December 8, 2015
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek reconsideration of the Department's determination letter issued as Public Document 15-139 (6/30/2015) to ***** (the "Taxpayer") for the taxable year ended December 31, 2010.
In Public Document (P. D.) 15-139 the Department determined that the Taxpayer's calculation for the pretax pension contribution did not meet the guidelines provided in P.D. 10-214 (9/15/2010). In addition, the Department asked the Taxpayer to provide additional information in order for the subtraction to be more accurately computed.
The Taxpayer has responded that information he received from the Department was incomplete, and he had presented all his personal records relative to his appeal. The Taxpayer requests the Department compute the subtraction based on the information provided in the appeal.
As stated in P.D. 15-139, the portion of the annual distribution(s) eligible for the subtraction would be determined by multiplying the total amount of the annual distribution for the 2010 taxable year by a ratio equal to the total balance of previously taxed contributions divided by the sum of the value of the retirement account at the end of the taxable year plus the total amount of the annual distribution. Based on the evidence, only pretax contributions verified from the Taxpayer's W-2s (*****) can be used to compute the subtraction limitation.
The enclosed spreadsheet shows the computation for the allowable subtraction for the 2007 through 2014 taxable years and is based on the information available. Due to the lack of information, the Department did not take into consideration taxable contributions that may have been distributed prior to the Taxpayer's move to Virginia as would be required under P.D. 10-214.
The 2010 assessment will be adjusted to reflect an allowable retirement subtraction in the amount of *****. Because the bill has been paid, a refund with accrued interest will be issued.
In addition, the Taxpayer should review subsequent returns to properly reflect the pension subtraction as computed in the enclosed spreadsheet and file amended returns for 2012 through 2014 as appropriate.
While I understand the Taxpayer's continuing disagreement with the Department's position, P.D. 15-139 represents the Department's final determination with regard to the 2010 tax assessment. The Code of Virginia sections, and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department's web site. If you have any questions regarding this response, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1-6090178043.D