Tax Type
Individual Income Tax
Description
Interest;Federal Adjustment
Topic
Collection of Tax
Date Issued
04-19-1985
April 19, 1985
Dear ****
This will reply to your letter of February 12, 1983, protesting the interest portion of an assessment of individual income tax for the year 1981.
FACTS
The department adjusted Taxpayers' 1981 Virginia Income tax return after receiving information from the Internal Revenue Service which indicated adjustments to Taxpayers' 1981 Federal income tax return. Taxpayers have paid the tax and interest so assessed, but protest the interest portion of the assessment, since, according to Taxpayers, the Internal Revenue Service assessed no additions to the tax. In support of their position, Taxpayers submitted a copy of a U.S. Tax Court decision which stated that no additions to tax under Secs. 6653(a) or 6653(b) of the Internal Revenue Code, were due from Taxpayers for taxable year 1981.
DETERMINATION
The Internal Revenue Code provisions cited by Taxpayers in their application for correction, relate to the imposition of a 5% penalty of the amount of any underpayment due to the negligence or fraud of Taxpayer in preparing a federal return. However, the interest assessed by the department in this case is not referable to any such negligence or fraud penalty. Rather, such interest accrues in due course, whenever an assessment for underpayment of taxes is issued. Sec. 58.1-1812 of the Virginia Code provides generally that, in addition to any penalties for failure to pay taxes within the time prescribed by law, interest on the outstanding tax shall be charged at the rate established pursuant to Sec. 6621 of the Internal Revenue Code of 1954, as amended.
Therefore, the non-imposition of negligence or fraud penalties by the IRS has no bearing on the accrual of ordinary interest on the amount of the underpayment which was properly assessed by the department.
Based on all of the above, I find no basis for correction of the assessment in this case. You are free, however, to appeal this determination at any time within three years of the date of the assessment to a Circuit Court pursuant to Sec. 58.1-1825 of the Virginia Code.
Dear ****
This will reply to your letter of February 12, 1983, protesting the interest portion of an assessment of individual income tax for the year 1981.
FACTS
The department adjusted Taxpayers' 1981 Virginia Income tax return after receiving information from the Internal Revenue Service which indicated adjustments to Taxpayers' 1981 Federal income tax return. Taxpayers have paid the tax and interest so assessed, but protest the interest portion of the assessment, since, according to Taxpayers, the Internal Revenue Service assessed no additions to the tax. In support of their position, Taxpayers submitted a copy of a U.S. Tax Court decision which stated that no additions to tax under Secs. 6653(a) or 6653(b) of the Internal Revenue Code, were due from Taxpayers for taxable year 1981.
DETERMINATION
The Internal Revenue Code provisions cited by Taxpayers in their application for correction, relate to the imposition of a 5% penalty of the amount of any underpayment due to the negligence or fraud of Taxpayer in preparing a federal return. However, the interest assessed by the department in this case is not referable to any such negligence or fraud penalty. Rather, such interest accrues in due course, whenever an assessment for underpayment of taxes is issued. Sec. 58.1-1812 of the Virginia Code provides generally that, in addition to any penalties for failure to pay taxes within the time prescribed by law, interest on the outstanding tax shall be charged at the rate established pursuant to Sec. 6621 of the Internal Revenue Code of 1954, as amended.
Therefore, the non-imposition of negligence or fraud penalties by the IRS has no bearing on the accrual of ordinary interest on the amount of the underpayment which was properly assessed by the department.
Based on all of the above, I find no basis for correction of the assessment in this case. You are free, however, to appeal this determination at any time within three years of the date of the assessment to a Circuit Court pursuant to Sec. 58.1-1825 of the Virginia Code.
Rulings of the Tax Commissioner