Could a contractor obtain a transitional sales-tax refund for purchases outside the three-year claim period?

Plain-English summary

A general contractor sought a refund under transitional rules for additional sales and use tax paid on tangible personal property. The contractor filed its claim on November 30, 2016 and said it believed it should wait until the contract was completed.

Virginia held that refund requests had to be made within three years after the tax became due. Purchases made in November 2013 or later remained eligible, but invoices dated before November 2013 were outside the limitations period. Because no statutory exception applied, the Department upheld the denial for those earlier invoices.

Citations and references

• Va. Code § 58.1-1823
• 23 VAC 10-210-3040
• P.D. 13-103
• House Bill 2313, Chapter 766, 2013 Acts of Assembly

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-53

Original ruling text

April 19, 2018

Re: § 58.1-1821R Application: Retail Sales and. Use Tax

Dear *:

This is in response to your letter submitted on behalf of * (the “Taxpayer”), in which you contest the Department's denial of a refund of sales and use taxes for the period July 2013 through October 2013.

FACTS

The Taxpayer provides general contracting services such as constructing bridges and tunnels. On November 30, 2016, the Taxpayer submitted a refund request to the Department pursuant to the transitional rules resulting from the legislation passed by the 2013 General Assembly (House Bill 2313, Chapter 766, Acts of Assembly ) and as set out in Public Document (P.D.) 13-103 (6/14/13). These provisions allow for refunds to real property contractors for additional tax paid on purchases of tangible personal property.

During the refund verification process, the Department's auditor determined that sales tax on invoices dated prior to November 1, 2013 were not eligible for a refund because the request was not made within three years of the date that the tax became due. You state in the appeal letter that the Taxpayer was under the assumption that the Department wanted a one-time refund application when the project was completed.

DETERMINATION

Virginia Code § 58.1-1823 states in pertinent part that “Any person filing a tax return or paying an assessment required for any tax administered by the Department of Taxation may file an amended return ... three years from the last day prescribed by law for the timely filing of the return...."

Title 23 of the Virginia Administrative Code 10-210-3040 states, “Refunds cannot be authorized unless the request is made within three years from the due date of the return.” The transitional rules in P.D.13-103 provide that:

As with refund requests generally, the request must be made within three years of the date the tax became due. For instance, if a piece of equipment is purchased in July 2013, the tax does not become due from the dealer until August 20, 2013. Thus, a refund request could be filed anytime on or before August 20, 2016.

The Taxpayer indicated in its initial refund claim letter that it believed or were led to believe that it should wait until the completion of the contract to file a refund claim. In its appeal letter, the Taxpayer asserts the same position. The Taxpayer did not provide any additional information during the refund verification process and does not submit any documentation or further clarification with the appeal.

The Taxpayer filed the refund claim with the Department on November 30, 2016. Based on the date of the claim, purchases that were made in November 2013 or later were eligible for refund. Purchases made prior to November 2013 were denied because they were outside the three-year limitations period. Virginia Code § 58.1-­1823 does not provide for any exceptions to the three year limitations period other than those stated in the statute, which are not applicable in this case.

In accordance with the authorities cited, the Department is not authorized to issue a refund outside of the three-year limitations period. Accordingly, the refund request for invoices dated prior to November 2013 was correctly denied.

The Code of Virginia section, regulation, and public document cited, along with other reference documents are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department's web site. In addition, House Bill 2313 from the 2013 General Assembly session is available in the Legislative Information System at www.lis.virginia.gov .

If you have any questions about this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1456.H