Tax Type
Individual Income Tax
Description
Penalty and interest; Failure to file an extension
Topic
Penalties and Interest
Date Issued
04-04-1985
April 4, 1985
Re: Virginia Code § 58.1-1821 Application/Individual Income Tax/1983
Dear ******
This is in response to your letter of December 3, 1984 in which you petition for relief of the penalties and interest assessed against your clients for taxable year 1983.
FACTS
The taxpayers are nonresidents of Virginia whose Virginia source income is derived from various investment sources, including partnerships and rental property. Since the taxpayers are calendar year taxpayers and did not file their return until July 23, 1984, the department assessed the applicable late filing penalty and late payment penalty. The department also assessed the penalty for the underpayment of estimated income tax, since no estimated income tax had been paid during the year.
Your petition is based on the contention that your clients were unaware that they would have income from Virginia sources until after the filing deadline.
DETERMINATION
Virginia Code § 58.1-341 provides that:
A. On or before May 1 of each year if an individual's taxable year is the calendar year, or on or before the fifteenth day of the fourth month following the close of a taxable year other than the calendar year, an income tax return under this chapter shall be made and filed by or for:
1. Every resident individual, except as provided in § 58.1-321, required to file a federal income tax return for the taxable year, or having Virginia taxable income for the taxable year;
2. Every nonresident individual having Virginia taxable income for the taxable year, except as provided in § 58.1-321 (Emphasis added.)
Whenever an individual has been granted an extension to file a federal income tax return, or has shown upon written request that good cause exists; the department will grant, upon written request, an extension of time to file the return, not to exceed six months. Your clients filed a federal extension request on April 16, 1984, two weeks before the deadline for filing a Virginia return or Virginia extension request. No Virginia extension request was filed, nor was a return filed until July 23, 1984.
The extension provisions of Virginia Code § 58.1-344 offer an adequate remedy, for situations such as your clients'. Since your clients failed to avail themselves of this remedy there is no basis for the department to grant relief from the late filing penalty and late payment penalty assessed.
I would like to point out that Virginia Code § 58.1-492 provides four exceptions which may reduce or void the penalty for the underpayment of estimated income tax. If your clients qualify for any of the exceptions, please complete and return the enclosed Form 760-C.
Sincerely,
W. H. Forst
Tax Commissioner
Enclosure
Re: Virginia Code § 58.1-1821 Application/Individual Income Tax/1983
Dear ******
This is in response to your letter of December 3, 1984 in which you petition for relief of the penalties and interest assessed against your clients for taxable year 1983.
FACTS
The taxpayers are nonresidents of Virginia whose Virginia source income is derived from various investment sources, including partnerships and rental property. Since the taxpayers are calendar year taxpayers and did not file their return until July 23, 1984, the department assessed the applicable late filing penalty and late payment penalty. The department also assessed the penalty for the underpayment of estimated income tax, since no estimated income tax had been paid during the year.
Your petition is based on the contention that your clients were unaware that they would have income from Virginia sources until after the filing deadline.
DETERMINATION
Virginia Code § 58.1-341 provides that:
A. On or before May 1 of each year if an individual's taxable year is the calendar year, or on or before the fifteenth day of the fourth month following the close of a taxable year other than the calendar year, an income tax return under this chapter shall be made and filed by or for:
1. Every resident individual, except as provided in § 58.1-321, required to file a federal income tax return for the taxable year, or having Virginia taxable income for the taxable year;
2. Every nonresident individual having Virginia taxable income for the taxable year, except as provided in § 58.1-321 (Emphasis added.)
Whenever an individual has been granted an extension to file a federal income tax return, or has shown upon written request that good cause exists; the department will grant, upon written request, an extension of time to file the return, not to exceed six months. Your clients filed a federal extension request on April 16, 1984, two weeks before the deadline for filing a Virginia return or Virginia extension request. No Virginia extension request was filed, nor was a return filed until July 23, 1984.
The extension provisions of Virginia Code § 58.1-344 offer an adequate remedy, for situations such as your clients'. Since your clients failed to avail themselves of this remedy there is no basis for the department to grant relief from the late filing penalty and late payment penalty assessed.
I would like to point out that Virginia Code § 58.1-492 provides four exceptions which may reduce or void the penalty for the underpayment of estimated income tax. If your clients qualify for any of the exceptions, please complete and return the enclosed Form 760-C.
Sincerely,
W. H. Forst
Tax Commissioner
Enclosure
Rulings of the Tax Commissioner