Byron's tax-filing bill passes Senate test

By: Ray Reed | Lynchburg News and Advance
Published: March 09, 2010

RICHMOND — An online income-tax filing bill that was killed — and brought back to life — in a committee last week passed the Senate 33-6 Monday.

It took even more debate and maneuvering before HB 1349, sponsored by Del. Kathy Byron, R-Campbell County, finally escaped with some help from Sen. Steve Newman, R-Lynchburg, and apparently headed to the desk of Gov. Bob McDonnell.

The measure establishes a Virginia Free File program, modeled after the federal Free File tax reporting program that, starting next year, will let people with incomes under $57,000 file their state tax returns for free. It will include the bonus of a labor-saving data link to their federal return.

Critics said people already can file their state tax returns for free under Virginia’s existing iFile program, and 270,000 Virginians did just that last year. Under the new legislation, some of those people will have to pay a fee, said Sen. Creigh Deeds, D-Bath. Byron has described the fee as being about $10; Deeds said it could be as high as $37.

“This is a small bill” compared to the $4.5 billion shrinkage in Virginia’s budget for the next two years, Deeds said. He also called it a “bad bill” and a “proprietary bill” because it would direct taxpayers to use commercially provided software.

“It looks like we are going to be able to go home and tell people we didn’t raise their taxes,” Deeds said, “but with this bill we are going to tell some people they are going to have to pay more to file their taxes.”

It’s not clear that Byron’s bill would save Virginia any money by getting rid of the iFile program, either, Deeds said. The Senate then voted to bypass the bill for the day.

Newman asked the senators to reconsider the bill a few minutes later, and told them the tax-software industry is moving toward providing more free products online.

“As that continues to occur, we will have the opportunity to link” a person’s federal tax information directly to his or her Virginia tax form as a convenience, Newman said. “There could be a small fee for that,” but a taxpayer could save money because the commercial software also could find deductions and tax credits for them — something Virginia’s iFile program does not do, he said.

The fee “could be relatively de minimis to the individual taxpayer,” Newman said, using a Latin term that means minimal effect.