November 18. 2024
Re: § 58.1-1821 Application: Corporate Income Tax
Dear *****:
This will reply to your letter in which you seek correction of the corporate income tax assessments issued to ***** (the “Taxpayer”) for the taxable years ended March 31, 2010, through 2012.
FACTS
The Taxpayer filed Virginia corporate income tax returns for the taxable years at issue, on which it reported intercompany intangible expense add-backs. Under audit, the Department increased the amounts of the add-backs to correspond to amounts reported on the Taxpayer’s federal income tax return. The Taxpayer filed an application for correction, contending that a portion of the payments added back by the Department represented research expenses not subject to the add-back and it was entitled to a full exception to the add-back as permitted by the plain language of the statute.
DETERMINATION
Virginia Code § 58.1-1821 states, “[A]ny person assessed with any tax administered by the Department of Taxation may, within 90 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 taxpayers’ contention.” Pursuant to Virginia Code § 58.1-1821 and Title 23 of the Virginia Administrative Code (VAC) 10-20-165, a complete appeal must be filed with the Department within 90 days from the date of assessment. In addition, 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 their last known address.
The assessments were issued on December 12, 2019, and the Taxpayer’s application for correction was filed on June 18, 2020, long after the 90-day time period for filing an application for correction under Virginia Code § 58.1-1821 had expired.
The Taxpayer acknowledges that it did not timely file its application for correction but believes that the Department should address its application for the following reasons: 1) it was sold to another company and there was a transition of tax personnel; 2) the office was relocated and the assessments were not received; and 3) personnel could not retrieve the notices because of a mandated pandemic shutdown.
The Taxpayer did not notify the Department of the sale or subsequent address change until February 2020, after the assessments had been mailed. While it is unfortunate that the Taxpayer failed to receive the assessments, the Department fulfilled its statutory obligation by mailing the assessments to the Taxpayer’s last known address. Further, the assessments were issued well before the mandatory shutdown. Accordingly, the Department finds no basis to extend the 90-day time period and thus cannot address the Taxpayer’s application for correction.
The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at ***** or email at *****.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/3474.B