Tax Type
Corporation Income Tax
Description
Amended returns
Topic
Computation of Income
Statute of Limitations
Date Issued
03-18-1993
March 18, 1993
Re: Va. Code § 58.1-1821 Application: Corporate Income Tax
Dear*****************
This will reply to your letter dated May 4, 1992 in which you request abatement of corporate income tax assessed against ***** (the "Taxpayer") for taxable years 1972 through 1974.
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 returns were filed for 1972 and 1973. In addition to reporting the final federal changes, the Taxpayer also amended its 1973 return to correct an item unrelated to the changes in federal income. The Department disallowed the unrelated correction made to the original 1973 return and issued assessments for the taxable years 1972 through 1974.
DETERMINATION
Prior to July 1, 1992, § 58.1-1823 of the Virginia Code provides that a taxpayer may file an amended Virginia income tax return within 60 days of a final determination of any change or correction in the federal tax liability of the taxpayer upon which the Virginia tax is based. In accordance with American Brands, Inc. v. Department of Taxation, Commonwealth of Virginia, Circuit Court of Richmond, No. 83-1378 (January 13, 1983), the Department issued Virginia Tax Bulletin ("T.B.") 84-21 (December 14, 1984) which provided that an amended return could correct any errors made in an original return regardless of whether the correction was attributable to changes in federal tax liability.
It is important to note that T.B. 84-21 was superceded by a 1992 amendment to § 58.1-1823. Effective July 1, 1992, corrections to income tax returns are limited to changes or corrections to the federal taxable income and must be filed with the Department within 90 days of the final determination.
Based upon the law as it existed at the time the Taxpayer reported the final determination to the Department and the Department's policy as then articulated in T.B. 84-21, the Taxpayer may amend its 1973 corporate income tax return to correct the identified error even though the error is unrelated to the changes in the Taxpayer's federal taxable income.
Accordingly, the assessment is abated.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6530L
Rulings of the Tax Commissioner