Ezel / Tax Rulings / VA
VA P.D. 16-146 Income Tax 2016-07-06

Did Virginia accept a research-and-development credit application received after April 1 when the envelope had no postmark?

Short answer: No. An application without a postmark was treated as filed when Virginia received it. Because the Department received the application on April 6, after the April 1 deadline, the denial was upheld.

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This page answers the general question as of 2016. Ezel answers yours, under current Virginia tax law, with citations.

Currency note: this ruling is from 2016
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official published Ruling of the Virginia Tax Commissioner (Virginia Department of Taxation), issued as a redacted public document. It is based on the specific facts the taxpayer presented and the law in effect when issued; different facts or later changes in the law can change the result, and another taxpayer should not assume it applies to their situation. Virginia's retail sales and use tax is administered by the Department, but many Virginia local taxes, including the business license (BPOL) tax, business tangible personal property tax, and machinery and tools tax, are administered by local commissioners of the revenue. This summary is informational only and is not legal or tax advice. Consult a licensed Virginia tax professional about your specific situation.
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Subject

Research and Development Expenses Tax Credit Guidelines

Plain-English summary

A company applied for Virginia's Research and Development Expenses Tax Credit for 2015. The Department received the application on April 6, 2016, and denied it because the filing deadline was April 1. The company said it had mailed the form before the deadline, but the envelope had no postmark.

The published credit guidelines and Form RDC instructions stated that an application without a postmark would be treated as filed on the date the Department received it. The Department also explained that a firm deadline was necessary because the credit was subject to an annual cap.

With no postmark establishing timely mailing, the April 6 receipt date controlled. The application was late, and the denial was upheld.

Citations and references

  • Va. Code § 58.1-439.12:08.
  • Research and Development Expenses Tax Credit Guidelines, P.D. 15-1.
  • P.D. 04-201 and P.D. 13-189.

Source

Original ruling text

July 6, 2016

Re: Ruling Request: Income Tax

Dear *:

This will reply to your letter submitted on behalf of * (the “Company”), requesting that the Department reconsider the denial of its application for the Research and Development Expenses Tax Credit (the “Credit”) for the 2015 taxable year.

FACTS

The Department received the Company's application for the Credit on April 6, 2016. The application did not bear a postmark. The Department denied the application on the basis that the Company had not submitted the application by the April 1, 2016, deadline. The Company appealed, contending that they mailed the application prior to April 1, 2016.

RULING

Pursuant to Va. Code § 58.1-439.12:08, an individual, corporation, or pass-through entity may apply for the Credit in an amount equal to either 15% or 20% of its Virginia qualified research and development expenses, to the extent that such expenses exceed its Virginia base amount. Under Va. Code § 58.1-439.12:08 C, the Department has the authority to develop and publish guidelines that specify the Credit application requirements.

As set forth in the Research and Development Expenses Tax Credit Guidelines, published as Public Document (P.D.) 15-1 (1/7/2015), an eligible taxpayer must submit the application (Form RDC) and any supporting documentation to the Department no later than April 1 of the year following the credit year. This requirement is clearly set forth in the Form RDC instructions, in the corporate income tax instructions, and on the Department's website. In addition, the Form RDC instructions specifically state that “[for any application received without a postmark, the date received by the Department will be used to determine if the application was received by the filing deadline.”

Because the Credit is subject to an annual cap, the Department must have a deadline for tax credit applications. Adopting a policy of approving credits for late applications could result in the amount of tax credits exceeding the tax credit cap for a particular year. The Department's policy of establishing a deadline for capped tax credits has been clearly applied to capped tax credits that are administered by the Department. See, e.g. , P.D. 04-201 (11/4/2004) and P.D. 13-189 (10/18/2013).

In this case, the Department received the Company's application on April 6, 2016, and the application did not bear a postmark. Therefore, the application was considered filed on the date it was received, which was after the April 1, 2016 deadline. Accordingly, I find that the application was properly denied.

The Code of Virginia sections and public documents 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 ruling, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns
Tax Commissioner

AR/1-6362266884.M

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