Tax Type
Corporation Income Tax
Description
Review of audit
Topic
Collection of Delinquent Tax
Date Issued
08-24-1992
August 24, 1992
Re: §58.1-1821 Application; Corporation Income Tax
Dear***************
This will reply to your letter of January 6, 1992 in which you protest certain audit adjustments made pursuant to a recent income tax audit of***************(the "taxpayer").
FACTS
The taxpayer, a multistate corporation, filed Virginia income tax returns for taxable years 3/31/88 through 3/31/90. An audit by the department resulted in several adjustments and the assessment of additional tax. You dispute the adjustments, contending that the audit report sent to the taxpayer fails to indicate the grounds upon which the proposed assessments are based. You state that the taxpayer disputes the allocation and apportionment of income and the disallowance of a portion of the foreign source income subtraction reported by the taxpayer. However, you fail to explain the grounds for your protest.
DETERMINATION
A review of the audit report indicates that the auditor limited the foreign source income subtraction to the types of income which satisfy the definition of foreign source income under Va. Code §58.1-302. The auditor then computed the applicable expenses, as required under Virginia Regulation (VR) 630-3-302, reconciling income and expense amounts to those reported on the taxpayer's federal Form 1118. The auditor also allocated dividends included in Virginia taxable income to the state of commercial domicile of the taxpayer. Other adjustments involved increasing the ACRS subtraction and decreasing federal taxable income to agree with the amount reported on the federal return after the special dividend deduction. All these adjustments are in accordance with Virginia law.
In an application for correction of an erroneous assessment under Va. Code §58.1-1821, the taxpayer has the burden of proving that the assessment is erroneous by showing what the correct assessment should be. This burden cannot be met if necessary documentation and supporting detail is not furnished. Based on the lack of documentation supplied with your application and my review of the audit, I find that the audit adjustments were properly made and adequately documented.
Accordingly, the assessment is upheld and is now due and payable. You will shortly receive an updated bill with interest accrued to date. The bill should be paid within 30 days to avoid the accrual of additional interest.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner