Are there penalties for late filing or underpayment of Virginia withholding tax on Form VA-5Q?

Yes. Virginia imposes penalties and interest for both late filing and underpayment of withholding tax:

1. Late Filing Penalty: Employers who fail to file Form VA-5Q by the due date may incur a penalty based on the amount of tax due.

2. Underpayment Penalty: If the tax withheld is less than the amount due, interest accrues on the unpaid balance from the original due date.

3. Combined Penalties: Repeated or significant underpayment or late filing may result in additional fines or enforcement actions by the Virginia Department of Taxation.

To avoid penalties, employers should file accurate and timely returns and remit the correct tax due each quarter.