December 16, 2015
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek correction of the individual tax assessments issued to ***** (the "Taxpayer") for the taxable years ended December 31, 2009 through 2011. You request that the assessments be held in abeyance pending the result of an Internal Revenue Service (IRS) audit.
FACTS
The Taxpayer was audited by the Internal Revenue Service (IRS) for the taxable years at issue. The IRS notified the Department of adjustments it made to the Taxpayer's federal income tax return. A review of the Department's records showed that the Taxpayer had not filed Virginia individual income tax returns. The Department requested that the Taxpayer file returns or provide information to verify that he was not subject to Virginia income tax.
In response, the Taxpayer notified the Department that the IRS was in error and that he was not liable for any federal or Virginia income tax. Based on the IRS information, the Department adjusted the Virginia returns for the 2010 and 2011 taxable years and issued assessments. No assessment has been issued for 2009. The Taxpayer appeals the assessments, requesting that the assessments be held in abeyance and adjusted in accordance with the outcome of the contested IRS audit.
DETERMINATION
Virginia Code § 58.1-311 requires any individual to report a change or correction in federal taxable income within one year of the final determination of such change or correction by filing an amended return with the Department. If the taxpayer fails to file an amended return, Va. Code § 58.1-312 A 3 permits the Department to assess the appropriate tax at any time.
The Taxpayer asserts that he has no federal income tax liability, and he is contesting the IRS audit. Where the IRS has audited the federal taxable income of a taxpayer, the Department does not look behind the IRS's final determination. See Public Document (P.D.) 11-107 (6/14/2011). The Department adjusted the Taxpayer's 2010 and 2011 income tax liability based on federal information available from the IRS as permitted by Virginia statute. As such, the 2010 and 2011 assessments are correct and remain due and payable.
The Taxpayer will receive an updated bill with accrued interest to date. The bill should be paid within 30 days of the bill date to avoid the accrual of additional interest. If the IRS adjusts its audit findings for the 2010 and 2011 taxable years, the Taxpayer will be permitted to file amended returns to correct his liability pursuant to Va. Code § 58.1-311 and Va. Code § 58.1-1823 A(ii).
The Code of Virginia sections and public document 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/1-6141862019.B