Tax Type
Corporation Income Tax
Description
Subtraction of fuel taxes
Topic
Computation of Tax
Subtractions and Exclusions
Taxable Income
Date Issued
08-24-1992
August 24, 1992
Re: Ruling Request: Corporation Income Taxes
Dear****************
This replies to your letter dated August 26, 1991, requesting clarification regarding the subtraction of fuel taxes in determining Virginia taxable income.
FACTS
The Internal Revenue Code (I.R.C.) disallows a deduction for fuel tax expense to the extent utilized in computing the fuel tax credit. Virginia law does not permit a deduction for the amount so disallowed, even though a Virginia deduction is permitted for the wage expense disallowed in computing the federal targeted jobs credit. You are protesting the dichotomy of the treatment of seemingly similar expenses.
DETERMINATION
Va. Code §58.1-402 defines Virginia taxable income as "federal taxable income and any other income taxable to the corporation under federal law for such year of a corporation" adjusted as provided in subsections B, C, or D. In determining Virginia taxable income, Va. Code §58.1402.C does not permit subtraction of the fuel tax expense disallowed by the I.R.C.
By contrast Va. Code §58.1-402.C.6 does provide a specific subtraction for expenses disallowed at the federal level due to a taxpayer's eligibility for the federal targeted jobs credit.
Deductions allowed in computing Virginia taxable income are a matter of legislative grace. Under Va. Code §58.1-203, the Tax Commissioner is granted the power to issue regulations relating to the interpretation and enforcement of Virginia tax laws governing taxes administered by the Department of Taxation.
The promulgation of an additional subtraction in computing Virginia income is not an interpretation of existing law; but rather, the creation of law.
Accordingly, the taxpayer is denied a Virginia income tax deduction for fuel taxes disallowed in computing federal taxable income.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner