October 19, 2015
Re: § 58.1-1821 Application: Fiduciary Income Tax
Dear *****:
This will reply to your letter in which you seek correction of the fiduciary income tax assessments issued to ***** (the "Taxpayer") for the taxable years ended December 31, 2006 through 2007 and December 31, 2009 through 2013.
FACTS
The Taxpayer acts as trustee for qualified funeral trusts (QFT) and filed Virginia fiduciary income tax returns for all of the taxable years at issue. The Taxpayer calculated its fiduciary tax liability based on the average income per contract. This resulted in the fiduciary trust being taxed at the lowest rate available on the Virginia income tax rate schedule.
On audit, the Department determined that the Taxpayer's income exceeded the income level set at the minimum rate and assessed additional tax. The Taxpayer appeals the assessments, contending that QFTs are taxed at the lowest rate at the federal level and conformity requires that Virginia also tax QFTs at the lowest tax rate.
DETERMINATION
Virginia Code § 58.1-1821 states, "Any person assessed with any tax administered by the Department of Taxation may, within ninety days from the date of such assessment, apply for relief to the Tax Commissioner. Such application shall be in the form prescribed by the Department and shall fully set forth the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention."
Pursuant to Va. Code § 58.1-1821 and Title 23 of the Virginia Administrative Code 10-20-165, a complete appeal must be filed with the Tax Commissioner within 90 days from the date of assessment. In this case, the date of the assessments issued to the Taxpayer range from December 2, 2008 through July 23, 2014. Based on the provisions of Va. Code § 58.1-1821, the Taxpayer was required to file a complete administrative appeal by October 21, 2014 for the most recent assessment.
The Department's records indicate your June 25, 2015 letter is the only correspondence from the Taxpayer regarding an administrative appeal of the assessments at issue. This filing is well after the expiration of the 90-day limitations period. Therefore, the Taxpayer's application for correction pursuant to Va. Code § 58.1-1821 is barred by the statute of limitations. Accordingly, the assessments are upheld and remain due and payable.
An updated bill will be issued shortly, which will include accrued interest to date. Payment of the assessments should be made within 30 days of the bill date in order to avoid the accrual of additional interest.
The Code of Virginia and regulation sections 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/1-6101170076.B