Could illness and problems with tax preparers extend Virginia's three-year deadline for a 2010 refund claim?

Plain-English summary

The taxpayers filed their 2010 return claiming a refund in November 2014. The three-year period had expired on May 2, 2014, and they asked for an exception because of severe illness and difficulties with a tax preparer.

Virginia held that the disability provision required a fiduciary or authorized agent to file for a taxpayer unable to do so, but it did not suspend the refund limitations period. Reliance on an accountant also did not relieve the taxpayers of responsibility for timely filing. Because the Department could not waive the statutory deadline, the refund was denied.

Citations and references

• Va. Code §§ 58.1-499 D and 58.1-341 A and F
• P.D. 10-204, P.D. 11-82, and P.D. 12-93

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-46

Original ruling text

April 16, 2018

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond to your letter in which you request that the Department reconsider its denial of a Virginia individual income tax refund for * (the “Taxpayers") for the taxable year ended December 31, 2010. I apologize for the delay in responding to your request.

FACTS

The Taxpayers filed their 2010 Virginia income tax return and requested a refund for the overpayment. The Department denied the refund because the return was filed beyond the period allowed by the statute of limitations. The Taxpayers filed an appeal, requesting an exception to the limitations period because of severe illness and complexities incurred with their tax preparer.

DETERMINATION

Return Filing Requirement

Virginia Code § 58.1-499 D specifies that the Department cannot issue a refund, “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 or within sixty days from the final determination of any change or correction in the liability of the taxpayer for any federal tax upon with the tax is based.”

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 V irginia 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).

The Taxpayers’ individual income tax return for the 2010 taxable year claiming a refund was required to be filed by May 2, 2011 (May 1 was on a Sunday). Therefore, the three-year statute of limitations period for filing a return claiming a refund in Virginia Code § 58.1-499 D expired May 2, 2014. The Taxpayers did not file their 2010 return until November 2014, well after the expiration of the statute of limitations.

Professional Tax Preparation

The Taxpayers contend that they incurred additional delays in filing their federal and state returns because of issues with their tax preparer, and they needed to hire a second accountant.

A taxpayer's reliance on an accountant to prepare income tax returns, while understandable, does not relieve the taxpayer of the responsibility for ensuring that the return is filed. See Public Document (P.D.) 11-82 (05/31/2011) and P.D. 12-93 (6/8/2012). Further, in a situation where a taxpayer relies on an accountant, lawyer, tax preparer or other tax professional and such professional provides inaccurate or erroneous advice that results in a liability, the taxpayer may have recourse against the tax professional.

CONCLUSION

The Department is bound by the clear requirements under the law. The Department is not empowered to waive the statute of limitations. Accordingly, the Taxpayers' refund request cannot be granted.

The Code of Virginia sections and public documents 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/1146.o