a clear period of limitations on tax collection efforts. Specifically, the bill stipulates that if a tax assessment has been made within the appropriate period, the collection process must be initiated within seven years from the date of assessment. This provision aims to provide clarity and finalize the timeline of tax liabilities for both taxpayers and the Department.
Although the bill primarily addresses procedural changes, it introduces points of contention regarding the balance of power between the taxpayer and the state. Some may argue that such limitations could hinder the Department's ability to enforce tax laws effectively, potentially allowing tax evasion to become more plausible. However, supporters contend that the legislation fosters a fairer tax collection environment and enhances fiscal responsibility by setting definitive periods for tax liabilities.