Rulings of the Tax Commissioner

August 25, 2017

Re:     § 58.1-1821 Application: Individual Income Tax

Dear *****:

This will reply to your letter in which you seek reconsideration of the Department's determination letter, issued as Public Document (P.D.) 17-78 (5/23/2017), to ***** (the “Taxpayer”) for the taxable year ended December 31, 2010.

FACTS

In P.D. 17-78, the Department upheld its assessment, finding that it had properly adjusted the Taxpayer's Virginia 2010 individual income tax return based on information received from the Internal Revenue Service (IRS), as permitted by Virginia statute.  The Taxpayer filed a request for reconsideration, again asking the Department to accept his amended 2010 return and abate the assessment.  The Taxpayer also asks for bankruptcy documents the Department's auditor referred to in previous correspondence.

DETERMINATION

Reconsideration

Under Title 23 of the Virginia Administrative Code (VAC) 10-20-165 F, a taxpayer's request for reconsideration must meet one of the four following requirements:

1. The facts upon which the original determination is based are misstated by the Tax Commissioner or are inaccurate, and the determination would have a different result based on a correction of the Tax Commissioner's misstatement of the facts presented or a clarification of the original facts presented in the taxpayer's administrative appeal;
2. The law upon which the original determination is based has been changed by legislation, court decision or other authority effective for the tax period(s) at issue;
3. The policy upon which the original determination is based is misapplied, and the determination would have a different result based on the application of the proper policy; or
4. The taxpayer has discovered additional evidence or documentation that was not available to the taxpayer at the time the original administrative appeal was filed with the Department, and the additional evidence or documentation could produce a result different from the original determination.

In his reconsideration request, the Taxpayer questions the Department's assertion that the balance due on his 2010 federal income tax assessment was written off by the IRS.  Since P.D. 17-78 was issued, the Taxpayer has received a new bill from the IRS.  The Department requested an updated federal income tax transcript for the 2010 taxable year, but the transcript still shows the IRS wrote off the balance due.  The Department has already provided the Taxpayer with a copy of the transcript.  Therefore, the new bill the IRS sent the Taxpayer likely relates to another taxable year not at issue in this appeal.  The Taxpayer should contact the IRS if he has any questions regarding the new bill.

Regardless, the Taxpayer has presented no new information showing the IRS has made further adjustments to his 2010 federal taxable income that would require adjustments to the Department's assessment.  Because no new information has been presented that would impact the assessment and because the Taxpayer has stated no other basis on which a reconsideration request could be made, the Taxpayer has failed to satisfy any of the requirements for a reconsideration request.

Bankruptcy Documentation

The Taxpayer asks for the bankruptcy documents the Department's auditor referred to in prior correspondence with him about the assessment.  The letter the Taxpayer refers to did not specify any particular bankruptcy documents, but merely mentioned bankruptcy as a possibility for why the IRS may have written off the uncollected debt.  The only documentation the Department relied on in issuing its assessment was the federal income tax transcript, which has already been provided to the Taxpayer.  Although several entries on the transcript refer to a bankruptcy notification being received, there are other entries referring to the removal of such action.  It is unclear from the transcript, therefore, why the IRS decided to write-off the debt.

CONCLUSION

As indicated above, the Department as already furnished all of the information it has with regard to the bankruptcy indicated by the IRS.  Further, because the Taxpayer's reconsideration request does not satisfy the requirements set forth by the Department's regulation, the request must be denied.  Therefore, the Department's determination in P.D. 17-78 is upheld.  This letter constitutes the Department's final determination on this matter.

The Taxpayer will receive an updated bill which will include accrued interest to date.  The Taxpayer should follow the instructions provided in P.D. 17-78 to arrange for payment or collections actions will begin.  In addition, for further information regarding why the assessment was written off by the IRS and what documentation, if any, the IRS relied on, the Taxpayer should contact the appropriate IRS office.

The regulation and public document 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 *****.

Sincerely,

Craig M. Burns
Tax Commissioner

AR/1321.M