Tax Type
Individual Income Tax
Description
Erroneous refund, the department exceeded its statutory authority to issue an assessment
Topic
Payment and Refund
Date Issued
06-26-1985
June 26, 1985
Re: Virginia Code § 58.1-1821 Application
Individual Income Tax
Dear *******
This is in reply to your letter of March 25, 1985, in which you requested relief from the assessment of additional individual income tax for taxable year 1981.
FACTS
You timely filed your Virginia individual income tax return for taxable year 1981. The amount of federal adjusted gross income that you reported on line 5 of your return was incorrectly read by the Department of Taxation. This resulted in a refund that was ****** more than the amount you had determined when you filed your return. This refund was issued on April 23, 1982.
The error was later discovered by the department during an audit of your return. After notifying you of the proposed adjustment, an assessment was issued on July 13, 1984. You petition now for the relief from this assessment.
DETERMINATION
Since the increased refund you received resulted from an error made by the department and was not the result of fraud or misrepresentation of a material fact, it is considered an "erroneous refund." Therefore, the assessment of additional tax is controlled by provisions of Virginia Code § 58.1-312D (§ 58-151.0104(b)(5) prior to January 1, 1985). This section requires that ". . . an assessment of a deficiency arising out of an erroneous refund may be made at anytime within two years from the making of the refund...
Your refund for taxable year 1981 was issued on April 23, 1982, and the assessment to recover the erroneous refund was issued on July 13, 1984. Since more than two years passed between the date of your refund and the department's assessment to recover the erroneous refund, the department exceeded its statutory authority to issue an assessment. The assessment will be abated in full and all amounts paid will be refunded to you.
Sincerely,
W. H. Forst
Tax Commissioner
Re: Virginia Code § 58.1-1821 Application
Individual Income Tax
Dear *******
This is in reply to your letter of March 25, 1985, in which you requested relief from the assessment of additional individual income tax for taxable year 1981.
FACTS
You timely filed your Virginia individual income tax return for taxable year 1981. The amount of federal adjusted gross income that you reported on line 5 of your return was incorrectly read by the Department of Taxation. This resulted in a refund that was ****** more than the amount you had determined when you filed your return. This refund was issued on April 23, 1982.
The error was later discovered by the department during an audit of your return. After notifying you of the proposed adjustment, an assessment was issued on July 13, 1984. You petition now for the relief from this assessment.
DETERMINATION
Since the increased refund you received resulted from an error made by the department and was not the result of fraud or misrepresentation of a material fact, it is considered an "erroneous refund." Therefore, the assessment of additional tax is controlled by provisions of Virginia Code § 58.1-312D (§ 58-151.0104(b)(5) prior to January 1, 1985). This section requires that ". . . an assessment of a deficiency arising out of an erroneous refund may be made at anytime within two years from the making of the refund...
Your refund for taxable year 1981 was issued on April 23, 1982, and the assessment to recover the erroneous refund was issued on July 13, 1984. Since more than two years passed between the date of your refund and the department's assessment to recover the erroneous refund, the department exceeded its statutory authority to issue an assessment. The assessment will be abated in full and all amounts paid will be refunded to you.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner