Did taxpayers qualify for Virginia's 2017 tax amnesty after filing an unpaid 2014 return and paying the later assessment during the amnesty period?

Plain-English summary

Virginia granted 2017 tax-amnesty treatment to taxpayers who filed their 2014 individual income-tax return late and without payment. The Department issued an assessment during the amnesty period, and the taxpayers paid the full tax plus half the interest before that period ended.

The assessment missed the program's ordinary June 15, 2017 cutoff. But the amnesty guidelines separately covered an unpaid or underpaid return for an eligible tax and period when the taxpayer was not under audit. Payment by the end of amnesty—or within 30 days after assessment, whichever was later—qualified. The remaining penalty and interest were therefore abated.

This ruling concerned the historical 2017 Virginia Tax Amnesty Program, which ran from September 13 through November 14, 2017.

Common questions

Did the ordinary assessment-date cutoff bar amnesty? No, because the unpaid-return exception applied.

What did the taxpayers pay? The full tax and one-half of the assessed interest.

What was abated? The remainder of the assessment, consisting of the penalty and other half of the interest described in the ruling.

Citations and references

• Va. Code § 58.1-1821
• P.D. 17-156 (Sept. 5, 2017), Guidelines for the Virginia Tax Amnesty Program

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-154

Original ruling text

August 8, 2018

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond to your letter in which you appeal the denial of your eligibility for amnesty with respect to the assessment of individual income tax issued to * (the “Taxpayers”) for the taxable year ended December 31, 2014.

FACTS

The Taxpayers filed their 2014 Virginia income tax return in August 2017. The return showed tax due, but the Taxpayers did not remit payment. Subsequently, an assessment was issued in October 2017. The Taxpayers paid the tax due and half the interest assessed in early November 2017, claiming amnesty under the Department’s 2017 Tax Amnesty Program. The Department determined that the Taxpayers did not qualify for amnesty and declined to abate the penalty and the other half of the interest due. The Taxpayers appealed, contending they met the criteria to be eligible for amnesty.

DETERMINATION

The 2017 Virginia Tax Amnesty Program ran from September 13, 2017, through November 14, 2017. Administration of the program was governed by the Guidelines for the Virginia Tax Amnesty Program, issued as Public Document (P.D.) 17-156 (9/5/2017) (the “Guidelines”). For amnesty eligible tax assessments or delinquent return liabilities, all penalties and one half of the accrued interest were waived provided the taxpayer paid the entire tax due and one half of the interest. With certain exceptions, bills had to have an assessment date on or before June 15, 2017. Under this general rule, the Taxpayers were not eligible for amnesty.

Under the Guidelines, taxpayers who filed returns that were not under audit for an amnesty eligible tax and an amnesty eligible period without payment or with insufficient payment would be assessed for any additional tax, penalties and interest due. If the assessment was paid under the amnesty terms by the end of the amnesty period, or within 30 days of the date the assessment was issued, whichever was later, the taxpayer would receive amnesty benefits. See P.D. 17-156.

The Taxpayers were not under audit for the 2014 taxable year. They filed a late 2014 return that showed a tax due for which no payment was made. An assessment was issued during the amnesty period, and the Taxpayers paid the tax due and half the interest before the end of the amnesty period. Therefore, the Taxpayers were eligible for amnesty. Accordingly, the remainder of the assessment will be abated.

The Code of Virginia section and public document 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/1640.M