Document Number
Tax Type
Corporation Income Tax
Administration : Reconsideration - Failure to Meet Criteria
Date Issued

November 10, 2020

Re:  § 58.1-1821 Application: Corporate 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.) 20-78 (5/5/2020), to ***** (the “Taxpayer”) for the taxable years ended March 31, 2014, and March 31, 2015.


At the conclusion of an audit, the Taxpayer advised the Department that it wished to elect the modified apportionment method for manufacturing companies permitted under Virginia Code § 58.1-422. The Department denied the request and the Taxpayer appealed. In P.D. 20-78, the Department determined that the Taxpayer did not have the ability to elect the method retroactively on an amended return. As a result, the assessments arising out of the audit were upheld as issued. The Taxpayer seeks reconsideration of that determination, arguing that the Department misapplied policy.   


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 this case, the Taxpayer argues that the Department misapplied policy in P.D. 20-78 by not applying the plain language of Virginia Code § 58.1-422. The Taxpayer contends that this statute gives it the absolute right to chose the modified apportionment method described therein at any time within the limitations period provided by Virginia Code § 58.1-1823.

In the Department’s opinion, the criteria for reconsideration have not been met in this case. The regulation requires that the determination would have a different result based on the application of the proper policy rather than whatever policy was applied. In other words, the context of the regulation indicates that an entirely different policy must actually be the correct policy to be applied in the case. 

The Taxpayer and the Department agree that the same policy applies in this case, i.e., the provisions governing the modified apportionment method described under Virginia Code § 58.1-422. The parties simply disagree as to the interpretation of the statute. In any event, P.D. 20-78 fully sets forth the Department’s position as to whether taxpayers may retroactively apply for the modified apportionment method. Although I recognize the Taxpayer’s disagreement with that position, I find no basis for reversing it at this time. The assessments, therefore, are upheld.

This letter constitutes the Department’s final determination in this matter. Updated bills will be issued to the Taxpayer shortly, which will include accrued interest to date. The Taxpayer should remit the balance due upon receipt to avoid the accrual of additional interest and possible collections actions.

The Code of Virginia sections, regulation 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 01/25/2021 09:07