Could taxpayers apply a January 2012 estimated payment to 2012 after it had already been credited and claimed for 2011?

Subject

Estimated payment already claimed for 2011 could not shift to 2012

Plain-English summary

A January 2012 estimated payment that had already been applied to and claimed for the 2011 tax year could not also be credited to 2012. Virginia upheld the resulting 2012 underpayment assessment.

The taxpayers said they made two estimated payments through their county treasurer for 2012 but received credit for only one. They produced canceled checks dated January and April 2012. Virginia law allows local assessing officers to collect estimated payments for the Department and requires local commissioners of the revenue to keep payment records.

Both the locality's and Department's records showed that the January payment belonged to 2011 under the estimated-tax schedule, and the taxpayers had claimed it on their 2011 return. The Department therefore found its 2012 payment adjustment correct.

What this means for you

• A payment's calendar date does not by itself determine which tax year receives the credit.
• A January estimated-tax payment may belong to the preceding tax year under the installment schedule.
• Payments may be made to Virginia or the taxpayer's locality, so canceled checks and both sets of records can matter.
• The same payment cannot be claimed for one year and then credited again to another.

Common questions

Q: Could estimated payments be made through the taxpayers' locality?

A: Yes. Va. Code § 58.1-307 authorizes local assessing officers to collect them for the Department.

Q: Why did the January 2012 check not count for 2012?

A: The records showed it was applied to 2011 under the estimated-tax schedule and claimed on the taxpayers' 2011 return.

Q: What happened to the 2012 assessment?

A: It was upheld, with a revised bill and a 30-day period stated for payment without additional interest.

Citations and references

• Va. Code §§ 58.1-1821, 58.1-490, and 58.1-307.
• 23 VAC 10-112-23.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 15-33

Original ruling text

March 3, 2015

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek correction of the individual income tax assessment issued to * (the "Taxpayers") for the taxable year ended December 31, 2012. I apologize for the delay in responding to your appeal.

FACTS

During the initial processing of the Taxpayers' 2012 Virginia individual income tax return, an addition for interest on obligations of another state was not included. Upon review, the addition was corrected and an adjustment was made to the amount of estimated payments because they did not match the Department's records. An assessment for underpayment of tax was issued. The Taxpayers appeal the assessment, contending they submitted the payments to their local commissioner of revenue.

DETERMINATION

Virginia Code § 58.1-490 requires every resident and nonresident with Virginia source income to make a declaration of estimated tax every taxable year their Virginia tax liability is expected to exceed $150. For calendar year individuals, other than a farmer or fisherman, declarations of estimated tax must be filed on or before May 1, on or before June 15, on or before September 15 of the taxable year, and on or before January 15 of the succeeding taxable year. See Title 23 of the Virginia Administrative Code (VAC) 10-112-23

Under Va. Code § 58.1-307, local assessing officers have the authority to collect estimated payments on behalf of the Department. This statute also requires that each commissioner of the revenue maintain a record keeping system of returns and payments received in whole or in part for individual income tax purposes. Thus, estimated payments may be made either to the Department or to the locality in which an individual resides.

The Taxpayers contend that they made two estimated payments to their county treasurer's office for the 2012 taxable year but received credit for only one payment when they filed their 2012 return. The Taxpayers provided copies of canceled checks dated in January and April of 2012.

The records of both the locality and Department show that the January 2012 payment was applied to the 2011 taxable year pursuant to Title 23 VAC 10-112-23 and was claimed by the Taxpayers on their 2011 income tax return. Because this payment was claimed in 2011, it cannot be applied to the 2012 taxable year. Accordingly, the adjustment to the 2012 estimated payments is correct and the assessment is upheld.

An updated bill, with interest accrued to date will be sent to the Taxpayer. No additional interest will accrue provided the outstanding balance is paid within 30 days from the date of the revised bill.

The Code of Virginia sections and regulation cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. Ifyou have any questions regarding this ruling, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns
Tax Commissioner

AR/1-5554582864.D