Tax Type
Individual Income Tax
Description
IRS change or correction of FAGI; Conformity to federal
Topic
Returns/Payments/Records
Date Issued
08-29-1996
August 29,1996
Re: 58.1-1821 Application: Individual Income Tax
Dear**************
This will reply to your letter to July 4, 1996, seeking correction of assessments resulting from adjustments to your 1993 and 1994 Virginia individual income tax returns.
FACTS
The assessments made on your 1993 and 1994 Virginia individual income tax returns were the result of changes made by the Internal Revenue Service (IRS) in an audit. For both years involved, the assessments were issued because your federal adjusted gross income was increased by the IRS thereby precipitating a like increase to your Virginia taxable income. You protest the assessments and state that they are not proper, and therefore no additional tax is due the Commonwealth.
DETERMINATION
The assessments for the years 1993 and 1994 were the result of audit information supplied to the department by the IRS. As a result of the IRS audit, federal adjusted gross income was increased. The recomputed federal audit information was compared to that reported on the Virginia individual income tax returns. This resulted in the assessment of additional Virginia tax for these years. The information was provided to the department under the State/Federal Information Exchange Agreement.
Virginia income tax statutes generally conform with the federal Internal Revenue Code. Accordingly, Virginia law provides that the starting point for state income tax is federal adjusted gross income with certain modifications as specified in Code of Virginia § 58.1-322.
Although I am sympathetic to your situation, unless the Internal Revenue Service amends their audit figures, there is no basis for adjustments to our assessments. The tax credit for rent reduction for low income and elderly or disabled tenants is available to individuals and corporations who are engaged in the renting of dwelling units subject to the Virginia Residential Landlord and Tenant Act. This credit is administered by the Virginia Housing Development Authority which certifies the credits earned to the Department of Taxation. The Authority is responsible for establishing regulations pertaining to the requirements of those persons requesting certification. As such, the Department of Taxation is limited in its authority to allowing certified credits for use in determining Virginia tax liability.
Your questions relating to federal depreciation and charitable contributions concern the determination of federal taxable income. The department relies on federal taxable income as the starting point for Virginia income subject to tax. The department is not in a position to change adjustments made to federal taxable income.
Accordingly, the department finds that the assessments are correct and your application for correction must be denied. You should receive updated assessments reflecting interest to date in due time. To avoid the accrual of additional interest, the assessments should be paid within 30 days.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11482P
Rulings of the Tax Commissioner