Tax Type
Corporation Income Tax
Description
Federal Taxable Income; Limitations Period for Amended Returns
Topic
Returns/Payments/Records
Date Issued
06-05-1992
June 5, 1992
Dear***********:This is in reply to your letter dated July 18, 1991, in which you protest the denial of refunds from the filing of amended returns for * * * (the "Taxpayer') for the taxable years 1978 through 1983.
FACTS
The taxpayer settled an audit with the Internal Revenue Service for the above taxable years. As a result of the federal audit, amended Virginia corporation income tax returns were filed, resulting in the refund claims for five of the above taxable years, and additional tax owed to Virginia for the taxable year ending February, 1980. The department first received notice regarding the federal audit changes in a letter dated July 17, 1990, which is being treated as the filing date of the amended returns for purposes of Va. Code § 58.1-1823.
In closing the federal audit, the taxpayer and the Internal Revenue Service (I.R.S.) corresponded on several occasions. The taxpayer sent a letter dated February 6, 1990 which discloses that a Form 870-AD was "previously signed by the taxpayer and Internal Revenue.' The taxpayer received a letter from the I.R.S. dated February 9, 1990 which disclosed that "the deficiencies and overassessments shown on Form 870-AD are the final amounts for the above taxable years.' The taxpayer also received a Form 872-T dated May 16, 1990 which formally terminated the agreement resulting from a signed Form 872-A, Special Consent to Extend the Time to Assess Tax.
The issue is whether the Form 872-T or some other earlier agreement between the taxpayer and I.R.S. is the "final determination date' under VR § 630-1-1823(B).
DETERMINATION
The applicable portion of Virginia Regulation (VR) § 630-1-1823 states that amended returns claiming a refund must be filed within 60 days from the final determination of any change or correction in the federal tax liability of the taxpayer upon which the Virginia tax is based.
Pursuant to VR 630-1-1823(B)(2), the receipt of an assessment or other notice that the amount of deficiency or overassesment stated on federal form 870 or similar form has been agreed to by the I.R.S. constitutes a final determination for Virginia tax purposes.
We have not been provided with all of the relevant correspondence; however, agreement between the I.R.S. and the taxpayer with respect to the overassessment shown on Form 870-AD is demonstrated by a letter dated February 9, 1990, in which the I.R.S. acknowledges a Form 870-AD executed by other parties. Other items signifying an agreement are the absence of further negotiations between the I.R.S. and the taxpayer after February 9, 1990, and the I.R.S. execution and transmission of Form 3610 to the Joint Committee on or before February 9, 1990.
According to Internal Revenue Procedural Regulation § 601.108(a), a Form 3610 refund claim is reviewed and acted upon by the Joint Committee on Taxation within 30 days. The receipt of a refund check in May 1990 is strong evidence that the overassessment was agreed to by the I.R.S.; however, the final determination occurs before receiving the check.
The issuance of the Form 872-T is not "final determination' by the I.R.S. for purposes of VR § 630-1-1823(B), because it only acts to end an open statute of limitations. In this case the tax liability had clearly been made final by agreement well before the Form 872-T was sent to the taxpayer.
In the absence of relevant documentation proving otherwise, I find that the final determination date occurred on or before March 9, 1990, 30 days after the submission of Form 3610 by the IRS. Since the amended return claiming a refund was filed more than 60 days after this date, the refund claim was properly denied.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner