Could Virginia refund 2011 and 2012 overpayments when the original returns were filed after the three-year deadline?

Subject

The provisions of Va. Code § 58.1-499 D are clear and do not provide the Department with any discretion in enforcing the three-year limitations period to apply for a refund

Plain-English summary

Virginia denied refunds claimed on original 2011 and 2012 individual income-tax returns filed on May 29, 2016.

The three-year refund period expired on May 1, 2015 for the 2011 return and May 2, 2016 for the 2012 return. Both filings were late. Va. Code § 58.1-499 D gave the Department no discretion to approve a refund after that deadline.

The taxpayer explained that she had been caring for her ill husband and did not realize the returns had not been filed. The Department acknowledged the circumstances but said Virginia law did not extend the limitation period for a disabled taxpayer or a person caring for someone with a disability. Va. Code § 58.1-341 F instead places responsibility on a fiduciary or authorized agent to file when the taxpayer cannot do so because of disability.

What this means for you

An overpayment does not preserve itself indefinitely. A return or refund claim must reach Virginia within the statutory period, and serious illness or caregiving responsibilities did not toll the deadline applied in this ruling.

Citations and references

• Va. Code §§ 58.1-499 A and D and 58.1-341 A and F.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 17-18

Original ruling text

March 13, 2017

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek refunds of the overpayments of individual income tax paid by * (the “Taxpayer”) for the taxable years ended December 31, 2011, and 2012.

FACTS

The Taxpayer filed her 2011 and 2012 Virginia individual income tax returns in May 2016, reporting overpayments of income tax and requesting refunds. The Department denied the refunds because the returns were filed beyond the refund period allowed by the statute of limitations. The Taxpayer appeals, contending that she was caring for her husband who had been in poor health and she did not realize he had not filed the returns.

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 a taxpayer file an individual income tax return by May 1 of the year following the tax year for which the return is filed. Virginia Code § 58.1-341 F provides that an individual who is unable to make a return because of a disability has the responsibility of having such return filed by a fiduciary or duly authorized agent. Thus, Virginia law addresses the requirements of filing returns for taxpayers who have disabilities. While a severe illness or medical condition may be considered a disability for purposes of Va. Code § 58.1-341 F, the statute does not provide for the suspension of the statute of limitations for an individual who is mentally or physically disabled. See Public Document (P.D.) 10-204 (9/2/2010). In addition, Virginia law does not extend the statute of limitations for individuals who are caring for disabled persons.

Based on Virginia statutes, the due dates for the Taxpayer's 2011 and 2012 individual income tax returns were May 1, 2012, and May 1, 2013, respectively. As such, the returns were required to be filed by May 1, 2015, and May 2, 2016, respectively, in order to receive refunds for the 2011 and 2012 taxable years (May 1, 2016 was on a Sunday).

The original 2011 and 2012 Virginia income tax returns were not filed until May 29, 2016, after the statute of limitations had expired for both years. The provisions of Va. Code § 58.1-499 D are clear and do not provide the Department with any discretion in enforcing the three-year limitations period to apply for a refund. Accordingly, while I empathize with your circumstances, I cannot approve your request for refunds of the overpayments of individual income tax for the taxable years ended December 31, 2011, and 2012.

The Code of Virginia sections and public document 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/1055.M