Tax Type
Corporation Income Tax
Description
ACRS Modifications
Topic
ACRS Modifications
Computation of Income
Date Issued
01-04-1989
January 4, 1989
Re: §58.1-1821 Application; Corporation Income Tax
§58.1-323 ACRS Modifications
Dear****************
This is in response to your letter of November 9, 1988, in which you asked that I review the portion of my decision of October 26, 1988, denying a refund of the interest portion of an assessment relating to an ACRS subtraction. P.D. No. 88-288 (copy enclosed).
Virginia Code §58.1-402 B.3. and §58.1-323, which required corporations to make the ACRS additions, were repealed effective for taxable years beginning on and after January 1, 1988. (1987 Acts, Ch. 9, HB 1119.) Therefore, Virginia tax liability for taxable years beginning before January 1, 1988, must be computed and assessed under the provisions of the repealed sections.
The taxpayer improperly claimed an ACRS subtraction on its return for F.Y.E. 6/30/84. The assessment properly computed tax liability under the law in effect for the taxable year and properly included interest from the due date of the return until the date of assessment as required by §58.1-1812. The tax portion of the assessment was abated not because it was erroneous but because the taxpayer was entitled to an offsetting refund under §58.1-323.1 D. added by 1988 legislation effective July 1, 1988. (1988 Acts, Ch. 773, SB 441.)
§58.1-1833 requires the payment of interest on refunds permitted or required under the provisions of Article 2, Chapter 18, of Title 58.1 (captioned "Correction of Erroneous Assessments; Refunds"). The refund in question is pursuant to §58.1-323.1 D. and is not a correction of an erroneous assessment. Furthermore, nothing in §58.1-323.1 authorizes a refund of tax with interest based upon recomputing Virginia tax liability for a prior year. The section merely specifies how prior ACRS additions (less subtractions) are to be recovered. Taxpayers still in existence receive subtractions in subsequent years; taxpayers no longer in existence may, after July 1, 1988, "apply for a refund of the outstanding amounts of excess cost recovery which have not been previously subtracted."
Therefore, the determination in my letter of October 26, 1988, that the interest portion of the assessment will not be refunded is correct.
Sincerely,
W. H. Forst
Tax Commissioner
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