Tax Type
Individual Income Tax
Description
ACRS subtractions denied
Topic
ACRS Modifications
Date Issued
06-29-1992
June 29, 1992
Re: §58.1-1821 Application: Individual Income Tax
Dear**********************
This is in reply to your letter in which you appeal the decision of the department denying your request for a refund of taxes paid in taxable years 1983 through 1987.
FACTS
For taxable years 1983 through 1987 you and your wife (the Taxpayers) lived in Virginia and reported excess cost recovery (ACRS) additions on your Virginia resident individual income tax returns. In 1987 the Taxpayers moved out of the state of Virginia and were not required to file Virginia individual income tax returns for taxable years 1988 and 1989. The Taxpayers moved back into Virginia during 1990 and sought a refund of taxes previously paid on ACRS additions reported for taxable years 1983 through 1987. The Taxpayers are now appealing the decision denying their request for a refund of taxes paid in taxable years 1983 through 1987.
DETERMINATION
Effective for taxable years beginning on and after January 1, 1988, the Virginia ACRS addition was repealed and Va. Code §58.1-323.1 was enacted to provide for the recovery of outstanding ACRS addition amounts (1987 Acts, Chapter 9). This section provides that individuals may recover previously unrecovered addition amounts through subtractions claimed in taxable years 1988 and 1989.
Virginia Regulation (VR) 630-3-323.1 (copy enclosed), adopted by the department to interpret Va. Code §58.1-323.1, provides that individuals who can demonstrate that the entire amount of ACRS additions have not been recovered through subtractions in taxable years 1988 and 1989 may apply for a refund. However, the regulation imposes certain conditions prerequisite to obtaining such a refund. Section 7(A)(5) of the regulation provides:
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- No refund shall be allowed under this section unless the taxpayer has income from Virginia sources or is required to file a Virginia return for each taxable year in which a subtraction is allowable under §4 [1988 or 1989] or, if earlier , for each taxable year until a final federal return is filed.
- No refund shall be allowed under this section unless the taxpayer has income from Virginia sources or is required to file a Virginia return for each taxable year in which a subtraction is allowable under §4 [1988 or 1989] or, if earlier , for each taxable year until a final federal return is filed.
Sincerely,
W. H. Forst
Tax Commissioner
TPD/5906E
Rulings of the Tax Commissioner