Iowa Administrative Code › Agency 701 - Revenue Department › Title VII - Franchise Tax › Chapter 600 - Administration › Rule 701-600.2 - Statutes of Limitation

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Periods of audit.
a. The
				department has three years after a return has been filed or three years after
				the return became due, including any extensions of time for filing, whichever
				time is the later, to determine whether any additional tax other than that
				shown on the return is due and owing. This three-year statute of limitation
				does not apply in the instances specified below in paragraphs
"b," "c,"
				"d," "e," "f,"
and
"g."
b. If a taxpayer fails to include in the
				taxpayer's return such items of gross income as defined in the Internal Revenue
				Code, as amended, as will under that Code extend the statute of limitations for
				federal tax purposes to six years, the correct amount of tax due may be
				determined by the department within six years from the time the return is
				filed, or within six years after the return became due, including any extension
				of time for filing, whichever time is the later.
c. If the taxpayer files a false or
				fraudulent return with intent to evade tax, the correct amount of tax due may
				be determined by the department at any time after the return has been
				filed.
d. If a taxpayer fails to
				file a return, the statutes of limitation so specified in Iowa Code section
				422.25 do not begin to run until the return is filed with the
				department.
e. While the burden of
				proof of additional tax owing under the six-year period or the unlimited period
				is upon the department, a prima facie case of omission of income, or of making
				a false or fraudulent return, shall be made upon a showing of a federal audit
				of the same income, a determination by federal authorities that the taxpayer
				omitted items of gross income or made a false or fraudulent return, and the
				payment by the taxpayer of the amount claimed by the federal government to be
				the correct tax or the admission by the taxpayer to the federal government of
				liability for that amount.
f. In
				addition to the periods of limitation set forth in paragraph
"a," "b,"
				"c," "d," or "e,"
the department has six months after notification by
				the taxpayer of the final disposition of any matter between the taxpayer and
				the Internal Revenue Service with respect to any particular tax year to make an
				examination and determination. Final disposition of any matter between the
				taxpayer and the Internal Revenue Service triggers the extension of the statute
				of limitations for the department to make an examination and determination and
				the extension runs until six months after the department receives notification
				and a copy of the federal document showing the final disposition or final
				federal adjustments from the taxpayer,
Van Dyke v. Iowa Department of
				Revenue and Finance,
547 N.W.2d 1. This examination and determination
				is limited to those matters between the taxpayer and the Internal Revenue
				Service which affect Iowa taxable income.
Kelly-Springfield Tire Co. v.
				Iowa State Board of Tax Review,
414 N.W.2d 113 (Iowa 1987). The
				notification shall be in writing in any form sufficient to inform the
				department of final disposition, and attached thereto shall be a photo
				reproduction or carbon copy of the federal document which shows the final
				disposition and any schedules necessary to explain the federal adjustments. The
				notification and copy of the federal document shall be mailed, under separate
				cover, to the Examination Section, Compliance Division, Iowa Department of
				Revenue, P.O. Box 10456, Des Moines, Iowa 50306. Any notification and copy of
				the federal document which is included in, made a part of, or mailed with a
				current year Iowa franchise tax return will not be considered as proper
				notification for the purposes of beginning the running of the six-month period.
When a taxpayer's income or loss is included in a
				  consolidated federal corporation income tax return, notification shall include
				  a schedule of adjustments to the taxpayer's income, a copy of the revenue
				  agent's tax computation, a schedule of revised foreign tax credit on a separate
				  company basis if applicable, and a schedule of consolidating income statements
				  after federal adjustments.
g. In lieu of the above periods of limitation
				for any prior year for which an overpayment of tax or an elimination or
				reduction of any underpayment of tax due for that prior year results from the
				carryback to such prior year of a net operating loss or net capital loss, the
				period shall be the period of limitations for the taxable year of the net
				operating loss or net capital loss which results in such carryback.
h. The department may, at any time within the
				period prescribed for assessment or refund adjustment, make a supplemental
				assessment or refund adjustment whenever it is ascertained that any assessment
				or refund adjustment is imperfect or incomplete in any respect.
If an assessment or refund adjustment is appealed (protested
				  under rule 701-7.8 (17A)) and is resolved
				  whether by informal proceedings or by adjudication, the department and the
				  taxpayer are precluded from making a supplemental assessment or refund
				  adjustment concerning the same issue involved in such appeal for the same tax
				  period unless there is a showing of mathematical or clerical error or a showing
				  of fraud or misrepresentation. Nothing in this rule shall prevent the making of
				  an assessment or refund adjustment for the purpose of taking into account the
				  impact upon Iowa net income of federal audit
				  adjustments.