Tax Type
Individual Income Tax
Description
Double taxation, statute of limitations, amended returns
Topic
Credits
Payment and Refund
Statute of Limitations
Taxable Income
Date Issued
06-13-2002
June 13, 2002
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you request individual income tax refunds on behalf of your clients ("the Taxpayers") for taxable years ended December 31, 1992 through 1996.
FACTS
The Taxpayers are Virginia residents who were shareholders of an S corporation that operated in another state ("State A"). The Taxpayers reported the income from the S corporation on their Virginia individual income tax returns for the taxable years 1992 through 1996. Individual income tax returns were not filed with State A.
As a result of an audit, State A issued income tax assessments against the Taxpayers for the 1992 through 1996 taxable years. You request that the Taxpayers be allowed a credit against their Virginia income tax in order to prevent double taxation of income resulting from this inadvertent filing error. Amended Virginia individual income tax returns have not yet been filed.
DETERMINATION
Code of Virginia § 58.1-332 provides a credit when a Virginia resident becomes liable to another state for income tax on any earned or business income derived from sources outside Virginia.
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 Taxpayers have not filed amended Virginia income tax returns to request a refund of overpayments that would result from a credit for tax paid to another state within the time period provided by statute. While I appreciate your situation, there is no statutory authority to allow an out-of-state tax credit on the Taxpayer's 1992 through 1996 Virginia income tax returns, as the statute of limitations for claiming the credit through the filing of amended returns has expired.
Copies of the Code of Virginia sections cited are enclosed for reference purposes. These and other reference documents are also available online in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.state.va.us. If you have any questions regarding this determination, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
Sincerely,
Kenneth W. Thorson
Tax Commissioner
AR39342E
Rulings of the Tax Commissioner