Business Taxes | Common Mistakes

The following is a list of some of the most common errors in filing business-related taxes. Please take care to avoid these mistakes.

• Filing with the wrong frequency
  • Every year, we’ll reassess your filing frequency based on the amount of your average monthly tax liability. If your average moves above or below certain thresholds, we’ll assign you a new filing frequency to match your new liability amounts and send you a letter late in the year detailing the change.
  • To avoid this error, check your business contact information to be sure the address we have on file is correct. And, be on the lookout for the 2 letters we will send you late in the year if your frequency changed, especially if your monthly averages are close to one of the thresholds for your tax type. If you use a payroll provider, it is your responsibility to inform them of your new filing frequency. 
• Miscalculating the 500C (underpayment of estimated tax) charge
  • Form 500C is a worksheet that will explain exactly how the 500C addition to tax is calculated on your corporation tax returns. The basis for the addition to tax is that you did not meet one of the following exemptions:
    • Form 500C will allow you to calculate the addition to tax due by using the estimated tax payments that you made for the current tax year. The dates those equal estimated payments are due on the 15th day of the 4th, 6th, 9th, and 12th months of your tax year.
    • You did not pay at least 100% of the previous year's tax due in four equal installments for the current tax year.
    • You did not pay at least 90% of the tax due for the current year in four equal installments.
    • Exception 3 requires a corporation to compute the tax on annualized income.This exception applies if the estimated tax paid was equal to or more than 90% of the amount the corporation would owe if estimated tax was figured on annualized taxable income for the months preceding an installment date.
• Mistakenly filing or paying state unemployment tax with us instead of the Virginia Employment Commission (VEC)
  • In Virginia, state unemployment tax is collected by the VEC and all payments should be made with them. However, we have an agreement with the VEC that allows you to register for unemployment tax when you use register with us online. After you register, you're also able to file and pay unemployment tax through our systems - either through your online services account or using Web Upload - so you don't have to go to more than one website to register and pay taxes for both agencies. If you have any questions about unemployment tax, contact the Virginia Employment Commission at 804.786.3066 or 800.828.1140.
• Not filing a timely Pass-Through Entity (PTE) return 
  • A pass-through entity that is required to file a return but fails to do so by the extended due date is liable for a penalty of $200 for each month or part of a month that the return is late, for up to 6 months.
  • If a pass-through entity does not file Form 502 on or before the extended due date, the automatic extension is not valid and the late-filing penalty is assessed as if no extension had been granted.
    • The due date of Form 502 is April 15.
    • The automatic 6-month filing extension moves the due date to October 15
    • If Form 502 has not been filed by October 15, the automatic extension becomes void. 
    • The late-filing penalty is calculated from the original due date of April 15.
    • $200/month penalty for late filing X 6 months late filing the return = $1,200 penalty