Tax Type
Corporation Income Tax
Description
Time limitations for assessment and collection; Timeliness of requests
Topic
Collection of Tax
Date Issued
09-10-1997
September 10, 1997
Re: § 58.1-1821 Application: Corporate Income Tax
Dear****************
This will respond to your letter in which you protest the denial of refunds of corporation income tax for ****** (“S1"),********* (“S2"), ****** (“S3"), ********* (“S4").
FACTS
S1 was audited by the Internal Revenue Service (IRS) for the taxable years ending December 31, 1986, 1987, and 1988. The federal taxable income for 1986 was increased resulting in an assessment of additional tax. The 1987 and 1988 years resulted in decreases in federal taxable income, resulting in overpayments. These changes were reported to the department resulting in the denial of the refunds for 1987 and 1988 and an assessment for 1986.
S2 was audited by the IRS for the taxable years ending December 31, 1985, 1986, 1987, and 1988. Federal taxable income was increased for 1986 and 1988 resulting in assessments for these years. The audit resulted in decreases for 1985 and 1987, resulting in overpayments. These changes were reported to the department resulting in assessments for 1986 and 1988 which were paid and the refunds for 1985 and 1987 which were denied.
S3 filed Form 500-NOLD covering the taxable years ending December 31, 1983, 1984, and 1985 carrying back a 1986 loss as adjusted by the IRS. The taxable year ending December 31,1988, was also audited by the IRS resulting in a decrease in federal taxable income for which a refund was requested. All refund requests for S3 were denied by the department.
S4 filed Form 500-NOLD's for 1991 carrying back a loss to 1988 and for 1989 carrying back a loss to 1986 requesting refunds. Both of these requested refunds were denied by the department.
The refund requests for all years involved were denied by the department because the IRS changes and Form 500-NOLD's were not filed within the limitations period prescribed in Code of Virginia § 58.1-1823. You protest the department's action and request that the department grant the refund requests.
DETERMINATION
Pursuant to Code of Virginia § 58.1-1823, an amended return claiming a refund must be filed within three years of the due date of the return or, if later, within 90 days from the final determination of a change in the taxpayer's federal taxable income. In this case, the amended returns and 500-NOLD's claiming refunds were filed more than three years after the due date of the returns, with the exception of the 1991 500-NOLD for S4, which was timely filed. Consequently, a refund may be issued only if they were filed within 90 days from the date if the final IRS determination.
The information provided by the taxpayer indicates a final determination date by the IRS of December 7, 1995, exclusive of the S4 500-NOLD. The taxpayers in this case did not file amended returns until May,1996, with the exception of the S4 500--NOLD for 1991, which was filed in May,1995. Because these returns were not filed within the 90 day period, the department does not have the necessary statutory authority to issue the refunds.
Although I am sympathetic to your situation, the department must comply with the statutory restrictions with respect to refunds as specified in Code of Virginia § 58.1-1823. Accordingly, your request that the department reconsider its position on the denial of your refunds cannot be granted. However, the 1991 500-NOLD for S4 will be honored because it was timely filed.
If you have any questions regarding this determination, please contact***** of the Office of Tax Policy at**********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12446P
Rulings of the Tax Commissioner