Tax Type
Corporation Income Tax
Description
Change to federal taxable income; Refund claimed for overassessment
Topic
Payment and Refund
Returns/Payments/Records
Statute of Limitations
Date Issued
08-03-1990
August 3, 1990
Re: §58.1-1821 Application; Corporation Income Tax
§58.1-1823 Reassessment and Refund Upon Filing of Amended Return
Dear*****************
This is in reply to your letter of January 29, 1990 in which you make application for correction of the assessment for additional corporate income tax to *********** for the taxable year ending September 30, 1979.
FACTS
****************(Taxpayer) timely filed original Virginia corporate income tax returns for FYE 9/30/78 and FYE 9/30/79. Subsequently, the Internal Revenue Service audited the federal corporate income tax returns for these periods. The Taxpayer contested the initial results of the audits to the Internal Revenue Service and the matter was resolved by the Regional Director of Appeals for the Internal Revenue Service. The Taxpayer was notified by the Regional Director of Appeals of a federal overassessment of tax for the FYE 9/30/78, on May 4, 1987. Likewise, the Taxpayer was notified of a federal deficiency of tax for the FYE 9/30/79, on September 23, 1988.
The Taxpayer notified the Department of Taxation of the final determinations regarding the changes in federal tax liability on December 20, 1988. While the federal change in liability for the FYE 9/30/78 would have resulted in a decrease in Virginia taxable income, no adjustment was made by the department. Based upon the federal change in liability for the FYE 9/30/79, the department issued an assessment for additional tax and interest.
You make application for correction of the department's determination that no adjustment was required for the FYE 9/30/78 return and contend that the overpayment of Virginia tax for the FYE 9/30/78 return should be applied to the assessment of additional tax for the FYE 9/30/79 period.
DETERMINATION
The time periods for filing amended Virginia income tax returns claiming a refund based upon federal changes is set forth under Virginia Code §58.1-1823:
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- Any person filing a tax return required for any tax administered by the Department of Taxation may, within three years from the last day prescribed by law for the timely filing of the return, or within sixty days from the final determination of any change or correction in the liability of the taxpayer for any federal tax upon which the state tax is based, whichever is later, file an amended return with the Department. If the Department is satisfied, by evidence submitted to it or otherwise, that the tax assessed and paid upon the original return exceeds the proper amount, the Department may reassess the taxpayer and order that any amount excessively paid be refunded to him.
- Any person filing a tax return required for any tax administered by the Department of Taxation may, within three years from the last day prescribed by law for the timely filing of the return, or within sixty days from the final determination of any change or correction in the liability of the taxpayer for any federal tax upon which the state tax is based, whichever is later, file an amended return with the Department. If the Department is satisfied, by evidence submitted to it or otherwise, that the tax assessed and paid upon the original return exceeds the proper amount, the Department may reassess the taxpayer and order that any amount excessively paid be refunded to him.
You contend that even without specific credit provisions in the Virginia tax statutes, under the well-established common law principles of setoff and counterclaim, the department is obligated to allow an offset of the FYE 9/30/79 tax liability with the FYE 9/30/78 overpayment.
As set forth by the Virginia Supreme Court in Commonwealth v. Holland, 211 Va. 530:
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- It is well settled that the common law continues in force in Virginia except as altered by statute. (Emphasis added.)
- It is well settled that the common law continues in force in Virginia except as altered by statute. (Emphasis added.)
Your application for correction is denied and I find no basis to make any adjustment to the assessment. Please pay the full amount of tax and interest assessed within the next 30 days.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner