Tax Type
Corporation Income Tax
Description
Deficiency Assessments, Amended Virginia corporate income tax returns
Topic
Collection of Tax
Date Issued
08-06-1999
August 6, 1999
Re: § 58.1-1821 Application: Corporate Income Tax
Dear ***********
This will respond to your letter in which you protest the department's computation of interest on amended returns for ******** (the "Taxpayer') for the taxable years ended June 30, 1986 through 1993. I apologize for the delay in responding.
FACTS
The Taxpayer was subject to an audit by the Internal Revenue Service ("IRS') which resulted in deficiencies for several years and refunds for others. The Taxpayer filed amended Virginia corporate income tax returns to report these adjustments. Interest on the additional tax assessments was computed on the balance outstanding from the due date of the original return to the date of assessment. Interest on the refunds was computed on the amount of the refund from 60 days after the date of the payment to a date within 30 days of the date the check is issued. The Taxpayer protests the interest computations, and suggests that the department employ the same methodology used by the IRS pursuant to Internal Revenue Code ("IRC') §6601 (f).
DETERMINATION
There is no provision in Virginia law, regulation, or prior rulings compatible with the interest computations provided in IRC §6601 (f). This section provides that if any portion of tax of an earlier year is satisfied by the overpayment of a later year, where the later year's return was filed timely or within the extension period, the interest is computed on the earlier year's return from the due date of the return until the original due date of the later year's return.
Under Virginia law, each amended return for a deficiency or refund is an entirely different transaction. Interest on each amended return is computed separately. Interest on a deficiency return is charged pursuant to Code of Virginia § 58.1-455. Interest on refunds is paid pursuant to Code of Virginia § 58.1-1833.
For assessment of additional taxes, Code of Virginia § 58.1-455 provides in pertinent part:
For refund of the overpayment of taxes, Code of Virginia § 58.1-1833 provides in pertinent part:
In the instant case, the department computed the interest on the refunds and deficiencies in accordance with the above statutes. Consequently, your request that the interest be recalculated by the methodology under IRC §6601 (f) must be denied.
The Taxpayer requested a conference in the event that the refund is denied. Because Virginia law is clear and unambiguous on this matter, this determination has been issued without a conference. If you have any questions regarding this matter, please contact ***** of the Office of Tax Policy at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13490P
Re: § 58.1-1821 Application: Corporate Income Tax
Dear ***********
This will respond to your letter in which you protest the department's computation of interest on amended returns for ******** (the "Taxpayer') for the taxable years ended June 30, 1986 through 1993. I apologize for the delay in responding.
FACTS
The Taxpayer was subject to an audit by the Internal Revenue Service ("IRS') which resulted in deficiencies for several years and refunds for others. The Taxpayer filed amended Virginia corporate income tax returns to report these adjustments. Interest on the additional tax assessments was computed on the balance outstanding from the due date of the original return to the date of assessment. Interest on the refunds was computed on the amount of the refund from 60 days after the date of the payment to a date within 30 days of the date the check is issued. The Taxpayer protests the interest computations, and suggests that the department employ the same methodology used by the IRS pursuant to Internal Revenue Code ("IRC') §6601 (f).
DETERMINATION
There is no provision in Virginia law, regulation, or prior rulings compatible with the interest computations provided in IRC §6601 (f). This section provides that if any portion of tax of an earlier year is satisfied by the overpayment of a later year, where the later year's return was filed timely or within the extension period, the interest is computed on the earlier year's return from the due date of the return until the original due date of the later year's return.
Under Virginia law, each amended return for a deficiency or refund is an entirely different transaction. Interest on each amended return is computed separately. Interest on a deficiency return is charged pursuant to Code of Virginia § 58.1-455. Interest on refunds is paid pursuant to Code of Virginia § 58.1-1833.
For assessment of additional taxes, Code of Virginia § 58.1-455 provides in pertinent part:
-
- Interest upon such tax or any unpaid balance of the tax....shall be added at a rate determined in accordance with § 58.1-15, from the date the tax or any unpaid balance of the tax was originally due until paid.
For refund of the overpayment of taxes, Code of Virginia § 58.1-1833 provides in pertinent part:
-
- ....interest shall accrue from a date sixty days after payment of the tax, or sixty days after the last day prescribed by law for such payment, whichever is later, and shall end on a date determined by the Department preceding the date of the refund check by not more than thirty days.
In the instant case, the department computed the interest on the refunds and deficiencies in accordance with the above statutes. Consequently, your request that the interest be recalculated by the methodology under IRC §6601 (f) must be denied.
The Taxpayer requested a conference in the event that the refund is denied. Because Virginia law is clear and unambiguous on this matter, this determination has been issued without a conference. If you have any questions regarding this matter, please contact ***** of the Office of Tax Policy at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13490P
Rulings of the Tax Commissioner