Tax Type
Individual Income Tax
Description
Jeopardy Assessment
Topic
Appropriateness of Audit Methodology
Collection of Delinquent Tax
Penalties and Interest
Returns/Payments/Records
Date Issued
04-14-1982
April 14, 1982
Re: §58-1118 Application: Individual Income Tax
Jeopardy Assessment
Dear *********************
This letter is in response to your correspondence of October 14, 1981, an application for correction of the jeopardy assessment issued against your client for State individual income taxes for the 1981 tax year.
Facts
On July 16, 1981 the Virginia State Police notified the department of the March 15, 1981, arrest of the taxpayer, ******** in a drug raid. Among the items seized was ********* in cash which was turned over to the State Police. This arrest led to no conviction since the search warrant was suppressed.
On July 17, 1981, the department issued a jeopardy assessment for ********and a warrant for the collection of taxes. The money was collected from the State Police Division Headquarters, ********** and sent for deposit on August 10, 1981.
In your letter of November 30, 1981 and again at your hearing with Department representatives on February 24, 1982, you set forth the grounds on which you are contesting this jeopardy assessment on behalf of your client, ********. You stated that there is no factual basis for the amount of this assessment. You advised us that the life style of your client did not indicate sufficient income to support this $ ****** jeopardy assessment. You also pointed out that he had no prior convictions or arrests. In addition, you contended that there is no evidence that the collection of this tax would be "jeopardized by delay" as delineated by the last paragraph of the applicable law, §58-151.0105 of the Code of Virginia, since your client was a lifelong resident of Virginia and had no passport.
Subsequent to this meeting and with your approval, field representatives interviewed your client to determine his net worth at four different dates in 1981. These interviews took place on March 18 and 19, 1982. Based on information made available to the Department at these meetings, the assets and liabilities of the taxpayer at the time of the jeopardy assessment and at the end of the year were determined to be as follows:
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DETERMINATION
Based on an evaluation of your client's net worth and the fact that there is no evidence of other drug related income, we have determined that the amount of the jeopardy assessment issued against your client was in error.
Accordingly, we ask that your client include the $ ******** cash currently held by the Department as income for his 1981 taxable year and submit a state individual income tax return for 1981 reflecting this and all other income on or before May 1, 1982. If tax is shown to be due on this return, he need not remit the sum, if any, with his return.
Upon timely receipt and review of this return, the Department will apply the $ ***** toward any outstanding tax liability. The remainder of the $ **** will then be returned to your client.
In order to facilitate the processing of your client's 1981 income tax returns, please send said return to the attention of ************* Tax Policy Division.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner