Could a corporation obtain administrative relief after appealing Virginia corporate-income-tax assessments beyond the 90-day deadline?

Subject

Late corporate-tax appeal barred; amended returns still permitted

Plain-English summary

Virginia rejected the corporation's administrative appeal because it missed both 90-day deadlines. The Department assessed tax, penalties, and interest after the corporation filed returns showing tax due but did not pay it.

The 2010-year assessment was issued January 18, 2012, making the stated appeal deadline April 17, 2012. The 2007-year assessment was issued September 14, 2012, making that deadline December 13, 2012. The corporation did not appeal until March 28, 2014.

The appeal was therefore barred under Va. Code § 58.1-1821 and 23 VAC 10-20-165. The Department also noted that the corporation did not claim the Department made an assessment error. It instead said errors existed in the corporation's own returns.

Virginia gave the corporation 30 days from the ruling to file amended returns. The Department would review them and adjust the assessments only as permitted by the statute of limitations; otherwise the assessments would be upheld and collection would resume.

What this means for you

• A complete Virginia administrative appeal had to be filed within 90 days of each assessment.
• Hiring a tax professional or discovering return errors later did not reopen the appeal deadline.
• An amended-return route could remain available even when the assessment appeal was untimely, but only within applicable limitation periods.
• An appeal must identify alleged assessment errors, supporting facts, and controlling authority.

Citations and references

• Va. Code § 58.1-1821.
• 23 VAC 10-20-165.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 14-134

Original ruling text

August 7, 2014

Re: § 58.1-1821 Application: Corporate Income Tax

Dear *:

This will reply to your letter in which you seek correction of the corporate income tax assessments issued to your client, the * (the "Taxpayer"), for the taxable years ended September 30, 2007 and September 30, 2010.

FACTS

For each of the taxable years in question, the Taxpayer filed a corporate income tax return that showed tax due. When the Taxpayer did not remit payment, the Department issued assessments for the unpaid taxes, plus penalties and interest. The Taxpayer filed an appeal, stating that it has hired a tax professional to correct errors it discovered on its prior tax returns.

DETERMINATION

Virginia Code § 58.1-1821 states, "Any person assessed with any tax administered by the Department of Taxation may, within ninety days from the date of such assessment, apply for relief to the Tax Commissioner. Such application shall be in the form prescribed by the Department and shall fully set forth the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention."

Title 23 of the Virginia Administrative Code (VAC) 10-20-165 mandates that a taxpayer file a complete appeal within the 90-day limitations period. A complete administrative appeal must include:

1. A statement signed by the taxpayer or duly appointed or authorized agent or attorney setting forth each alleged error in the assessment;

2. The grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention; and

3 Controlling legal authority (statutes, regulations, rulings of the Tax Commissioner, court decisions, etc.) upon which the taxpayer's position is based.

The Department issued the assessment for the taxable year ended September 30, 2010 on January 18, 2012 and the assessment for the taxable year ended September 30, 2007 on September 14, 2012. The Taxpayer appealed the assessments on March 28, 2014, well after the 90-day limitations periods had expired (April 17, 2012 and December 13, 2012, respectively). Because the Taxpayer failed to file a complete administrative appeal within 90 days from the dates of the assessments, the Taxpayer is now barred from filing an application for correction of the assessments and there is no basis for relief. In addition, even if the Taxpayer had timely filed the appeal, the Taxpayer does not contend that the Department erred in making the assessments. As such, the Taxpayer has not provided a basis upon which relief could be granted.

If the Taxpayer believes it made errors on the returns, it should file amended returns within 30 days of the date of this letter. Mail the returns to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23118-7203, Attention: *. Once the amended returns are received, they will be reviewed and the assessments will be adjusted as permitted under the statute of limitations. If the returns are not filed within the time permitted, the assessments will be upheld and collection action will resume.

The Code of Virginia and regulation sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department's web site. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-5664780886.M