Tax Type
Corporation Income Tax
Description
Refund requests for overpayment.
Topic
Appropriateness of Audit Methodology
Payment and Refund
Date Issued
03-15-2002
March 15, 2002
Re: § 58.1-1821 Application: Corporate Income Taxation
Dear *****
This will reply to your letter in which ***** (the "Taxpayer") requests a refund of the overpayment of corporate income tax for the taxable year ended December 31, 1996.
FACTS
In Public Document ("P.D.") 01-220 (12/20/01)(copy enclosed), the department determined that the technical fees were incidental to the licensing of intellectual property and were eligible to be included in the subtraction for foreign source income. The department issued a refund for the paid assessment with applicable interest. The Taxpayer contends that information provided to overturn the audit assessment shows that the Taxpayer overpaid its 1996 income tax on its original return and has requested that the overpayment be refunded with interest.
DETERMINATION
Pursuant to Code of Virginia § 58.1-1823, an amended return claiming a refund must be filed within the later of:
- (i) three years from the last day prescribed by law for the timely filing of the return; (ii) one year from the final determination of any change or correction in the liability of the taxpayer for any federal tax upon which the state tax is based, provided that the refund does not exceed the amount of the decrease in Virginia tax attributable to such federal change or correction; (iii) two years from the filing of an amended Virginia return resulting in the payment of additional tax, provided that the amended return raises issues relating solely to such prior amended return and that the refund does not exceed the amount of the payment with such prior amended return; or (iv) two years from the payment of an assessment, provided that the amended return raises issues relating solely to such assessment and that the refund does not exceed the amount of such payment.
In the instant case, the Taxpayer did not file an amended return or a request for a refund of overpayment within the time period provided by statute. The overpayment was addressed in the Taxpayer's appeal letter submitted well after the three-year limitation period from the due date the original return had expired.
The refund request was not made in response to a final determination of a change or correction of the Taxpayer's federal tax liability. Nor did the refund request result from the filing of an amended return resulting in the payment of additional tax.
The refund request was made within two years after the Taxpayer paid the audit assessment of additional tax and interest. However, in such circumstances, the refund amount may not exceed the amount of the additional assessment. The department has already refunded an amount equal to the assessment plus applicable interest to the Taxpayer. The statute does not permit a refund beyond the amount assessed as a result of the department's audit. Accordingly, the Taxpayer's request for an additional refund for overpayment of corporate income tax for the taxable year ended December 31, 1996 is denied.
If you have any questions regarding this determination, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
AR/38119B
Rulings of the Tax Commissioner