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Virginia to replace core tax system with $131 million IRM; sales tax and withholding slated for Sept. 2026
Summary
The Department of Taxation detailed a $131 million, 4.5-year project to replace its 25-year-old core tax processing system with vendor Fast Enterprises; sales and withholding tax modules are scheduled for rollout in September 2026, with business testing beginning March 2026.
The Virginia Department of Taxation told the House Finance Committee it has begun implementing a $131 million project to replace its Integrated Revenue Management (IRM) core tax-processing system and will phase rollouts by tax type over the next four and a half years.
Kristen Collins, the State Tax Commissioner, said the current system is based on obsolete PowerBuilder technology and has become difficult to maintain and update. "We started a journey back in 2017 to replace our system," Collins said, and the General Assembly "approved funding a $131,000,000 for our agency to implement a new tax processing system." The department selected Fast Enterprises as the vendor; Fast has implemented tax systems in other states.
Collins outlined a phased rollout: sales and use taxes and withholding will be implemented first (target: September 2026), corporate and other business taxes will follow the next year, and the largest deployment—individual income tax—will be the final phase. The department said it is in the middle of development and data conversion, with business testing scheduled to begin in March 2026 so staff can validate that taxpayer accounts, form processing, refunds and other transactional functions post correctly.
Collins cautioned members about enactment dates for tax changes: bills that materially alter forms or processing may require later enactment dates (for example, a January 1 enactment) to avoid disrupting the rollout. She said changes that do not affect forms can generally be implemented on the standard July 1 date after a session.
The department emphasized close vendor coordination and careful scheduling so that legislative changes that must be implemented by the IRM rollouts will fit into the testing and release windows. Members were told to expect fiscal-impact statements that note whether a proposed change would interfere with the rollout schedule and whether later enactment dates should be requested.
Next procedural steps include business testing in March 2026, continuing conversion and development, and coordinating with the committee on enactment dates for bills that require system changes.
