                                 CODE OF VIRGINIA

ADMINISTRATION (§ 58.1-399.7)

A. For partners and partnerships subject to the provisions of this article, the
Department shall assess, collect from, and refund any Virginia income tax,
interest, and penalties arising from final federal adjustments as set forth in
this article. If any partner or partnership makes an election pursuant to &#xA7;
58.1-399.1, the Department shall assess and collect in-lieu-of amounts,
interest, and penalties arising from final federal adjustments as if the
in-lieu-of-amounts are a corporate income tax imposed pursuant to the provisions
of Article 10 (&#xA7; 58.1-400 et seq.). Penalties and interest imposed on a
partner or partnership shall be determined based on the date the partnership
return for the reviewed year originally was due. If any partner or partnership
subject to &#xA7; 58.1-399 fails to file its federal adjustments report within
the time required, the provisions of &#xA7; 58.1-394.1 shall be applicable to
such report, mutatis mutandis.

B. Notwithstanding the provisions of subsection C of § 58.1-312 and clause (ii)
of § 58.1-1823, an assessment shall be issued and an amended return for refund
shall be filed by the following dates:

   1. If a partner or partnership files with the Department a federal adjustments
   report or an amended Virginia tax return within the time period specified in
   &#xA7; 58.1-399, or &#xA7; 58.399.1, as applicable, the Department may assess
   any amounts, including taxes, in-lieu-of-amounts, interest, and penalties
   arising from those federal adjustments, if the Department issues a notice of
   assessment to the partner or partnership no later than the expiration of the
   one-year period following the date of filing with the Department of the
   federal adjustments report.

   2. If a partner or partnership fails to file the federal adjustments report
   within the time period specified in &#xA7; 58.1-399, or &#xA7; 58.399.1, as
   applicable, or if the federal adjustments report filed by the partner or
   partnership omits final federal adjustments or understates the correct amount
   of tax owed, the Department may assess amounts or additional amounts including
   taxes, in-lieu-of-amounts, interest, and penalties arising from the final
   federal adjustments, if the Department issues a notice of assessment to the
   partner or partnership no later than the expiration of the one-year period
   following the date of filing with the Department of the federal adjustments
   report.

   3. An amended return for refund arising from federal adjustments made by the
   Internal Revenue Service shall be filed no later than one year from the date a
   federal adjustments report, as required by &#xA7; 58.1-399, or &#xA7;
   58.399.1, as applicable, was due to the Department, including any extensions
   issued pursuant to the provisions of this section. The partner or partnership
   may, on the federal adjustments report, report additional tax due, report a
   claim for refund or credit of a tax, and make any other adjustments resulting
   from adjustments to the partner&#8217;s or partnership&#8217;s federal taxable
   income, including adjustments to its net operating losses.

   4. Unless otherwise agreed to in writing by the partnership or partner and the
   Department, any adjustments by the Department or by the partner or partnership
   that are made pursuant to the one-year statute of limitations provided for in
   this subsection are limited to adjustments to the partner&#8217;s or
   partnership&#8217;s tax liability that arise from federal adjustments.

C. The one-year statute of limitations provided for in subsection B may be
extended:

   1. Automatically, upon written notice to the Department, by 60 days for an
   audited partnership or a tiered partner that has 10,000 or more direct
   partners; or

   2. By written agreement between the partnership or partner and the Department
   pursuant to &#xA7; 58.1-101.

D. 1. Any extension granted pursuant to subsection C shall extend by an equal
time period the last day for the Department to assess any additional amounts
arising from the adjustments to federal taxable income and the period for filing
a claim for refund or credit of taxes.

   2. The one-year statute of limitations provided for in subsection B shall not
   affect the time within which or the amount for which an assessment may
   otherwise be made or a refund sought under this title.

HISTORY: 2020, c. 1030.