Was a Virginia refund claim timely when an overseas taxpayer filed on July 1, three years after the automatic extended due date?

Subject

Automatic overseas extension preserved refund claim

Plain-English summary

The refund claim was timely because the taxpayer's overseas filing extension moved the relevant due date from May 1 to July 1. Filing the 2009 return on July 1, 2013 was within three years of the extended July 1, 2010 due date, so Virginia ordered the refund.

Virginia's general six-month extension requires a taxpayer to satisfy filing and payment conditions. The separate rule for a taxpayer travelling or residing outside the United States on the original due date applied automatically; no election or tentative-tax payment was required. The regulation did require a statement attached to the return certifying the taxpayer's overseas status.

Because the taxpayer was overseas on May 1, 2010, the Department treated July 1 as the last day prescribed by law for the timely filing. That extended date controlled the three-year refund period in Va. Code § 58.1-499 D.

What this means for you

• The three-year refund period can run from an applicable extended due date, not always the original due date.
• The overseas extension discussed here was automatic for a qualifying taxpayer.
• The ruling states that the return must include a certification that the taxpayer was travelling or residing outside the United States on the original due date.
• A general extension under Va. Code § 58.1-344 A has different filing and payment conditions.

Citations and references

• Va. Code §§ 58.1-499 A and D, 58.1-341 A, and 58.1-344 A and D; 23 VAC 10-110-270 E 1.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 15-3

Original ruling text

January 8, 2015

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you appeal the Department's denial of a refund claimed by * (the "Taxpayer") on his individual income tax return for the taxable year ended December 31, 2009. I apologize for the delay in responding to your appeal.

FACTS

The Taxpayer lived and worked overseas in 2010. The Taxpayer filed his return for the 2009 taxable year on July 1, 2013, claiming a refund due. The Department denied the refund on the basis that the return was filed outside the statute of limitations. The Taxpayer filed an appeal, contending that the refund claim was timely because the return was filed within three years from the extended due date applicable to taxpayers who were overseas on the original due date.

DETERMINATION

Virginia Code § 58.1-499 A provides that in the case of any overpayment of any tax, whether by reason of excessive withholding, overestimating and overpaying estimated tax, or error on the part of the taxpayer, the Department shall order a refund of the overpayment. Virginia Code § 58.1-499 D specifies, however, in pertinent part:

No refund under this section . . . shall be made . . . whether, on discovery by the Department or on written application of the taxpayer, if such discovery is not made or such written application is not received within three years from the last day prescribed by law for the timely filing of the return . . . . [Emphasis added.]

Virginia Code § 58.1-341 A requires that taxpayers file individual income tax returns by May 1 of the year following the tax year for which the return is filed. For taxpayers who are overseas on the due date, Va. Code § 58.1-344 D grants an extension for filing the return to July 1. Taxpayers who are eligible for the extension are not required to request the extension or pay any tentative tax. A statement must be attached to the return, however, certifying that the taxpayer was travelling or residing outside the United States on the due date. See Title 23 of the Virginia Administrative Code (VAC) 10-110-270 E 1.

In applying the provisions of Va. Code § 58.1-499, the Department has held that the last day prescribed by law for the timely filing of the return includes extensions. See Public Document (P.D.) 96-191 (8/6/1996). In this case, the Taxpayer was residing overseas on the original due date, May 1, 2010. Because the Taxpayer did not file the return until July 1, 2013, however, the auditor concluded that the extension was not valid in calculating the three year limitations period.

Under Va. Code § 58.1-344 A, a taxpayer must (i) file the return within the extended period, and (ii) on or before the original due date for the filing of the return, pay the full amount properly estimated as the balance of the tax due for the taxable year in order to elect an extension. If the taxpayer intends to take the extension but then does not file a return or pay the full amount of the tax due by the extended due date, the taxpayer is treated as if no extension had been granted and the last day allowed for the timely filing of the return reverts to the original due date under Va. Code § 58.1-499 D. See P.D. 10-238 (9/30/2010).

Unlike the general six month extension under Va. Code § 58.1-344 A, a taxpayer is not required to elect the extension granted by Va. Code § 58.1-344 D. It is granted automatically as long as the taxpayer was travelling or residing outside the United States on the original due date of the return. The information provided indicates that the Taxpayer was overseas on the original due date. The Taxpayer, therefore, had three years from the extended due date, July 1, 2010, to file his original return claiming a refund. The Taxpayer filed his return on July 1, 2013, within the three year limitations period. Accordingly, the Department will issue the refund.

The Code of Virginia sections, regulation and public documents cited are available on­line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department's web site. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns
Tax Commissioner

AR/1-5731517986.M