Tax Type
Corporation Income Tax
Description
Motor carrier; Milage factor
Topic
Collection of Tax
Date Issued
09-06-1991
September 6, 1991
Re: § 58.1-1821 Application; Corporation Income Tax
Dear******************
This will reply to your letter of June 23, 1989, in which you seek reply of corporation income tax assessments for ************** (the "Taxpayer").
FACTS
The taxpayer is a motor carrier operating in Virginia and several other states. The taxpayer was audited and the auditor adjusted the numerator of the mileage factor to agree with the Virginia miles determined for motor fuel road tax purposes. The taxpayer disagrees with the method used by the auditor to compute the numerator of the mileage factor.
DETERMINATION
Under Va. Code § 58.1-417, motor carriers are to apportion their income on the basis of vehicle miles traveled. The ratio is vehicle miles in Virginia to vehicle miles everywhere. Virginia's road tax on motor carriers, administered by the State Corporation Commission (SCC), is based on the amount of motor fuel used in the motor carrier's operations within Virginia. One factor used to determine the amount of motor fuel used in Virginia operations is the total number of miles traveled in Virginia by all vehicles of the motor carrier. Virginia mileage for motor fuel road tax purposes provides a useful tool for our auditors in determining the numerator of the mileage factor for income tax purposes.
You claim that the mileage figures submitted in the return were miles traveled between terminals, while the SCC mileage figure also includes miles traveled for pickups and deliveries. Thus, if SCC mileage figures are used for the numerator of the factor, similar mileage figures should be used for the denominator Virginia law requires the motor carrier mileage factor to be based on all miles traveled for a charge or on a scheduled route. Thus, the SCC mileage figures are consistent with the statutory factor. In theory, a similar adjustment may be appropriate to the denominator of the factor. However, the auditor requested mileage information at the time of the audit, but the taxpayer was unable to substantiate any adjustments to the "everywhere" denominator of the mileage factor. Therefore, the auditor based his assessment on the best information available to him at the time.
In an application for correction of an erroneous assessment, the assessment is presumed correct, and the taxpayer has the burden of proving that the assessment is erroneous. This burden cannot be met by submitting an "everywhere" mileage figure without any explanation of how it was computed, without any documentation to support it, and without any means or opportunity for our auditors to review and reconcile the figures to other information.
While I cannot accept your unsubstantiated figures as a basis for revising the audit report, I will refer this audit back to the Interstate Audit Unit for review of your mileage figures. If you can substantiate your figures, they will make the appropriate adjustments to the audit report and assessment.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner