58.1-492 - Failure by individual, trust or estate to pay estimated tax.
§ 58.1-492. Failure by individual, trust or estate to pay estimated tax.
A. In the case of any underpayment of estimated tax by an individual, trustor estate, except as provided in subsection C, there shall be added to thetax under this chapter for the taxable year an amount determined at the rateestablished for interest, under § 58.1-15, upon the amount of theunderpayment (determined below), for the period of the underpayment(determined under subsection B). The amount of such addition to the tax shallbe reported and paid at the time of filing the individual income tax returnor the fiduciary income tax return for the taxable year.
The amount of the underpayment shall be the excess of:
1. The amount of the installment which would be required to be paid if theestimated tax were equal to ninety percent (sixty-six and two-thirds percentin the case of an individual referred to in § 58.1-490 F, relating to incomefrom farming) of the tax shown on the return for the taxable year, or if noreturn was filed, ninety percent (sixty-six and two-thirds percent in thecase of individuals referred to in § 58.1-490 F, relating to income fromfarming) of the tax for such year; or 100 percent of the tax shown on thereturn of the taxpayer for the preceding taxable year, whichever is less, over
2. The amount, if any, of the installment paid on or before the last dateprescribed for such payment.
B. The period of the underpayment shall run from the date the installment wasrequired to be paid to whichever of the following dates is the earlier:
1. May 1, if a calendar year, or the fifteenth day of the fourth monthfollowing the close of the taxable year, if a fiscal year.
2. With respect to any portion of the underpayment, the date on which suchportion is paid. For purposes of this subdivision a payment of estimated taxon any installment date shall be considered a payment of any previousunderpayment only to the extent such payment exceeds the amount of theinstallment determined under subdivision A 1 for such installment date.
C. Notwithstanding the provisions of subsections A and B, the addition to thetax with respect to any underpayment of any installment shall not be imposedif the total amount of all payments of estimated tax made on or before thelast date prescribed for the payment of such installment equals or exceedswhichever of the following is the lesser:
1. The amount which would have been required to be paid on or before suchdate if estimated tax were whichever of the following is the least:
a. The tax shown on the return of the individual, trust or estate for thepreceding taxable year, if a return showing a liability for tax was filed bythe individual, trust or estate for the preceding taxable year and suchpreceding year was a taxable year of twelve months;
b. An amount equal to the tax computed, at the rates applicable to thetaxable year, on the basis of the taxpayer's status with respect to personalexemptions for the taxable year, otherwise on the basis of the facts shown onhis return for, and the law applicable to, the preceding year; or
c. An amount equal to ninety percent (sixty-six and two-thirds percent in thecase of individuals referred to in § 58.1-490 F, relating to income fromfarming) of the tax for the taxable year computed by placing on an annualizedbasis the taxable income for the months in the taxable year ending before themonth in which the installment is required to be paid. For purposes of thisparagraph the taxable income shall be placed on an annualized basis by:
(i) Multiplying by twelve (or, in the case of a taxable year of less thantwelve months, the number of months in the taxable year) the taxable income(computed without deduction of personal exemptions) for the months in thetaxable year ending before the month in which the installment is required tobe paid, or, for a trust or estate, the months in the taxable year endingbefore the date that is one month before the month in which the installmentis required to be paid;
(ii) Dividing the resulting amount by the number of months in the taxableyear ending before the month in which such installment date falls, or, for atrust or estate, the months in the taxable year ending before the date thatis one month before the month in which the installment is required to bepaid; and
(iii) Deducting from such amount the deductions for personal exemptionsallowable for the taxable year (such personal exemptions being determined asof the last date prescribed for payment of the installment); or
2. An amount equal to ninety percent of the tax computed, at the ratesapplicable to the taxable year, on the basis of the actual taxable income forthe months in the taxable year ending before the month in which theinstallment is required to be paid.
D. For purposes of applying this section:
1. The estimated tax shall be computed without any reduction for the amountwhich the individual estimates as his credit under § 58.1-480 (relating totax withheld at source on wages);
2. The amount of the credit allowed under § 58.1-480 for the taxable yearshall be deemed a payment of estimated tax, and an equal part of such amountshall be deemed paid on each installment date (determined under § 58.1-491)for such taxable year, unless the taxpayer establishes the dates on which allamounts were actually withheld, in which case the amounts so withheld shallbe deemed payments of estimated tax on the dates on which such amounts wereactually withheld; and
3. There shall be no addition to tax imposed for underpayment of estimatedtax of $150 or less for the taxable year.
E. The application of this section to taxable years of less than twelvemonths shall be in accordance with regulations prescribed by the TaxCommissioner.
(Code 1950, § 58-151.23; 1962, c. 612; 1972, c. 827; 1977, c. 396; 1983, c.575; 1984, c. 675; 1985, c. 221; 1987, cc. 484, 599, 611; 1990, c. 335; 1991,cc. 362, 456; 2000, c. 388.)