Tax Type
Individual Income Tax
Description
Refund; Amended returns; Final determination by I.R.S.
Topic
Payment and Refund
Statute of Limitations
Taxpayers
Date Issued
10-27-2000
October 27, 2000
Re: § 58.1-1821 Application: Individual Income Tax
Dear ****
This will respond to your letter on behalf of your clients * * * (the "Taxpayers") in which you request the department to reconsider its prior determination on the Virginia income tax consequences of audit adjustments made on the Taxpayers' federal tax returns. I apologize for the delay in responding.
FACTS
The Taxpayers were audited by the Internal Revenue Service ("IRS") for the taxable years ended December 31, 1984 through 1987, and 1993. On February 14, 1997, you delivered amended returns to the department along with a check covering the balance of the tax due (net of proposed refunds for the audited years). Included with the amended returns were copies of several IRS documents (Forms 3363 and 2259) signed by the Taxpayers on April 2, 1996, which you had previously delivered to the IRS. The department denied the refund years as being barred by the statute of limitations and assessed the Taxpayers additional tax. The Taxpayers protested this treatment, but were denied relief by the department. The Taxpayers request that the department reconsider its prior determination and allow the amended returns requesting refunds.
DETERMINATION
Pursuant to Code of Virginia § 58.1-311, a taxpayer audited by the IRS is required to file an amended return and report the changes to the department within 90 days of the final determination of the change. Further, under Code of Virginia § 58.1-1823, a taxpayer has three years from the last day prescribed by law for the timely filing of the return, or one year from the final determination of a federal change or correction to file an amended return to request a refund. As the law is clear on this issue, it is incumbent upon a taxpayer to file an amended return when a refund is involved in order to protect his statutory rights to the refund.
The Taxpayers have furnished a copy of an executed agreement for redetermination signed by the Taxpayers on April 2, 1996. However, a copy of this agreement signed by the IRS Commissioner or his designee has not been furnished to the department establishing a final determination date. The cover letter attached to the amended returns stated that as of that time, no written acceptance of the Taxpayers' agreement had been received from the IRS.
In addition, you have furnished additional information from the IRS concerning the Taxpayers. The department has reviewed this information and finds no significant facts that establish a final determination date later than April 2, 1996.
With no other facts to establish a final determination date other than the aforementioned agreement, I must again deny your request to issue refunds for the taxable years 1984, 1986 and 1987. Based on the foregoing, the assessments for 1985 and 1993 are now due and payable. These should be paid within the next 30 days to avoid accrual of additional interest. If you have any questions regarding this determination, please contact * * * of the Office of Tax Policy at * * *
Danny M. Payne
Tax Commissioner
Re: § 58.1-1821 Application: Individual Income Tax
Dear ****
This will respond to your letter on behalf of your clients * * * (the "Taxpayers") in which you request the department to reconsider its prior determination on the Virginia income tax consequences of audit adjustments made on the Taxpayers' federal tax returns. I apologize for the delay in responding.
FACTS
The Taxpayers were audited by the Internal Revenue Service ("IRS") for the taxable years ended December 31, 1984 through 1987, and 1993. On February 14, 1997, you delivered amended returns to the department along with a check covering the balance of the tax due (net of proposed refunds for the audited years). Included with the amended returns were copies of several IRS documents (Forms 3363 and 2259) signed by the Taxpayers on April 2, 1996, which you had previously delivered to the IRS. The department denied the refund years as being barred by the statute of limitations and assessed the Taxpayers additional tax. The Taxpayers protested this treatment, but were denied relief by the department. The Taxpayers request that the department reconsider its prior determination and allow the amended returns requesting refunds.
DETERMINATION
Pursuant to Code of Virginia § 58.1-311, a taxpayer audited by the IRS is required to file an amended return and report the changes to the department within 90 days of the final determination of the change. Further, under Code of Virginia § 58.1-1823, a taxpayer has three years from the last day prescribed by law for the timely filing of the return, or one year from the final determination of a federal change or correction to file an amended return to request a refund. As the law is clear on this issue, it is incumbent upon a taxpayer to file an amended return when a refund is involved in order to protect his statutory rights to the refund.
The Taxpayers have furnished a copy of an executed agreement for redetermination signed by the Taxpayers on April 2, 1996. However, a copy of this agreement signed by the IRS Commissioner or his designee has not been furnished to the department establishing a final determination date. The cover letter attached to the amended returns stated that as of that time, no written acceptance of the Taxpayers' agreement had been received from the IRS.
In addition, you have furnished additional information from the IRS concerning the Taxpayers. The department has reviewed this information and finds no significant facts that establish a final determination date later than April 2, 1996.
With no other facts to establish a final determination date other than the aforementioned agreement, I must again deny your request to issue refunds for the taxable years 1984, 1986 and 1987. Based on the foregoing, the assessments for 1985 and 1993 are now due and payable. These should be paid within the next 30 days to avoid accrual of additional interest. If you have any questions regarding this determination, please contact * * * of the Office of Tax Policy at * * *
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner