Title of Regulation: 23VAC10-20. General Provisions Applicable to All Taxes Administered by the Department of Taxation (amending 23VAC10-20-20, 23VAC10-20-80, 23VAC10-20-90, 23VAC10-20-110, 23VAC10-20-130, 23VAC10-20-200).

Statutory Authority: § 58.1-203 of the Code of Virginia.

Effective Date: March 4, 2009.

Agency Contact: Jennifer Lewis, Tax Policy Analyst, Department of Taxation, P.O. Box 27185, Richmond, VA 23261-7185, telephone (804) 371-2341, FAX (804) 371-2355, or email jennifer.lewis@tax.virginia.gov.

Summary:

This regulatory action amends 23VAC10-20-130, Memorandum of lien for collection of taxes, to reflect statutory changes. Chapter 384 of the 1993 Acts of Assembly required the taxpayer to be given 10 days notice before a memorandum of lien can be issued unless the lien is filed in instances where the commissioner determines the collection to be in jeopardy. Chapter 384 also required that notice be given at a taxpayer's "last known address" and defined the term. Chapter 800 of the 1994 Acts of Assembly allowed TAX to deposit any payment submitted with an offer in compromise unless directed otherwise by the taxpayer. Chapter 634 of the 1996 Acts of Assembly allowed the taxpayer to appeal to the commissioner if the taxpayer alleges an error in the filing of the lien.

In addition, this action conforms the regulation to the Form, Style, and Procedure Manual for Publication of Virginia Regulations.

23VAC10-20-20. Filing of tax returns and payment of taxes which fall due on Saturday, Sunday or legal holiday.

A. Definitions. The following words and terms when used in this section shall have the following meanings unless the context clearly indicates otherwise:

"Legal holiday" means any day designated as such by § 2.2-3300 of the Code of Virginia.

"Business day" means any Monday, Tuesday, Wednesday, Thursday, or Friday that is not a legal holiday.

B. Generally. When the last day prescribed by law for filing a return or paying a tax falls on a Saturday, Sunday or legal holiday, then the return may be filed or the payment may be made without penalty or interest on the next succeeding business day. If an extension has been obtained, and the last day of the extension falls on a Saturday, Sunday or legal holiday the return may be filed or the payment may be made without penalty on the next succeeding business day.

B. Definitions.

1. Legal holiday. "Legal holidays" shall be those defined in Va. Code § 2.1-21.

2. Business day. A "business day" means a Monday, Tuesday, Wednesday, Thursday, or Friday which is not a legal holiday.

23VAC10-20-80. Waiver of time limitation on assessment of taxes.

A. Assessments. The Tax Commissioner and a taxpayer may agree to extend the period for assessing a tax prescribed by Va. Code §§ 58.1-104 (period of limitations in general), 58.1-312 (relating to income tax only), 58.1-634 (relating to retail sales and use tax only) and 58.1-1812 (assessment of omitted taxes) of the Code of Virginia. Such agreements shall be in writing, on forms prescribed by the Tax Commissioner, and shall extend the period for assessing a tax for all issues relevant to the tax and taxable period for which the agreement is executed.

B. Refunds. Any such agreement will also extend the period for filing an amended return claiming a refund. See also 23VAC10-20-190 relating to for information regarding protective claims.

23VAC10-20-90. Retention of records by taxpayer.

A. In general Generally. Every taxpayer must retain suitable records and documents substantiating all information contained on any return for any tax administered by the Department department. Such records and documents shall be preserved for a period of three years from the required date for filing a return to which such records or documents pertain. If an extension of the date for filing a return has been granted such records and documents shall be preserved for a period of three years from the extended date.

B. Net operating loss deductions. When an income tax return contains a net operating loss deduction, the records and documents pertinent to such return shall include:

1. the The return for the year of the loss with supporting records and documents, and

2. the The returns for all years to which any portion of the loss has been or could have been carried under federal law together with the supporting records and documents for such returns.

23VAC10-20-110. Offers in compromise.

A. In general Generally.

1. The Tax Commissioner has the authority to accept an offer in compromise of a penalty, or to abate a penalty in its entirety, if he determines that such action is justified. An offer in compromise is considered accepted only when the taxpayer is notified in writing by the Tax Commissioner.

2. The Tax Commissioner has the authority to accept an offer in compromise of taxes if he determines that the assessment is based upon a doubtful and disputed claim or that the tax liability is of doubtful collectibility.

B. Form of submission. An offer in compromise shall be submitted in the form of a letter addressed to the Tax Commissioner, Virginia Department of Taxation, P.O. Box 1880, Richmond, Virginia 23282-1880. See the department’s website, www.tax.virginia.gov, for contact information and the mailing address for the commissioner. The letter should state that it is an offer in compromise and identify the taxpayer, type of tax involved, taxable period, date and amount of the assessment and contain a complete statement of the reasons for acceptance of the offer. A check payable to the Department of Taxation in the amount of the offer may be attached to the letter in addition to any supporting documents. In the case of an offer in compromise based upon doubtful collectibility, the taxpayer shall submit signed financial statements in sufficient detail to indicate the financial condition of the taxpayer.

C. The Department of Taxation may deposit any payments submitted with offers in compromise into the state treasury unless the taxpayer specifically and clearly directs otherwise.

23VAC10-20-130. Memorandum of lien for collection of taxes.

1. If an A. The Tax Commissioner may file a memorandum of lien in the circuit court clerk's office of the county or city in which the taxpayer's place of business is located, or in which the taxpayer resides, if:

1. An assessment of any tax, fees, penalty or interest remains unpaid thirty 30 days after the assessment, or if there has been an immediate assessment of income or sales tax where collection would be jeopardized by delay pursuant to Va. Code §§ 58.1-313 (relating to income tax) or 58.1-631 (relating to sales tax), the Tax Commissioner may file a memorandum of lien in the circuit court clerk's office of the county or city in which the taxpayer's place of business is located, or in which the taxpayer resides.; or

2. There has been an immediate assessment of income or sales tax where collection would be jeopardized by delay pursuant to § 58.1-313 (relating to income tax) or 58.1-631 (relating to sales tax) of the Code of Virginia.

B. No memorandum of lien shall be filed unless the taxpayer is first given 10 or more days' prior notice of intent to file a lien. Notice shall be given to the taxpayer at his last known address. For purposes of this section, "last known address" refers to the address shown on the most recent return filed by or on behalf of the taxpayer or the address provided in correspondence by or on behalf of the taxpayer indicating that it is a change of the taxpayer's address.

C. If the taxpayer has no place of business or residence within Virginia, such memorandum may be filed in the clerk's office of the Circuit Court circuit court of the City of Richmond. A copy of such memorandum may also be filed in the circuit court clerk's office of all counties in which the taxpayer owns real estate.

2. D. The recordation of a memorandum of lien shall not prevent a taxpayer from seeking refund or exoneration under Va. Code §§ § 58.1-1821 (application to Tax Commissioner), 58.1-1823 (amended return claiming a refund), 58.1-1824 (protective claim) or 58.1-1825 (application to Court) of the Code of Virginia.

E. A taxpayer may appeal to the Tax Commissioner after a memorandum of lien has been filed under this section if the taxpayer alleges an error in the filing of the lien. The Tax Commissioner shall make a determination of such an appeal within 14 days. If the Tax Commissioner determines that the filing was erroneous, he shall issue a certificate of release of the lien within seven days after such determination is made.

23VAC10-20-200. Interest on overpayments or improper collection.

A. In general Generally. Interest will be allowed and paid upon the overpayment of any tax administered by the department, the refund of which is either permitted or required under Title 58.1, Chapter 18, Article 2 Article 2 (§ 58.1-1820 et seq.) of Chapter 18 of Title 58.1 of the Code of Virginia, at a rate equal to the rate of interest established pursuant to Va. Code § 58.1-15 of the Code of Virginia. Such interest will accrue from a date 60 days after the date of the payment of the tax, except as set forth below, to a date determined by the Department of Taxation, which will not be more than 30 days prior to the date of the refund check.

B. Income tax. Refunds appearing on the face of an income tax return will accrue interest from a date 60 days after the due date for filing the return or the date on which such return was filed, whichever is later. Refunds resulting from payments of estimated tax or withholding tax can only be claimed on the face of the income tax return to which such payments apply.

C. Erroneous assessment.

1. Refunds pursuant to an erroneous assessment accrue interest from the date the assessment was paid.

2. If the assessment is a self assessment paid upon filing a return, the date the assessment is paid is the date the return is filed and the tax paid or the last day prescribed by law for filing the return, whichever is later.

3. If the assessment is a written assessment made pursuant to notice by the department, the date the assessment is paid is the date the department receives payment.

4. A refund is the result of an erroneous assessment if the refund is pursuant to an application for correction of an erroneous assessment or improper collection under § 58.1-1821 of the Code of Virginia, an amended return under § 58.1-1823 of the Code of Virginia, a protective claim under § 58.1-1824 of the Code of Virginia or an application to a court for correction of an erroneous assessment or improper collection under § 58.1-1825 of the Code of Virginia.

D. Sales tax. No interest will be paid on sales taxes refunded to a dealer unless the dealer agrees to pass such interest on to the purchaser. (See 23VAC10-20-160 C 2 for procedure.) See 23VAC10-20-180 A 2 for more information.

E. Net operating loss. Any overpayment of tax resulting from the carryback of a net operating loss or net capital loss will be deemed to have been made on the day on which the return for the year in which the loss occurred was filed, or the last day prescribed by law for such filing, whichever is later.