June 20, 2018
Re: § 1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the individual income tax assessment issued to ***** (the “Taxpayer”) for the taxable year ended December 31, 2007.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia income tax return for the 2007 taxable year. A review of the Department's records showed that the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer in order to determine if her income was taxable in Virginia. When a response was not received, the Department issued an assessment on July 7, 2010. The Department satisfied the assessment through collection actions on March 8, 2018. The Taxpayer now appeals, contending that she did not owe any tax for the year at issue and the amount due was assessed incorrectly.
DETERMINATION
Timely Appeal
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.” Title 23 of the Virginia Administrative Code (VAC) 10-20-165 D further specifies what must be included in a complete appeal. Additionally, Virginia Code § 58.1-1820 provides that assessments made by the Department are deemed to be made when a written notice of assessment is mailed to a taxpayer at her last known address.
Here, the Department issued the assessment on July 7, 2010, but the appeal was not filed until March 2018, well after the 90-day statute of limitations. Likewise, the Taxpayer has not asserted sufficient legal or factual grounds to satisfy the requirements for a complete appeal.
Statute of Limitations
Virginia Code § 58.1-341 provides that a Virginia resident who is required to file a federal income tax return is also required to file a Virginia income tax return, unless the resident is exempt from filing under Virginia Code § 58.1-321. When a resident does not file a proper Virginia return, Internal Revenue Code (IRC) § 6103(d) authorizes the Department to obtain information from the IRS that will help in determining the resident's tax liability. See Public Document (P.D.) 14-33 (3/7/2014) and P.D. 15-49 (4/3/2015). Because the Taxpayer did not file a Virginia income tax return, the Department made an assessment based on the information it had available pursuant to Virginia Code § 58.1-111.
In this case, the Taxpayer does not assert that she was not required to file a Virginia individual income tax return. Because no return was on file, the Department was within its authority in issuing an assessment based on the best information available. Absent any documentation to the contrary, the assessment must be upheld.
The Taxpayer asserts that, because of how much time has elapsed, evidence of her proper 2007 income tax liability has been hard to obtain. Although the Department recognizes that obtaining evidence may be difficult, the Department can only base assessments on information made available.
Under Virginia Code § 58.1-1823(iv), a taxpayer has two years from the payment of an assessment to file an amended return requesting a refund, provided that the amended return raises issues relating solely to such assessment and the refund does not exceed the amount of such payment. In this case, the taxpayer paid the assessment on March 8, 2018. Thus, although she is not eligible for an appeal, the Taxpayer is provided additional time to obtain the evidence requested and correct the assessment by filing an amended return requesting a refund on or before March 8, 2020.
The Code of Virginia sections, regulation, 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/1622.C