Tax Type
Corporation Income Tax
Description
Timely appealed disallowance of the FSI subtraction/ Appeal of new issues 90-day limitation for filing an appeal not met.
Topic
Records/Returns/Payments
Statute of Limitations
Subtractions and Exclusions
Date Issued
08-08-2014
August 8, 2014
Re: § 58.1-1821 Application: Corporate Income Tax
Dear *****:
This will reply to your letter in which you seek correction of the corporate income tax assessments issued to ***** (the "Taxpayer") for the taxable years ended August 31 2006 through 2008.
FACTS
The Taxpayer was audited by the Department for the taxable years at issue and numerous adjustments were made. One of the adjustments made by the auditor was to eliminate the foreign source income (FSI) subtraction. The Taxpayer timely appealed the disallowance of the FSI subtraction. In Public Document (P.D.) 12-198 (12/6/2012), the Department upheld the assessment because the Taxpayer had not provided requested documentation, but provided one last opportunity to comply with the Department's request.
After the Taxpayer provided the requested documentation, the Department allowed the FSI subtraction. See P.D. 14-8 (1/24/2014). The assessments were adjusted in accordance with the determination and a revised audit report was issued to the Taxpayer. The Taxpayer has now asked for a review of adjustments made in the audit report unrelated to the FSI Subtraction.
DETERMINATION
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." Pursuant to Va. Code § 58.1-1821 and Title 23 of the Virginia Administrative Code (VAC) 10-20-165, a complete appeal must be filed with the Tax Commissioner within 90 days from the date of assessment. Further, Title 23 VAC 10-20-165 D 1 f A provides that an appeal must set forth each alleged error in the assessment, the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention.
The Taxpayer filed an appeal within the 90-day limitations period. This appeal only alleged that the FSI subtraction adjustment was erroneous, resulting in the issuance of P.D. 12-198 and P.D. 14-8.
The Taxpayer's current appeal raises new issues that were not contested in the original appeal. Because a complete appeal on these issues was not presented at the time the appeal of the FSI subtraction adjustment was filed, the appeal of these new issues is subject to the 90-day limitation for filing an appeal under Va. Code § 58.1-1821.
The assessment was issued in December 2011. As such, the appeal on the new issues was submitted well after the expiration of the 90-day limitations period. Therefore, the Taxpayer's application for correction pursuant to Va. Code § 58.1-1821 dated February 21, 2014, is barred by the statute of limitations.
An updated bill, with interest accrued to date, will be sent to the Taxpayer. The outstanding balance should be paid within 30 days of the bill date to avoid additional interest charges. The Taxpayer should remit its payment to: Virginia Department of Taxation, 600 East Main Street, 23rd Floor, Richmond, Virginia 23219, Attention: *****. If you have any questions concerning payment of the assessment, you may contact ***** at *****.
The Code of Virginia sections, regulation and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department's web site. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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Craig M. Burns
Tax Commissioner
AR/1-5640378127.B
Rulings of the Tax Commissioner