Tax Type
Individual Income Tax
Description
Offset and Netting Income Tax Refund
Topic
Returns and Payments
Date Issued
10-07-1999
October 7, 1999
Re: Sec. 58.1-1821 Application: Individual income Tax
Dear***
This will respond to your letter in which you protest the denial of an offset and netting of an individual income tax refund for the taxable years ended December 31, 1992 and 1994 with a assessment for the taxable year ended December 31, 1993 for ***** (the "Taxpayers').
FACTS
The Taxpayers' federal individual income tax returns for the taxable years ended December 31, 1992 through 1994 were audited by the Internal Revenue Service ("IRS'). This resulted in tax due for 1993 and overpayments for 1992 and 1994. The Taxpayers did not notify the department of such changes. The department assessed the tax due for 1993 and denied the refunds for 1992 and 1994 because they were not timely filed with the department within limitations period prescribed in Code of Virginia Sec. 58.1-1823. The Taxpayers protest the assessment and argue that had the department acted timely on the matter, the overpayments for 1992 and 1994 would have been in statute and could have been used to offset part of the 1993 tax due.
DETERMINATION
Pursuant to Code of Virginia Sec. 58.1-311, a taxpayer audited by the IRS is required to file an amended return and report the change to the department within 90 days of the final determination of the change. Further, under Code of Virginia Sec. 58.1-1823, a taxpayer has three years from the last day prescribed by law for the timely filing of the return or one year from the final determination of a federal change or correction to file an amended return to request a refund. It should also be noted that Internal Revenue Service Form 4549-CG, enclosed with your letter, states that if changes made by the IRS affect your state income tax, you should file a state form reporting it. As the law is clear on this issue, it is incumbent upon a taxpayer to file an amended return when a refund is involved to protect his statutory rights to the refund.
In the instant case, the Taxpayers did not file amended returns claiming refunds. As such, the department does not have the statutory authority to issue refunds.
Although I am sympathetic to the Taxpayers' situation, the department must comply with the statutory restrictions with respect to refunds as specified in Code of Virginia Sec. 58.1-1823. As such, your request for the department to reconsider the refunds for the taxable years ended December 31, 1992 and 1994 must be denied. The assessment should be paid within the next 30 days to avoid the accrual of additional interest. If you have any questions regarding this determination, please contact ***** of the Office of Tax Policy at
Sincerely,
Danny M. Payne
Tax Commissioner
Re: Sec. 58.1-1821 Application: Individual income Tax
Dear***
This will respond to your letter in which you protest the denial of an offset and netting of an individual income tax refund for the taxable years ended December 31, 1992 and 1994 with a assessment for the taxable year ended December 31, 1993 for ***** (the "Taxpayers').
FACTS
The Taxpayers' federal individual income tax returns for the taxable years ended December 31, 1992 through 1994 were audited by the Internal Revenue Service ("IRS'). This resulted in tax due for 1993 and overpayments for 1992 and 1994. The Taxpayers did not notify the department of such changes. The department assessed the tax due for 1993 and denied the refunds for 1992 and 1994 because they were not timely filed with the department within limitations period prescribed in Code of Virginia Sec. 58.1-1823. The Taxpayers protest the assessment and argue that had the department acted timely on the matter, the overpayments for 1992 and 1994 would have been in statute and could have been used to offset part of the 1993 tax due.
DETERMINATION
Pursuant to Code of Virginia Sec. 58.1-311, a taxpayer audited by the IRS is required to file an amended return and report the change to the department within 90 days of the final determination of the change. Further, under Code of Virginia Sec. 58.1-1823, a taxpayer has three years from the last day prescribed by law for the timely filing of the return or one year from the final determination of a federal change or correction to file an amended return to request a refund. It should also be noted that Internal Revenue Service Form 4549-CG, enclosed with your letter, states that if changes made by the IRS affect your state income tax, you should file a state form reporting it. As the law is clear on this issue, it is incumbent upon a taxpayer to file an amended return when a refund is involved to protect his statutory rights to the refund.
In the instant case, the Taxpayers did not file amended returns claiming refunds. As such, the department does not have the statutory authority to issue refunds.
Although I am sympathetic to the Taxpayers' situation, the department must comply with the statutory restrictions with respect to refunds as specified in Code of Virginia Sec. 58.1-1823. As such, your request for the department to reconsider the refunds for the taxable years ended December 31, 1992 and 1994 must be denied. The assessment should be paid within the next 30 days to avoid the accrual of additional interest. If you have any questions regarding this determination, please contact ***** of the Office of Tax Policy at
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner