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Ezel / Tax Rulings / VA
VA P.D. 18-74 Individual Income Tax 2018-05-02

Could Virginia assess an IRS adjustment when taxpayers failed to file an amended state return?

Short answer: Yes. Taxpayers had one year to report the final federal adjustment on an amended Virginia return. Because they did not do so, Virginia could assess at any time from the IRS information, and the refund request failed without contrary proof.

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This page answers the general question as of 2018. Ezel answers yours, under current Virginia tax law, with citations.

Currency note: this ruling is from 2018
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.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

Virginia upheld a 2013 assessment based on a final IRS adjustment. State law required the taxpayers to report the federal change within one year by filing an amended Virginia return.

They did not file the amended return or respond to Virginia's February 2017 notice. Virginia therefore adjusted the state return from the IRS information. The Department would not look behind the IRS's final determination, and the taxpayers supplied no explanation or records showing the federal information was wrong.

The assessment remained and the refund was denied.

Citations and references

  • Va. Code §§ 58.1-311 and 58.1-312 A 3
  • P.D. 11-107

Source

Original ruling text

May 2, 2018

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek a refund of individual income tax paid by * (the “Taxpayers”) for the taxable year ended December 31, 2013. I apologize for the delay in responding to your request.

FACTS

The Taxpayers were audited by the Internal Revenue Service (IRS) for the 2013 taxable year, and the IRS notified the Department of adjustments it made to the Taxpayer's federal income tax return. When the Taxpayers failed to file an amended Virginia income tax return reflecting the IRS adjustments, the Department issued an assessment based on the IRS information. The Taxpayers filed an appeal, contending they do not understand why an assessment was issued.

DETERMINATION

Virginia Code § 58.1-311 requires any individual to report a change or correction in federal taxable income within one year of the final determination of such change or correction by filing an amended return with the Department. If the taxpayer fails to file an amended return reflecting the federal adjustment, Virginia Code § 58.1-312 A 3 permits the Department to assess the appropriate tax at any time.

Where the IRS has audited the federal taxable income of a taxpayer, the Department does not look behind the IRS's final determination. See Public Document (P.D.) 11-107 (6/14/2001). The Department issued a letter dated February 10, 2017, copy enclosed, notifying the Taxpayers of the change. When no response was received, the Department adjusted the taxpayers’ 2013 return based on the federal information available from the IRS as permitted by Virginia statute. The Taxpayers have not provided an explanation or any supporting documentation to prove the federal information is incorrect. Accordingly, there is no basis to revise the assessment and the Taxpayers' request for a refund of Virginia income tax paid cannot be granted.

The Code of Virginia sections 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/1252.B

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