Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 51 - Administration › Rule 701-51.2 - 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 limitations
				does not apply in the instances specified in paragraphs
"b, " "c, " "d,
				" "e, " "f"
and
"g. "
b. If a taxpayer fails to include in the
				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 extensions of time for
				filing, whichever time is the later
c. If a 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 periods of Limitation so specified in Iowa Code section
				42225.
				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 periods 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 to the notification 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, RO. 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 corporation
				income 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 an 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
				  701-78. (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.