Did a federal filing extension preserve a Virginia refund when the original 2010 state return was not filed until September 2014?

Subject

The statute of limitations for filing a return claiming a refund for the 2010 taxable year expired the day after May 2, 2014

Plain-English summary

Virginia denied the 2010 refund because the taxpayers did not file the original state return until September 2014, after the refund period expired. The ordinary 2010 due date was May 2, 2011.

Virginia offered a six-month filing extension, but a taxpayer had to file within the extended period and timely pay the properly estimated balance due. If the original return was not filed by the extended due date, the extension election was negated and the refund period was measured from the original due date.

The taxpayers' federal extension did not change that result. Virginia's conformity did not import federal extension rules where Virginia statutes supplied their own rules. The three-year period expired in May 2014, before the September return.

What this means for you

• A federal extension does not by itself establish a Virginia refund deadline.
• Meet Virginia's own filing and payment requirements for a valid state extension.
• Filing after the extended due date can cause the refund period to revert to the original due date.
• Preserve proof of estimated payment and timely state filing.

Common questions

Q: Was the federal extension enough?

A: No.

Q: Why was the state extension negated?

A: The original Virginia return was not filed within the extended period.

Q: When did the refund period expire?

A: In May 2014, before the September 2014 filing.

Citations and references

• Va. Code §§ 58.1-301, 58.1-341(A), and 58.1-344.
• Chapter 100, 2005 Acts of Assembly.
• P.D. 10-238 and P.D. 97-360.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 15-45

Original ruling text

March 18, 2015

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which * (the "Taxpayers") request a refund of individual income tax for the taxable year ended December 31, 2010.

FACTS

The Taxpayers filed an individual income tax return for the 2010 taxable year in September 2014. The Department processed the return, but denied the refund because the return was not filed within the statute of limitations. The Taxpayers filed an appeal, contending the return was filed within three years of the extended due date.

DETERMINATION

Virginia's conformity to federal law is set forth in Va. Code § 58.1-301, which provides that the terms used in the Virginia income tax statutes will have the same meanings as used in the IRC unless a different meaning is required. As such, Virginia's conformity to federal law is limited to the actual use of a specific term in a Virginia statute. Further, conformity does not extend to terms, concepts, or principles specifically provided for in Title 58.1 of the Code of Virginia . Accordingly, the federal extension requirements cited by the Taxpayer, while informative, have no direct impact on the Department's interpretation of Virginia statute in this case.

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. Virginia Code § 58.1-344 provides a six-month filing extension of the due date for filing the income tax return.

Taxpayers are allowed to elect to take a six month extension to file their returns. In order to elect an extension, 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. See Va. Code § 58.1-344. 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. See Public Document (P.D.) 10-238 (9/30/2010).

When an original return has been filed after the extended due date, the taxpayer has from three years after the original due date to file an amended return. This is because Va. Code § 58.1-344 A permits an individual to elect "an extension of time within which to file the income tax return . . . ." If a taxpayer has not filed an original return by the extended due date, a valid election to extend the due date has not been made. In such cases, the extension is negated and the last day allowed for the timely filing of the return reverts to the original due date of such return.

Prior to 2005, a taxpayer who was granted an extension of time for filing their federal income tax return could receive an extension of time for filing the Virginia return provided they filed a tentative tax return with Virginia and paid the full amount of the estimated balance of tax due in order to gain a valid extension. See P.D. 97-360 (9/05/1997). In 2005, Virginia's General Assembly eliminated the need for a taxpayer to file a federal extension in order to be granted an automatic extension for Virginia income tax purposes. See Chapter 100, 2005 Acts of Assembly . As such, the fact that the Taxpayers filed an extension for federal income tax purposes has no bearing on whether an extension was granted to file a 2010 Virginia income return.

In this case, the Taxpayers' original individual income tax return for the 2010 taxable year was filed in September 2014, well beyond the extended due date for the 2010 taxable year. As such, the Taxpayers had three years from the original due date, May 2, 2011 (May 1 was on a Sunday), in which to file a timely request for refund. The statute of limitations for filing a return claiming a refund for the 2010 taxable year expired the day after May 2, 2014. The Taxpayers filed their original 2010 return after the applicable statute of limitations had expired. Accordingly, the Taxpayers' request for a refund of income tax paid for the 2010 taxable year is denied.

The Code of Virginia sections and public documents cited are available on-line 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/1-5877210826.M