January 18, 2023
Re: § 58.1-1821 Application: Corporate Income Tax
Dear *****:
This will reply to your letter submitted on behalf of ***** (the “Taxpayer”), in which you appeal the denial of its application for the Research and Development Expenses Tax Credit (the “Credit”) for the 2021 taxable year.
FACTS
The Department received the Taxpayer’s Form RDC, Application for Research and Development Expenses Tax Credit (the “Application”), for the 2021 taxable year on September 8, 2022. The Application did not bear a postmark. The Department denied the Application on the basis that the Taxpayer had not submitted the Application by the September 1, 2022, deadline. The Taxpayer appealed, contending that it mailed the Application on September 1, 2022, using the United States Postal Service.
DETERMINATION
Pursuant to Virginia Code § 58.1-439.12:08, an individual, corporation, or pass-through entity may apply for the Credit. Virginia Code § 58.1-439.12:08 E provides that applications for the Credit “must be received by the Department no later than September 1 of the calendar year following the close of the taxable year in which the expenses were paid or incurred.” [Emphasis added] See also Research and Development Expenses Tax Credit Guidelines, as updated and re-issued as Public Document (P.D.) 20-120 (7/7/2020).
This requirement is also clearly set forth in the Form RDC instructions, in the income tax instructions, and on the Department’s website. The Form RDC instructions specifically state that “[f]or any application received without a postmark, the date received by the Department will be used to determine if the application was received by the filing deadline.”
Because the Credit is subject to an annual cap, the Department must have a deadline for tax credit applications. Adopting a policy of approving late applications for the Credit could result in the amount of tax credit exceeding the tax credit cap for a particular year. The Department’s policy of establishing a hard deadline for capped tax credits has been applied to all capped tax credits that are administered by the Department. See P.D. 04-201 (11/4/2004), P.D. 13-189 (10/18/2013), P.D. 15-201 (10/19/2015), and P.D. 20-26 (2/27/2020). Accordingly, the Department cannot accept an application for the Credit after the deadline.
In this case, the Department received the Application on September 8, 2022, and the Application did not bear a postmark. A taxpayer’s statement that a return was mailed from a United States post office on a given date is not a substitute for a postmark. See P.D. 16-146 (7/6/2016). Therefore, the Application was considered filed on the date it was received, which was after the September 1, 2022, deadline. Accordingly, I find that the Application was properly denied.
The Code of Virginia sections and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department’s web site. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/4371.X