Document Number
Tax Type
Corporation Income Tax
Administration : Accounting - Application of Overpayments; Collections - Offsets
Date Issued

October 5, 2020

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 assessment issued to ***** (the “Taxpayer”) for the taxable year ended December 31, 2018. 


The Taxpayer was assessed tax and an underpayment of tax penalty for the 2018 taxable year. The Taxpayer appealed, contending that the Department reduced its prior year overpayment, extension and estimated payments without any basis. It requests that the reduced payments to the 2018 taxable year be credited to the Taxpayer and the assessment of tax and penalty be abated. 


The Taxpayer was audited by the Department for the 2013 and 2014 taxable years resulting in assessments of additional corporate income tax. In October 2017, the assessment was satisfied by a portion of the Taxpayer’s 2016 corporate income tax overpayment credit to the estimated tax and a sales tax refund from July 2017. The Taxpayer appealed the assessments requesting that amount of tax offset by the Department be refunded. In Public Document (P.D.) 18-182 (10/29/2018), the Department upheld the assessments issued for the 2013 and 2014 taxable years. As explained in P.D. 18-182, offsets of Virginia tax overpayments are allowed to satisfy outstanding Virginia tax liability pursuant to Virginia Code § 202-4800 et. seq. of the Virginia Debt Collection Act. In this case, the Department followed all required procedures in satisfying the assessments. 

According to the Department’s records, the Taxpayer’s overpayment credit, estimated payments, and extension payments from the 2016 taxable year exceeded its 2017 Virginia corporate income tax liability even with the offset of the overpayment. There was not enough of an overpayment from the 2017 taxable year, however, to satisfy the Taxpayer’s 2018 corporate income tax liability. As such, an assessment for the balance of the income tax due was assessed. Further, an “addition to tax” (commonly called the “underpayment penalty”) was assessed for the underpayment of estimated tax. See Virginia Code § 58.1-504. 

Because the Department acted within its authority to reduce the Taxpayer’s 2016 credit to estimated tax, the Taxpayer’s request for the estimated payments reduced by the offset to be credited back, and the abatement of the assessment for the taxable years ended December 31, 2018 cannot be granted. A schedule of the Taxpayer’s payments and offsets for the taxable years at issue has been attached. 

The outstanding balance on the assessments remain due and payable. Updated bills, with interest accrued to date, will be sent to the Taxpayer shortly. No additional interest will accrue provided the bill is paid within 30 days from the date indicated on the bill statement.

The Code of Virginia sections and public document cited are available on-line at 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 *****.



Craig M. Burns
Tax Commissioner



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Last Updated 01/21/2021 10:27