Unfiled Virginia Tax Returns (2010–2024): File Now and Avoid Virginia Department of Taxation Penalties

According to Virginia’s Department of Taxation, thousands of taxpayers face unfiled Virginia tax returns yearly, resulting in growing tax liabilities and unnecessary penalties. Interest builds from the due date when a return goes unfiled, and balances can quickly double or triple. For many individuals, ignoring this problem leads to escalating collection actions such as wage garnishment or property liens.

Unfiled Virginia tax returns affect more than your wallet. They can disrupt access to refunds, delay loan approvals, and put you at risk of legal consequences. The state views filing as a legal obligation, not an option, and will use automated systems to match your income records from employers, banks, and federal agencies. Failing to meet these tax responsibilities can even result in notices sent by mail or text message warning you of enforcement measures.

This guide explains how to get back on track, reduce penalties, and work directly with Virginia’s tax agency to resolve your account. It provides practical steps for requesting tax information, filing overdue returns, setting up a payment plan, and addressing financial hardship if you cannot pay in full. Whether you are a wage employee, rideshare driver, or small business owner, you can take control of your situation and move toward compliance.

What Are Unfiled Virginia Tax Returns?

Understanding what qualifies as an unfiled return is the first step toward resolving the issue. In Virginia, you are generally required to file an annual individual income tax return if you lived in the state, earned income from a Virginia source, or met certain income thresholds. These returns are due on May 1, or the next business day if May 1 falls on a weekend or holiday. Failure to file creates an account balance with the Virginia Department of Taxation, which will remain open until resolved.

Unfiled Virginia tax returns can also prevent you from claiming refunds or credits you can receive. The longer you wait, the more interest and penalties accumulate. Understanding these filing obligations ensures taxpayers stay compliant and avoid unnecessary financial stress.

Virginia Filing Requirements

• Part-year residents and certain nonresidents must file if they earned enough taxable income during the year.
  
  
• Filing typically uses Form 760 for residents, Form 763 for nonresidents, or Form 760PY for part-year residents.
  
  
• Individuals should review W-2s, 1099s, and tax information from investment accounts to verify all income before filing.
  
  
• Virginia law makes filing a legal responsibility, and missing a deadline can result in notices and penalties from the tax agency.

Common Reasons Returns Go Unfiled

• Many taxpayers miss filing deadlines due to life changes, unexpected health issues, or financial hardship.
  
  
• Wage employees may think that tax withholding covers their obligations, only to find out later that they still owe a balance.
  
  
• Rideshare drivers, food delivery contractors, and other gig workers can be confused about quarterly estimated payments and proper recordkeeping.
  
  
• Small business owners sometimes overlook basics like separating personal and business funds, leading to delayed filings.
  
  
• Taking action early can prevent escalating bills, collection actions, and additional penalties from the state.

Why the Virginia Department of Taxation Pursues Unfiled Returns

Once a return goes unfiled, Virginia’s tax agency actively works to recover the funds. The state relies on income tax revenue to support schools, transportation, and essential public programs, so compliance is critical. Leaving an account unresolved creates compliance gaps and affects the fairness of the entire system.

Tax Compliance and State Revenue

The Virginia Department of Taxation views filing as a legal duty that protects state revenue. The Commonwealth of Virginia branding and Virginia branding bar cardinal you see on notices and websites serve as official confirmation that communications are legitimate. Whether you are a wage employee or a small business owner, your tax responsibilities help fund vital state services.

Data Matching and Notices

Virginia uses data from federal tax records, W-2s, 1099s, and even certain investment accounts to identify taxpayers who have not filed. If a return is missing, the agency will create a notice and send it by mail or issue an alert on your online account. Some taxpayers may also receive a secure text message reminding them to respond. These notices notify individuals before more serious collection actions, like liens or garnishments, begin.

Consequences of Ignoring Unfiled Virginia Tax Returns

When unfiled Virginia tax returns remain unresolved, the consequences grow more serious over time. Ignoring notices can result in higher bills, additional interest, and legal action. Understanding these outcomes helps taxpayers see why quick action is essential.

Penalties and Interest

Virginia law imposes strict penalties and interest on late filings:

• Late filing penalty is assessed at 6% per month or partial month until the return is filed, with a maximum penalty of 30% of the tax due.
  
  
• A monthly late payment penalty of 6%, with a maximum penalty of 30%, is also assessed, though it does not apply in months when the late filing penalty has already been charged.
  
  
• Interest begins accruing from the original due date until the balance is paid in full, based on the federal underpayment rate plus 2%.

These charges can turn a manageable tax bill into a much larger financial burden within weeks.

Collection Actions

If you fail to respond to notices, Virginia can initiate aggressive collection actions:

• Wage garnishment: The agency can garnish wages without going to court, and this process will continue until the balance is fully paid.
  
  
• Bank levies: The Virginia Department of Taxation can freeze and seize funds from your bank account, often with little advance notice.
  
  
• Liens and property seizures: The state can file liens on your home or business property and sometimes seize and sell assets to cover the unpaid tax bill.
  
  
• Workers’ compensation intercepts: Payments from compensation claims can be redirected to satisfy outstanding tax debts until the balance is resolved.

Legal Risks

Virginia law allows for civil penalties of 100% of the tax due for fraudulent or false returns. In extreme cases, criminal penalties may include fines up to $2,500, jail time up to one year, or both. Responding promptly in writing or contacting the agency directly can often prevent these outcomes.

Relief and Resolution Options

Virginia offers several ways to bring unfiled Virginia tax returns into compliance and prevent further enforcement. Acting promptly can reduce penalties, limit interest, and demonstrate to the agency that you are committed to resolving your account. The following three steps outline the recommended process for addressing unfiled returns.

Step 1 – Obtain Tax Information

Before preparing accurate returns, you must gather all necessary documentation and confirm your account status.

• You should request IRS tax transcripts online, by phone, or by mail to obtain federal data for each unfiled year.
  
  
• You should complete and submit Form VA-1 to request your Virginia account history and verify any previously filed returns or outstanding balances.
  
  
• You should review all W-2s, 1099s, and income information from certain investment accounts to ensure your records are complete and accurate.

Step 2 – Prepare and File Returns

After collecting the required records, you should prepare and submit your Virginia returns for all unfiled years.

• You should use the appropriate forms to complete your filings, including Form 760 for full-year residents, Form 763 for nonresidents, or Form 760PY for part-year residents.
  
  
• You should verify that each return includes all income and payments to prevent future adjustments or additional notices from the agency.
  
  
• You should retain copies of all filed forms and supporting documentation in writing for your records, as these may be required if the agency requests further information.

Step 3 – Explore Payment and Relief Options

Virginia provides multiple solutions to help taxpayers resolve their balances if they cannot pay the entire amount owed.

• You can request a payment plan that allows you to make monthly payments until the balance is fully satisfied.
  
  
• You can request a penalty waiver if your failure to file or pay was due to financial hardship, serious illness, natural disaster, or another qualifying circumstance.
  
  
• If you cannot pay in full and demonstrate financial inability, you can submit an offer in compromise to settle the debt for less than the full amount.

How to Respond to the Virginia Department of Taxation

Timely and professional responses to the Virginia Department of Taxation notices are essential to avoid escalated enforcement. Addressing correspondence quickly can prevent wage garnishments, bank levies, and other collection actions.

Respond to Notices Promptly

When a notice arrives, immediate action is critical to protect your account and stay compliant.

• All mailed correspondence and online alerts should be reviewed carefully to understand the balance due, filing requirements, or the issue being addressed.
  
  
• If clarification or additional information is needed, the agency should be contacted by phone, mail, or secure online account.
  
  
• Copies of notices and written responses should be retained for personal records and future reference.

Verify the Authenticity of Communications

Confirming that communications are legitimate helps prevent falling victim to scams.

• Official notices should display the Commonwealth of Virginia branding, including the Virginia branding bar, cardinal, or other approved logos.
  
  
• The notice number can be checked on the official Virginia Department of Taxation website to confirm its validity.
  
  
• Suspicious text messages or phone calls requesting payment should be treated cautiously, and sensitive information should never be shared unless the source is verified as secure.

Take Action Before Deadlines

Acting before the deadline can prevent costly enforcement measures.

• Requested forms, payments, or written responses must be submitted by the due date stated on the notice.
  
  
• Payment options should be discussed with the agency if full compliance is impossible by the deadline.

Professional Help and Resources

Navigating unfiled Virginia tax returns can be complex, especially when multiple years are involved. Professional guidance ensures that filings are accurate, deadlines are met, and penalties are minimized. Working with qualified tax professionals can also save significant time by allowing them to communicate with the Virginia Department of Taxation on your behalf and provide additional information when required.

Confirming your federal tax history is one of the most valuable first steps in resolving unfiled returns. Our IRS Account Transcript Service allows taxpayers to quickly retrieve their complete IRS account transcript with a clear, plain-English explanation of what the IRS has on file. This record includes prior filings, payments, adjustments, and balances—essential information for preparing accurate Virginia returns.

Using this service provides several benefits:

• A complete view of which federal returns have been filed and which years are missing, preventing errors when preparing state filings
  
  
• Verified payment and account data that aligns with your federal and Virginia tax information, reducing the risk of new notices
  
  
• Fast, secure delivery of transcripts, allowing you to begin the resolution process immediately

By starting with accurate IRS data, taxpayers can avoid filing incorrect returns, duplicate payments, or overlooking refunds they may still be eligible to claim. This step gives individuals and small business owners a clear path forward and allows professionals to build a precise resolution plan.

Frequently Asked Questions

How many years ago did I need to file unfiled Virginia tax returns?

Virginia generally requires taxpayers to file returns for the past three years if they were required to file and did not. The state may go back six years or more in cases involving fraud or a complete failure to file. It is important to note that filing sooner limits interest and penalties and helps prevent collection actions such as liens or wage garnishment.

Can tax professionals help with unfiled returns?

Working with tax professionals can make the process more efficient and accurate. Professionals understand small business basics, can review your records, and prepare correct filings for each unfiled year. They can also assist by communicating with the Virginia Department of Taxation on your behalf and ensuring payment information related to your account is complete and up to date before you submit returns.

What if I cannot pay my full tax bill and need a payment plan?

Virginia offers several options for taxpayers who cannot pay their balance in full. A payment plan allows you to spread your bill over several months, avoiding more severe collection actions. Individuals facing financial hardship may also request a penalty waiver or offer in compromise. Submitting complete documentation and requesting assistance early can make the process smoother and help you stay in compliance.

What happens if I move out of Virginia but still have unfiled returns?

Leaving Virginia does not remove your tax responsibilities for the years you lived in the state or earned Virginia income. Even after moving, those returns must still be filed to remain in compliance. Harris, for example, relocated but needed to complete prior-year filings to close his account. Filing past returns helps avoid new notices or bills from the Virginia Department of Taxation.

Can Virginia garnish my wages or levy my bank account?

If notices are ignored, the Virginia Department of Taxation can garnish wages, levy bank accounts, and place liens on property. These actions continue until the balance is completely paid. The character of these enforcement measures is serious, and acting quickly is critical. Setting up a payment plan or requesting assistance before the deadline can stop enforcement and protect your funds and assets.

Can I get a refund for past years if I file now?

Virginia generally allows taxpayers to claim a refund within three years of the return's original due date. Filing later may result in losing the ability to claim refunds, even if you were eligible for them. To avoid losing funds owed to you, review payment information related to each year, gather income records, and complete filings as soon as possible.

How do I know if a notice, email, or text message is a scam?

Always verify the source of any communication before responding or providing payment information. Official notices will include the Virginia branding bar, the cardinal, and a valid notice number that can be searched on the state’s secure website. Be cautious of text scams or calls demanding immediate payment. Contact the agency if you are unsure and request assistance through official channels before sending funds.