Tax Type
Corporation Income Tax
Description
Interest on amended returns
Topic
Penalties and Interest
Date Issued
04-18-1994
April 18, 1994
Re: §58.1-1821 Application: Corporate income tax
Dear***************
This will reply to your letter of May 7, 1993 in which you applied for correction of an assessment of interest to ***********(the "Taxpayer") for the fiscal year ended June 30, 1986. I apologize for the delay in responding.
FACTS
The Taxpayer was audited by the Internal Revenue Service, and numerous adjustments were made. As a result of the IRS audit, the Taxpayer's federal taxable income was increased for the taxable year ended June 30, 1986. The Taxpayer's federal taxable income decreased, resulting in a net operating loss, for the taxable years ended June 30, 1985, 1987, and 1989. The net operating losses for all years were carried to the year ended June 30, 1986. The department assessed the additional tax for the year ended June 30, 1986, and allowed refunds for the net operating loss carrybacks.
The department assessed interest on the additional taxes assessed for the year ended June 30, 1986. No allowance for the net operating loss carrybacks was made in determining interest owed on the June 30, 1986 assessments. You contest the manner in which the department has determined the additional interest owed.
DETERMINATION
As a result of the IRS audit, the Taxpayer's federal taxable income for the year ended June 30, 1986 was increased by various adjustments, and decreased by the net operating loss carryover from June 30, 1985. In accordance with VR 630-1-1812, copy attached, interest on the additional tax owed for the taxable year ended June 30, 1986 shall be added from the original due date of the return through the date of the assessment (December 17, 1992).
Also as a result of the IRS audit, the Taxpayer's federal taxable income for the taxable years ended June 30, 1987 and 1989 decreased, resulting in net operating losses which could be carried back to the year ended June 30, 1986. For Virginia purposes this resulted in two separate carrybacks to the year ended June 30, 1986, each resulting in an overpayment of tax. In accordance with VR 630-3-1833, copy attached, interest shall be allowed on each of these overpayments beginning on the last day prescribed for filing the return for the year of the loss through December 17, 1992, the date of the assessment for additional taxes for the year ended June 30, 1986.
Accordingly, the assessment of interest for the year ended June 30, 1986 and interest allowed on the related carryback claims to this year will be adjusted in accordance with this letter and as reflected on the attached schedules.
The Taxpayer has contacted the department several times in its effort to correct the interest assessment. I apologize for this inconvenience, and will waive any additional interest which may have accrued since the assessment date if the balance due per the attached schedule, ********* ,is paid within 60 days of the date of this letter. The check should be made payable to Department of Taxation, and mailed to******** c/o Office of Tax Policy, Department of Taxation, P.O. Box 1880, Richmond, Virginia 23282.
Sincerely,
Danny M. Payne
Acting Tax Commissioner
OTP/6982M
Rulings of the Tax Commissioner