I disagree with the Department's determination denying my corporate income tax refund claim -- can I still get it reconsidered if my request comes in more than 45 days after the determination letter?

Plain-English summary

This ruling shows how narrow the window is to ask Virginia to take a second look at a final tax determination. A corporate taxpayer had already lost a refund dispute in a prior ruling, P.D. 19-114 (issued October 4, 2019), which denied its refund claim for the tax years ended December 31, 2013 through 2015. The Department had found the taxpayer's ownership interest in a limited liability company exceeded what P.D. 95-19 permitted, and separately found the taxpayer didn't qualify for an alternative allocation and apportionment method. The taxpayer later asked the Department to reconsider, arguing it was not a unitary business with the LLC and that the LLC's income and apportionment factors therefore should not have been folded into its Virginia-apportioned income.

The Department never reached that unitary-business argument on the merits. Under 23 VAC 10-20-165 F, a taxpayer who disagrees with a final determination has only 45 days from the date of the determination letter to request reconsideration. Since the determination letter was dated October 4, 2019, that 45-day window closed on November 18, 2019. The taxpayer's reconsideration request, however, was dated May 13, 2020 and wasn't received by the Department until May 21, 2020 -- more than six months after the deadline. Because the request came in so far outside the 45-day period, the Department held it was time-barred, left the original P.D. 19-114 determination unchanged, and confirmed the refund for 2013-2015 was not granted. The letter states it constitutes the Department's final determination on the matter.

What this means for you

Corporate taxpayers who disagree with a Virginia determination letter

If the Department issues a final determination you want reconsidered, act immediately: you have only 45 days from the date of the determination letter to submit a request for reconsideration under 23 VAC 10-20-165 F. Waiting months -- even to gather additional legal arguments, like this taxpayer's unitary-business theory -- risks losing the chance to have those arguments considered at all, regardless of how strong they might be on the merits.

Common questions

Q: How long do I have to ask Virginia to reconsider a final determination letter?
A: Only 45 days from the date of the determination letter, under 23 VAC 10-20-165 F. The clock runs from the letter's date, not from when you receive it or decide to act.

Q: My reconsideration request raises a strong legal argument the Department never addressed -- does that matter if my request is late?
A: Not based on this ruling. Here the taxpayer argued it wasn't a unitary business with the LLC in question, but the Department never reached that argument -- it denied reconsideration solely because the request arrived more than six months after the 45-day deadline had passed.

Citations and references

• Va. Code § 58.1-1821 (appeal of an assessment/determination to the Tax Commissioner)
• 23 VAC 10-20-165 F (45-day deadline to request reconsideration of a final determination)
• P.D. 19-114 (10/4/2019) (the prior determination the taxpayer sought to have reconsidered)
• P.D. 95-19 (2/13/1995) (limit on LLC ownership interest referenced in the underlying refund denial)

Subject

Administration : Appeals - Redetermination, Timely Filing

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 20-147

Original ruling text

August 25, 2020

Re: § 58.1-1821 Appeal: Individual Income Tax

Dear *:

This will respond to your letter in which you seek reconsideration of the Department’s determination letter, issued as Public Document (P.D.) 19-114 (10/4/2019) to * (the “Taxpayer”).

FACTS

In P.D. 19-114, the Department denied the Taxpayer’s refund request for the taxable years ended December 31, 2013 through 2015 because its interest in a limited liability company was greater than that permitted by P.D. 95-19 (2/13/1995). In addition, the Department determined that the Taxpayer did not qualify for an alternative method of allocation and apportionment. The Taxpayer requests that the Department reconsider its determination, contending it was not a unitary business with the limited liability company and, therefore, the income and apportionment factors from the limited liability company cannot be included in determining income apportioned to Virginia.

DETERMINATION

Pursuant to Title 23 of the Virginia Administrative Code (VAC) 10-20-165 F, a taxpayer who disagrees with the Tax Commissioner’s final determination may request a reconsideration within 45 days of the date of the determination letter. The Department’s determination letter was issued on October 4, 2019. The Taxpayer’s request for reconsideration is dated May 13, 2020, and was not received by the Department until May 21, 2020, both well after the 45-day period expired on November 18, 2019.

Accordingly, the Taxpayer’s request for reconsideration is time barred. The determination in P.D. 19-114 is unchanged, and the Taxpayer’s request for the refund of Virginia corporate income tax paid for the taxable years ended December 31, 2013 through 2015 is not granted. This letter constitutes the Department’s final determination on this matter.

The Code of Virginia section, regulation 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 response, you may contact * in the Department’s Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/3422.B

Related Documents

19-114

95-19