Tax Type
Individual Income Tax
Description
Residency
Topic
Taxpayers
Date Issued
06-21-1999
June 21, 1999
Re: § 58.1-1821 Application: Individual Income Tax
Dear***
This will respond to your letter in which you request on behalf of your client, ***** (the "Taxpayer') that the department reconsider its previous ruling concerning the carryover of individual income tax overpayment credits. I apologize for the delay in responding.
FACTS
The Taxpayer filed his Virginia individual income tax returns after the due date for the 1989, 1991, 1993 and 1994 taxable years. The 1989 and 1991 returns reported overpayments which the Taxpayer requested to be applied to the 1993 and 1994 tax due returns. The 1989 and 1991 overpayments were denied because the returns were filed outside the three-year statute of limitations and assessments were issued for the 1993 and 1994 taxable years. You contend that although the 1989 and 1991 returns were not filed within the three-year limitation period, they were filed within 60 days of a final determination of a Internal Revenue Service ("IRS') change to the Taxpayer's federal tax liability pursuant to Code of Virginia § 58.1-499.
DETERMINATION
At issue is the meaning of change or correction for purposes of Code of Virginia § 58.1-499. Pursuant to Code of Virginia § 58.1-311 and § 58.1-1823, a taxpayer is required to file an amended Virginia return within 90 days (one year for amended returns for refund effective July 1, 1998) when such original return is audited by the IRS which results in changes to federal taxable income. For purposes of this section, changed or corrected refers to those items of income or deduction included in federal taxable income which is the starting point in the determination of Virginia taxable income.
In the instant case, a change or correction has not been made to federal taxable income but resulted from the allowance of withholding tax credits. In order for the statute of limitations for changes in federal returns to open, the changes must affect Virginia taxable income. Further, in a case where all other statute of limitation provisions have expired, the amendments are limited to those made by the IRS. In this case, the changes to the federal returns do not affect the Taxpayer's Virginia tax liability and the Virginia returns were not filed to reflect federal changes. As such, no amendment to the Virginia returns was required and the 60-day statute is not in effect. Based on the foregoing, the Taxpayer does not meet either requirements set forth in Code of Virginia § 58.1-499.
Therefore, the 1989 and 1991 overpayments cannot be applied to the 1993 or 1994 tax liability and the corresponding assessments are due and payable. This letter is a final determination pursuant Code of Virginia § 58.1-1821. You have one-year from the date of this letter to pursue a judicial remedy under by Code of Virginia § 58.1-1825. If you have any questions regarding this determination, please contact of the Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13898P
Re: § 58.1-1821 Application: Individual Income Tax
Dear***
This will respond to your letter in which you request on behalf of your client, ***** (the "Taxpayer') that the department reconsider its previous ruling concerning the carryover of individual income tax overpayment credits. I apologize for the delay in responding.
FACTS
The Taxpayer filed his Virginia individual income tax returns after the due date for the 1989, 1991, 1993 and 1994 taxable years. The 1989 and 1991 returns reported overpayments which the Taxpayer requested to be applied to the 1993 and 1994 tax due returns. The 1989 and 1991 overpayments were denied because the returns were filed outside the three-year statute of limitations and assessments were issued for the 1993 and 1994 taxable years. You contend that although the 1989 and 1991 returns were not filed within the three-year limitation period, they were filed within 60 days of a final determination of a Internal Revenue Service ("IRS') change to the Taxpayer's federal tax liability pursuant to Code of Virginia § 58.1-499.
DETERMINATION
-
- Code of Virginia § 58.1-499 states in pertinent part:
... nor shall any refund of any amount under this section be made, whether on discovery by the Department or on written application of the taxpayer, if such discovery is not made or such written application is not received within three years from the last day prescribed by law for the timely filing of the return, or within sixty days from the final determination of any ***** change or correction in the liability of the taxpayer for any federal tax upon which the state tax is based, whichever is later.
- Code of Virginia § 58.1-499 states in pertinent part:
At issue is the meaning of change or correction for purposes of Code of Virginia § 58.1-499. Pursuant to Code of Virginia § 58.1-311 and § 58.1-1823, a taxpayer is required to file an amended Virginia return within 90 days (one year for amended returns for refund effective July 1, 1998) when such original return is audited by the IRS which results in changes to federal taxable income. For purposes of this section, changed or corrected refers to those items of income or deduction included in federal taxable income which is the starting point in the determination of Virginia taxable income.
In the instant case, a change or correction has not been made to federal taxable income but resulted from the allowance of withholding tax credits. In order for the statute of limitations for changes in federal returns to open, the changes must affect Virginia taxable income. Further, in a case where all other statute of limitation provisions have expired, the amendments are limited to those made by the IRS. In this case, the changes to the federal returns do not affect the Taxpayer's Virginia tax liability and the Virginia returns were not filed to reflect federal changes. As such, no amendment to the Virginia returns was required and the 60-day statute is not in effect. Based on the foregoing, the Taxpayer does not meet either requirements set forth in Code of Virginia § 58.1-499.
Therefore, the 1989 and 1991 overpayments cannot be applied to the 1993 or 1994 tax liability and the corresponding assessments are due and payable. This letter is a final determination pursuant Code of Virginia § 58.1-1821. You have one-year from the date of this letter to pursue a judicial remedy under by Code of Virginia § 58.1-1825. If you have any questions regarding this determination, please contact of the Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13898P
Rulings of the Tax Commissioner