Tax Type
Individual Income Tax
Description
Illegal drug sales; Jeopardy assessment
Topic
Collection of Delinquent Tax
Date Issued
09-06-1988
September 6, 1988
Re: §58.1-1821 Application
§58.1-313 Jeopardy Assessment; Individual Income Tax
Dear***********************
This is in response to your client's letter of October 23, 1987, and subsequent correspondence with you in which you applied for correction of an assessment of individual income tax.
Facts
The taxpayer owned and managed a motel. In 1982 police searched a room in the motel and found a quantity of illegal drugs. The men who rented the room were arrested. The taxpayer was also arrested and a substantial amount of cash in his possession was seized by the police but the charges were later dropped. The department assessed income tax on a jeopardy basis and the seized cash was applied to the liability.
Discussion
The assessment was made in 1982. The department was not contacted by anyone to protest the assessment until your client's letter of October 23, 1987, more than five years after the assessment. However, based on the medical records supplied, it appears that the taxpayer became incompetent before expiration of the period for requesting a refund and that your client requested the refund within one year of the date that the court appointed her guardian for the taxpayer. Therefore, the application was timely filed pursuant to §8.01-229.
The department has reviewed the facts and circumstances surrounding the assessment. Although the unexplained possession of a large amount of cash is suspicious, the department has determined that the evidence available does not support a finding that the taxpayer had a substantial amount of undeclared income for 1982.
Determination
Accordingly, the outstanding balance of the assessment will be abated and the amount collected will be refunded to you with interest.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner