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Bill

HB 2667

Income tax, state; creation of currently not collectible status.

2025 Regular Session Introduced by Kim Taylor

Virginia would allow temporary suspension of tax collection efforts for individuals with severe financial hardship while preserving future collection rights.

Incorporated by Finance (HB2549-Clark) (Voice Vote)
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Bill Summary · HB 2667

Legislative bill overview

HB 2667 would create a "currently not collectible" status for Virginia state income tax debts, allowing the Department of Taxation to temporarily suspend collection efforts on taxes owed by individuals facing financial hardship. This mechanism would pause enforcement actions while maintaining the tax liability, which could be pursued again once the taxpayer's financial situation improves.

Why is this important

This policy addresses a practical administrative challenge: some taxpayers cannot pay their tax obligations due to genuine financial hardship, and aggressive collection efforts may be counterproductive or cause undue financial distress. The provision could reduce costly enforcement actions while preserving the state's ability to collect later, and it aligns Virginia's approach with federal IRS practices that have long included similar hardship provisions.

Potential points of contention

  • Revenue impact: The state may experience delayed tax collection, reducing near-term revenue and potentially affecting budget projections, though this was flagged in the TAX impact statement
  • Defining financial hardship: Standards for determining who qualifies as "currently not collectible" could be subjective, raising concerns about inconsistent application or potential abuse
  • Statute of limitations: The bill must clarify whether the suspension of collection tolls (pauses) the statute of limitations on tax debts, as this affects long-term revenue recovery and taxpayer finality

Compiled from official sources — confirm details with the bill’s official record.

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