Tax Type
Corporation Income Tax
Description
Domestic international sales corporations (DISCS), interest charge DISCs, and foreign sales corporations (FSCs); Commissions paid to FSC.
Topic
Computation of Income
Date Issued
03-17-1998
March 17, 1998
Dear*****:
This will respond to your letter of January 16, 1998, in which ***** (the "Taxpayer') applies for correction of corporate income tax assessments for the taxable years ending June 30, 1994, 1995, and 1996.
FACTS
The Taxpayer was field audited resulting in the disallowance of commissions paid to the Taxpayer's foreign sales corporation (the "FSC'). The Taxpayer protests the adjustment, contending that the department's policy for the period under audit should follow the guidance of Virginia Regulation (VR) 630-3-446.1, even though Sec. 4 of this regulation was not in effect for the period. The Taxpayer contends that Code of Virginia Sec. 58.1-401(8), effective for taxable years beginning on and after July 31, 1995, further supports this position.
DETERMINATION
In Public Document (P.D.) 97-445 (11/5/97), copy enclosed, the department ruled it appropriate to continue the policy set for VR 530-3-446.1 to those years falling within the period March 10, 1993, through July 31, 1995. Accordingly, the assessments for the taxable years ending June 30, 1994, 1995, and 1996 will be corrected by removing the adjustments applicable to the transactions of the FSC with the Taxpayer.
You have paid the tax and interest due on the uncontested portion of the audit. Therefore, the remainder of the assessments will be abated.
If you have any questions regarding this matter, please contact ***** of the Office of Tax Policy at *****.
Dear*****:
This will respond to your letter of January 16, 1998, in which ***** (the "Taxpayer') applies for correction of corporate income tax assessments for the taxable years ending June 30, 1994, 1995, and 1996.
FACTS
The Taxpayer was field audited resulting in the disallowance of commissions paid to the Taxpayer's foreign sales corporation (the "FSC'). The Taxpayer protests the adjustment, contending that the department's policy for the period under audit should follow the guidance of Virginia Regulation (VR) 630-3-446.1, even though Sec. 4 of this regulation was not in effect for the period. The Taxpayer contends that Code of Virginia Sec. 58.1-401(8), effective for taxable years beginning on and after July 31, 1995, further supports this position.
DETERMINATION
In Public Document (P.D.) 97-445 (11/5/97), copy enclosed, the department ruled it appropriate to continue the policy set for VR 530-3-446.1 to those years falling within the period March 10, 1993, through July 31, 1995. Accordingly, the assessments for the taxable years ending June 30, 1994, 1995, and 1996 will be corrected by removing the adjustments applicable to the transactions of the FSC with the Taxpayer.
You have paid the tax and interest due on the uncontested portion of the audit. Therefore, the remainder of the assessments will be abated.
If you have any questions regarding this matter, please contact ***** of the Office of Tax Policy at *****.
Rulings of the Tax Commissioner