April 14, 2015
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek correction of the individual income tax assessments issued to ***** (the "Taxpayers") for the taxable years ended December 31, 2009, 2010 and 2013.
FACTS
The Taxpayers were audited by the Internal Revenue Service (IRS) for the 2009 through 2013 taxable years. The IRS notified the Department of adjustments it made to the Taxpayers' federal income tax return. The Taxpayers failed to file amended Virginia income tax returns reflecting the IRS adjustments. As a result, the Department issued assessments based on the IRS information. The Taxpayers appeal the assessments, contending they are in the process of contesting the adjustments with the IRS.
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 Taxpayers indicate that they are working with the IRS to correct the audit findings. 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 2009, 2010 and 2013 Virginia income tax returns based on federal information available from the IRS as permitted by statute.
The Department requested information regarding the progress of the IRS audits, but the Taxpayers have failed to provide sufficient documentation that would allow the Department to adjust the current assessments. Accordingly, the assessments are upheld and remain due and payable. The Taxpayers will receive updated bills with accrued interest to date. The bills should be paid within 30 days of the bill date to avoid the accrual of additional interest.
If the IRS later adjusts its audit findings for the 2009, 2010 and 2013 taxable years and issues a new final determination, the Taxpayers may file amended returns to correct their liabilities as permitted under Va. Code § 58.1-311 and Va. Code § 58.11823 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/1-5811363737.B