Tax Type
Corporation Income Tax
Description
Statute of Limitations for Refund
Topic
Statute of Limitations
Date Issued
07-31-2000
July 31, 2000
RE: § 58.1-1821 Application: Corporate Income Taxation
This will reply to your letter in which you request a refund of additional corporate income tax and interest assessed against ***** (the "Taxpayer") for the taxable years ended May 1987 and May 1990.
The Taxpayer's federal corporate income tax returns for the taxable years ending May 1986 through May 1990 were adjusted by the Internal Revenue Service ("IRS"). The adjustments caused an increase in Virginia income tax liability for the taxable years ended May 1987 and 1990 and a decrease in tax liability for the taxable years ended May 1988 and 1989. There was no resulting liability or overpayment for adjustments made to the taxable year ended May 1986.
Based on the federal adjustments, the Taxpayer filed amended Virginia returns with the department in December 1999, which included a partial payment for the taxable years ended May 1987 and 1990. The Taxpayer requested that the balance of the liability be offset by the overpayments for the taxable years ended May 1988 and 1989. The department subsequently notified the Taxpayer by letter dated May 10, 2000, that the refunds were denied because the request was not filed within the period prescribed by Code of Virginia § 58.1-1823. Assessments were issued for additional tax and interest for the May 1987 and 1990 taxable years. The Taxpayer has paid these assessments.
The Taxpayer contests the denial of the refund request for the taxable years ended May 1987 and 1990. Although conceding that the amended returns were filed outside the statute of limitations, the Taxpayer asserts that additional time was needed to file the complicated consolidated amended returns correctly. The Taxpayer is requesting that the Tax Commissioner allow the refunds in light of these extenuating circumstances.
Pursuant to Code of Virginia § 58.1-1823, an amended return claiming a refund may be filed within three years of the due date of the return or, if later, within one year from the final determination of a change in the taxpayer's federal taxable income. In this case, the amended returns were filed more than three years after their due date. Consequently, a refund may be issued only if the returns were filed within one year from the date of the final IRS determination.
The final determination for the change to the Taxpayer's federal taxable income was October 26, 1998, when the audit report was issued. The Taxpayer did not file amended returns with the department until December 27, 1999, two months beyond the one year period prescribed by law. As such, the department does not have the necessary statutory authority to issue refunds for overpayments made for the taxable years ended May 1987 and 1990.
Enclosed are previous rulings issued by the department where refund offset requests were denied in situations similar to yours. See Public Documents (P.D.) 97-224 (5/16/97), 96-137 (6/17/96), 95-155 (6/13/95), 93-108 (4/28/93), and 90-20 (1/11/90), copies enclosed. These public documents were issued prior to the 1998 amendment to Code of Virginia § 58.1-1823 that increased the statute of limitations from 90 days from the final determination of a change in the taxpayer's federal taxable income to one year.
Although I am sympathetic to the Taxpayer's situation, the department must comply with the statutory restrictions with respect to refunds as specified in Code of Virginia § 58.1-1823. Accordingly, pursuant to long standing written policy, your request for the department to issue refunds for the taxable years ending May 1987 and May 1990 as a result of the federal adjustments must be denied. If you have any questions regarding this determination, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
RE: § 58.1-1821 Application: Corporate Income Taxation
This will reply to your letter in which you request a refund of additional corporate income tax and interest assessed against ***** (the "Taxpayer") for the taxable years ended May 1987 and May 1990.
FACTS
The Taxpayer's federal corporate income tax returns for the taxable years ending May 1986 through May 1990 were adjusted by the Internal Revenue Service ("IRS"). The adjustments caused an increase in Virginia income tax liability for the taxable years ended May 1987 and 1990 and a decrease in tax liability for the taxable years ended May 1988 and 1989. There was no resulting liability or overpayment for adjustments made to the taxable year ended May 1986.
Based on the federal adjustments, the Taxpayer filed amended Virginia returns with the department in December 1999, which included a partial payment for the taxable years ended May 1987 and 1990. The Taxpayer requested that the balance of the liability be offset by the overpayments for the taxable years ended May 1988 and 1989. The department subsequently notified the Taxpayer by letter dated May 10, 2000, that the refunds were denied because the request was not filed within the period prescribed by Code of Virginia § 58.1-1823. Assessments were issued for additional tax and interest for the May 1987 and 1990 taxable years. The Taxpayer has paid these assessments.
The Taxpayer contests the denial of the refund request for the taxable years ended May 1987 and 1990. Although conceding that the amended returns were filed outside the statute of limitations, the Taxpayer asserts that additional time was needed to file the complicated consolidated amended returns correctly. The Taxpayer is requesting that the Tax Commissioner allow the refunds in light of these extenuating circumstances.
DETERMINATION
Pursuant to Code of Virginia § 58.1-1823, an amended return claiming a refund may be filed within three years of the due date of the return or, if later, within one year from the final determination of a change in the taxpayer's federal taxable income. In this case, the amended returns were filed more than three years after their due date. Consequently, a refund may be issued only if the returns were filed within one year from the date of the final IRS determination.
The final determination for the change to the Taxpayer's federal taxable income was October 26, 1998, when the audit report was issued. The Taxpayer did not file amended returns with the department until December 27, 1999, two months beyond the one year period prescribed by law. As such, the department does not have the necessary statutory authority to issue refunds for overpayments made for the taxable years ended May 1987 and 1990.
Enclosed are previous rulings issued by the department where refund offset requests were denied in situations similar to yours. See Public Documents (P.D.) 97-224 (5/16/97), 96-137 (6/17/96), 95-155 (6/13/95), 93-108 (4/28/93), and 90-20 (1/11/90), copies enclosed. These public documents were issued prior to the 1998 amendment to Code of Virginia § 58.1-1823 that increased the statute of limitations from 90 days from the final determination of a change in the taxpayer's federal taxable income to one year.
Although I am sympathetic to the Taxpayer's situation, the department must comply with the statutory restrictions with respect to refunds as specified in Code of Virginia § 58.1-1823. Accordingly, pursuant to long standing written policy, your request for the department to issue refunds for the taxable years ending May 1987 and May 1990 as a result of the federal adjustments must be denied. If you have any questions regarding this determination, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner