Tax Type
Individual Income Tax
Description
Failure to file a complete administrative appeal within 90 days.
Topic
Statute of Limitations
Date Issued
01-19-2012
January 19, 2012
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek correction of individual income tax assessments issued ***** (the "Taxpayers") for the taxable years ended December 31, 2005 through 2007.
FACTS
The Taxpayers were audited by the Internal Revenue Service (IRS) for the 2005 through 2007 taxable years. As a result of the audit, the Taxpayers' federal adjusted gross income (FAGI) was increased. The Taxpayers failed to file amended Virginia income tax returns reflecting the IRS adjustments.
The IRS notified the Department of the changes in the Taxpayers' FAGI, and the Department issued an assessment for additional tax and interest. The Taxpayers appeal the assessment, contending they are pursuing reconsideration from the IRS.
DETERMINATION
Timely Filed Appeal
Virginia Code § 58.1-1821 states, "Any person assessed with any tax administered by the Department of Taxation may, within ninety days from the date of such assessment, apply for relief to the Tax Commissioner. Such application shall be in the form prescribed by the Department and shall fully set forth the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention."
The Department issued the assessments to the Taxpayers on November 9, 2010. The Taxpayers appealed the assessment on June 27, 2011. Because the Taxpayer failed to file a complete administrative appeal within 90 days from the date of the assessment (by February 7, 2011), the Taxpayer is now barred from filing an application for correction of the assessments and there is no basis for relief. The Taxpayer will receive an updated bill with interest accrued to date. The bill should be paid within 30 days of the bill date to avoid the accrual of additional interest.
IRS Adjustments
Virginia Code § 58.1-311 requires any individual to report a change or correction in federal taxable income (FAGI) within one year of the final determination of such change or correction by filing an amended return with the Department. If the taxpayer fails to file an amended return, Va. Code § 58.1-312 A 3 permits the Department to assess the appropriate tax at any time.
In this case, the Taxpayers failed to file amended Virginia individual income tax returns as required by Va. Code § 58.1-311. The Department issued assessments based on the final figures computed by the IRS, as authorized under Va. Code § 58.1-312.
The Taxpayers state they are appealing the notice of deficiency issued by the IRS on January 9, 2009. Where the IRS has audited the federal taxable income of a taxpayer, the Department does not look behind the IRS's final determination. See Public Document (P.D.) 11-107 (6/14/2011). If the IRS adjusts its audit findings for the taxable years at issue, the Taxpayers will then be permitted to file amended returns to correct their liability for the taxable years changed by the IRS pursuant to Va. Code § 58.1-311 and Va. Code § 58.1-1823 A(ii).
The Code of Virginia sections and public document cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's website. If you have any questions concerning this
determination, you may contact ***** in the Department's Office of Tax Policy, Appeals and Rulings Division, at *****.
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- Sincerely,
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- Craig M. Burns
Tax Commissioner
- Craig M. Burns
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AR/1-4821136881.D
Rulings of the Tax Commissioner