Tax Type
Individual Income Tax
Description
Contested assessments, federal adjustments
Topic
Basis of Tax
Penalties and Interest
Date Issued
11-15-2002
November 15, 2002
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek correction of the Virginia individual income tax assessments issued to ***** (the "Taxpayers") for the taxable years 1992, 1993 and 1994. I apologize for the delay in the department's response.
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- FACTS
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The Internal Revenue Service ("IRS") audited and adjusted the Taxpayers' federal individual income tax returns for the 1992, 1993 and 1994 taxable years. The department's records indicated amended Virginia individual income tax returns were not filed by the Taxpayers. Assessments were issued based on the information provided by the IRS.
The assessment for 1994 was issued in February 2000 and paid in March 2000. Assessments for 1992 and 1993 were issued in January 2002. The Taxpayers contest these assessments, claiming that the 1992 and 1993 underpayments were resolved at the same time as the 1994 assessment.
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- DETERMINATION
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Under 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. If such amended returns are not filed, the department may make an assessment of additional tax based on the federal adjustments at any time pursuant to Code of Virginia § 58.1-312.
The Taxpayers assert that because the IRS audits for the 1992 through 1994 taxable years were conducted at the same time, the Virginia deficiencies would logically have been resolved in a like manner. The Taxpayers further believe that amended Virginia returns were filed as a result of the federal adjustments. However, the department has no record of such returns. With no other evidence to establish that the Taxpayers have remitted payment for the additional Virginia income tax due as a result of federal adjustments for the 1992 and 1993 taxable years, the assessments must be considered correct.
Accordingly, the assessments are upheld. The interest portions of the assessments for the 1992 and 1993 taxable years remain due.
Notwithstanding the above, I will allow the Taxpayers one final opportunity to provide the department with clear and objective evidence of prior payment of the assessments for the 1992 and 1993 taxable years. If such documentation is not provided within 30 days from the date of this letter, the outstanding interest totaling ***** (***** for taxable year 1992 and ***** for taxable year 1993) will become immediately due and payable.
Please send the requested information or remit payment within 30 days to the Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, P. O. Box 1880, Richmond, Virginia 23218-1880, Attention: *****. If the requested documentation or payment is not received within the time allowed, interest will accrue on the outstanding balance.
Copies of the Code of Virginia sections cited have been enclosed for reference purposes. These and other reference documents are also available online in the Tax Policy Library section of the department's web site, located at www.tax.state.va.us. If you have any questions with respect to this determination, you may contact ***** at *****.
Sincerely,
Kenneth W. Thorson
Tax Commissioner
AR/40401E
Rulings of the Tax Commissioner