Tax Type
Corporation Income Tax
Description
Amended return
Topic
Collection of Tax
Date Issued
10-24-1997
October 24,1997
Re: § 58.1-1821 Application: Corporate Income Tax
Dear***********
This will reply to your letter of July 2, 1997 in which you request a correction of an assessment of corporate income tax on *****(the "Taxpayer") for the 1991 taxable year. I apologize for the delay in responding.
FACTS
The Taxpayer was audited for its 1984 through 1990 taxable years. As a result of this audit, the Taxpayer was assessed additional tax, penalty and interest. The Taxpayer and the Commonwealth negotiated a settlement agreement (the "Agreement") in or about June of 1993, at which time the United States Bankruptcy Court approved the Agreement. The settlement amount was paid to settle all years through 1990. The Agreement also recognized that the Taxpayer has already filed an income tax return for its 1991 taxable year and had made estimated payments for such year.
On or about September 29, 1995, the Taxpayer filed a Virginia amended return for its 1991 taxable year reporting no tax due. The Taxpayer contends that the department had not reviewed the amended return in a timely fashion pursuant to the Agreement and therefore the amended return should be deemed correct and a refund issued.
DETERMINATION
Paragraph 12 of the Agreement acknowledges that the Taxpayer had filed a return for its 1991 taxable year. This return reported a liability of ***** . The Taxpayer filed an amended return on September 29, 1995 which reported no taxable income. The Taxpayer contends that according to the Agreement, the department had 30 days to review the amended return and 90 days to issue a report of proposed changes. The Agreement provides that:
-
- Virginia agrees to review the return or any amended return for said period filed within thirty days (30) days from the date of the approval of this agreement and issue ... a report of any proposed changes within ninety days to the date of approval of this Agreement. In the event no such report is issued, the tax amount shown as due on said return or amended return shall be deemed correct, and Virginia agrees to promptly refund any overpayment of taxes by the Trust (Emphasis added.)
From the plain language of the Agreement, the 30 day period refers to the number of days after the approval of the Agreement in which the Taxpayer could file an amended return for taxable year 1991. The ninety day clause refers to the period after approval of the Agreement in which the department can issue a report proposing changes to any tax return filed for tax year 1991. The Agreement was approved by the United States bankruptcy judge on June 21, 1993. Thus, the Taxpayer had thirty days form June 21, 1993 in which to file an amended return (i.e. July 31, 1993) or else the current return would be deemed Correct unless the department issued a report of proposed changes within 90 days of the Agreement approval.
The Taxpayer did not file its amended return until September 29, 1995, more than two years after the date specified by the Agreement. The department never filed a report of proposed changes to the 1991 return referred to in the Agreement. Therefore, the 1991 tax return referred to in the Agreement is correct. If you have any questions regarding this determination, you may contact ****at******.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12964B
Rulings of the Tax Commissioner