Virginia Administrative Code › Title 23 - TAXATION › Agency 10 - DEPARTMENT OF TAXATION › Chapter 110 - INDIVIDUAL INCOME TAX › Section 23VAC10-110-90 - Limitations on assessments

Current through Register Vol. 40, No. 24, July 15, 2024
A.
				Generally. Except as otherwise provided, the department must assess any tax
				deficiency within three years from the date the tax was due and payable. See
				§ 58.1-104 of the Code of Virginia.
B. Exceptions. The three-year statute of
				limitations for assessment shall not be applicable to the situations set forth
				in subdivisions 1 through 8 of this section.
1. Failure to file a return. When any
				individual fails to file a return as required by law, an assessment may be made
				at any time.
2. False or fraudulent
				return. If any individual files a false or fraudulent return with intent to
				evade the tax legally due, an assessment may be made at any time.
3. Failure to report change in federal
				income. When any individual fails to report a change or correction which
				increases his federal taxable income as required by
				23VAC10-110-70, fails to report a
				change or correction in federal taxable income which is treated as a deficiency
				for federal purposes, or fails to file an amended return as required by law,
				the tax may be assessed at any time.
4. Waiver. When the department and the
				taxpayer have, before the expiration of the statute of limitations, agreed to
				extend the period for assessing the tax beyond the expiration date of such
				statute of limitations, the tax may be assessed at any time prior to the
				substituted expiration date provided for in such agreement. Subsequent
				agreements further extending the period of assessment may be executed prior to
				the expiration date of the previous agreement. Any agreement waiving and
				extending the statutory assessment period must be in writing and must clearly
				specify the date to which the assessment period has been extended. Any such
				extension will also extend the period in which a taxpayer may file an amended
				return claiming a refund. See §§ 58.1-101, 58.1-1823 of the Code of
				Virginia.
5. Report of change or
				correction in federal income. When any taxpayer reports a change or correction
				or files an amended return pursuant to an increase in federal taxable income
				pursuant to
				23VAC10-110-70, or reports a
				change or correction in federal taxable income which is treated as a deficiency
				for federal purposes, an assessment may be made at any time within one year
				after such report, correction, or amended return is filed. Any additional tax
				assessed pursuant to this provision may not exceed the amount of additional
				Virginia tax due as a result of the federal change or correction. However, an
				assessment for additional amounts due which are not attributable to the federal
				change or correction may be made provided such assessment is made within the
				otherwise applicable statute of limitations. Further, if any other provision of
				law allows the assessment of tax during a period which exceeds the one-year
				statute of limitations contained in this subsection, e.g., filing of a false or
				fraudulent return, such other provision shall prevail.
6. Carry-back deficiencies. Any deficiency
				which is attributable to the carry-back of a net operating loss or net capital
				loss may be assessed at any time within the statute of limitations within which
				an assessment may be made for the taxable year in which the loss occurred. For
				example, if a taxpayer incurs a net operating loss in taxable year 1983 and a
				portion of the loss is carried back to taxable year 1980 resulting in a refund
				for taxable year 1980, and a subsequent audit reduces or eliminates the loss
				which was carried back to 1980, assessment relative to such deficiency may be
				assessed within the statute of limitations applicable to taxable year
				1983.
7. Recovery of erroneous
				refund.
a. Generally. An erroneous refund of
				tax shall be considered an underpayment of tax on the date the refund is made.
				An assessment for recovery of the erroneous refund may be made within two years
				of the date such refund is made except that recovery may be made within five
				years if any part of the refund was the result of fraud or misrepresentation of
				a material fact.
b. Erroneous
				refund defined. As used in this regulation, the term "erroneous refund" means
				the issuance of refund to which a taxpayer is not entitled. Where a taxpayer
				provides complete and current information and an erroneous refund results from
				a departmental error, such as a clerical error, the department is limited to
				recovery within the two year statute of limitations.
However, the department may make an assessment for recovery
				  of the amount erroneously refunded within five years from the date of the
				  refund if the issuance of the erroneous refund results from a misrepresentation
				  of a material fact by the taxpayer, including inadvertent taxpayer errors,
				  e.g., the omission of information or the incorrect listing of information which
				  has a direct bearing on the computation of Virginia taxable income or tax
				  liability.
8.
				Request for prompt assessment. When a return is required to be filed for a
				decedent during the period of administration of such decedent's estate, the
				executor, administrator, or other person representing the estate may request in
				writing (after the filing of the decedent's return) that the department issue a
				prompt assessment for any deficiency arising from such return. Upon such
				request, the department shall issue any applicable assessment within 18 months
				of the request. Nothing in this subsection shall be construed as extending the
				period of limitations for assessment beyond three years from the date the
				return was filed or limiting the assessment period where otherwise provided by
				law.