Tax Type
Corporation Income Tax
Description
Time limitations for assessment and collection; Timeliness of request for refund
Topic
Collection of Tax
Date Issued
06-17-1996
June 17, 1996
Re: § 58.1-1821 Application: Corporate Income Tax
Dear*************
This will reply to your letter of February 28, 1996, in which you protest the denial of refunds of corporation income tax for ***** (the "Taxpayer").
FACTS
The Taxpayer's federal corporation income tax returns for the taxable years 1987 through 1989 were audited by the Internal Revenue Service (IRS). Federal taxable income was increased for the 1987 taxable year, resulting in an increase in tax liability. For the 1988 and 1989 taxable years, federal taxable income was decreased, resulting in overpayments. Based on these changes, the Taxpayer filed amended Virginia corporation income tax returns with the department on July 11, 1995, and requested the tax liability for the 1987 taxable year be offset by the overpayments for the taxable years 1988 and 1989. The refund offset was denied because the amended returns for refunds were not filed within the limitations period prescribed in Code of Virginia § 58.1-1823. You subsequently have paid the remaining tax liability for the taxable year 1987 and now request that the department reconsider your refund request.
DETERMINATION
Pursuant to Code of Virginia § 58.1-1823, an amended return claiming a refund must be filed within three years of the due date of the return or, if later, within 90 days from the final determination of a change in the Taxpayer's federal taxable income. In this case, the amended returns claiming refunds were filed more than three years after the due date of the returns. Consequently, a refund may be issued only if they were filed within 90 days from the date of the final IRS determination.
The information provided by the Taxpayer indicates a final determination date by the IRS of April 10, 1995. The Taxpayer in this case did not file amended returns until July 11, 1995. This is not within the 90 day period for filing allowed under the law. As such, the department does not have the necessary statutory authority to issue a refund.
Although I am sympathetic to your situation, the department must comply with the statutory restrictions with respect to refunds as specified in Code of Virginia § 58.1-1823. Accordingly, your request for the department to reconsider the refunds for taxable years 1988 and 1989 must be denied.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11000P
Rulings of the Tax Commissioner