Tax Type
Corporation Income Tax
Description
The period for filing an amended return & claiming a refund
Topic
Payment and Refund
Statute of Limitations
Date Issued
09-10-1992
September 10, 1992
Re: §58.1-1821 Application; Corporation Income Tax
Dear***************
This will reply to your letter of May 1, 1992, in which you seek correction of a corporation income tax assessment for***************(the "Taxpayer").
FACTS
The Taxpayer's 1976-1987 federal corporation income tax returns were audited by the IRS. Federal taxable income was increased for some taxable years, resulting in an increase in tax liability, and decreased for others, resulting in a refund. Based on these changes, the Taxpayer filed with the department preliminary IRS adjustments (the "first amended return") and paid the tax and interest due in August, 1987. The amount of tax paid was the total net increase in tax liability (tax liabilities net of the refunds due). On May 29, 1990, the IRS made the final determination for taxable year 1980, a year in which there was an overpayment. The Taxpayer requested that Virginia apply the overpayment to the tax deficiency for taxable year 1987. The information regarding the final determination for taxable year 1980 (the "second amended return") was provided to the department on September 20, 1991.
The department denied the offset because the request was filed with the department after the expiration of the statute of limitations. Additional tax was assessed for the amount of the deficiency for taxable year 1987 that was offset by the refund. You protest the denial of the offset and request that the assessment be abated.
DETERMINATION
The period for filing an amended return claiming a refund expires three years after the last day prescribed by law for the timely filing of the original return or, if later, 60 days after 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. See Va. Code § 58.1-1823.
The Taxpayer reported the expected changes by the IRS to the department before the changes were complete, and indicated that 1980 would be an overpayment year. This notice was sufficient to establish a "claim for refund" under Va. Code §58.1-1823. The Taxpayer supplied notice of a claim for refund prior to the expiration of the limitations period and acted in good faith.
Accordingly, the assessment of taxes will be abated, and the offset will be allowed. The overpayment from taxable year 1980 will be applied to taxable year 1977 to cover the additional tax and interest resulting from the federal changes.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6138P
Rulings of the Tax Commissioner