Tax Type
Corporation Income Tax
Description
Subtractions of non-business income
Topic
Collection of Tax
Date Issued
09-26-1994
September 26, 1994
Re: §58.1-1821 Application; Corporate Income Taxes
Dear***********
This will reply to your letter of May 26, 1994, in which you have contested the assessment of additional corporate income tax to***************(the "Taxpayer") for the taxable years ended February 23, 1991, February 29, 1992, and February 27, 1993.
FACTS
The Taxpayer claimed subtractions for allocable non-business income, net of related expenses on its Virginia corporate income tax returns. The department disallowed these subtractions and assessed additional corporate income taxes; you aver that these assessments are incorrect.
DETERMINATION
The department has previously ruled that certain nonbusiness income received by this Taxpayer should be allocated out of income subject to apportioned taxation in Virginia. See Public Document (P.D.) 94-178 (6/8/94), copy attached. The documentation provided indicates that the income for which the Taxpayer has claimed a subtraction in the taxable years currently at issue is essentially the same as that previously ruled on by the department. Accordingly, the subtractions claimed by the Taxpayer shall be allowed, and the auditors adjustments for these subtractions shall be reversed.
Although you notified the department of your intent to contest the assessments discussed herein on May 26, 1994, the department failed to take the appropriate action necessary to suspend its related collection efforts. As a result of this failure, on July 12, 1994, the refunds previously authorized in P.D. 94-178 were offset against the assessments for the later years. This should not have happened, as you had taken the appropriate action necessary to protest the later assessments.
The refunds previously authorized shall be processed as soon as possible, with additional interest computed at statutory rates provided for the period that these refunds were suspended.
On behalf of the department, I apologize for any inconvenience this may have caused you.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/8325M
Rulings of the Tax Commissioner