Could Virginia extend the three-year refund deadline for tax paid after the 2013 rate increase when the purchaser did not know the refund process?

Plain-English summary

A medical provider contracted for equipment before Virginia's July 2013 rate increase and received it during the transition window. It requested the extra one-percentage-point tax back after the refund deadline.

Virginia denied the claim as 68 days late. Potential eligibility under a transition rule did not override the general three-year limitation.

How the deadline was calculated

The vendor invoiced the equipment and 6% tax on July 27, 2013. That tax was due to Virginia by August 20, 2013, so the three-year refund period expired August 20, 2016.

The written claim arrived October 27, 2016. Va. Code § 58.1-1823 and 23 VAC 10-210-3040 did not permit the Commissioner to extend the period because the purchaser was unaware of the process.

What this means for you

• Transitional relief still carries the normal refund deadline.
• Calculate the limitation from the legally prescribed return due date.
• File protectively before time expires if eligibility is uncertain.
• Administrative unfamiliarity does not extend a statutory deadline.

Common questions

Q: Did the contract and delivery dates otherwise fit the transition rule?

A: They fit the stated pre-April 3 contract and pre-October 1 delivery window, but the claim was untimely.

Q: Could Virginia waive the 68-day delay?

A: No. The ruling found no exception to the three-year limitation.

Citations and references

• Va. Code § 58.1-1823 — refund limitation
• 23 VAC 10-210-3040 — sales-tax refunds
• P.D. 13-103 — 2013 rate-change guidelines

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 19-30

Original ruling text

April 17, 2019

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

Dear *:

This is in response to your letter submitted on behalf of * (the “Taxpayer”), in which you request reconsideration of the Department’s denial of a sales tax refund. The refund request resulted from the retail sales and use tax rate change that became effective July 1, 2013. I apologize for the delay in responding to your request.

FACTS

The Taxpayer, a medical services provider, entered into a contract for the purchase of medical equipment on March 18, 2013. The medical equipment vendor shipped the equipment to the Taxpayer on July 22, 2013 and invoiced the Taxpayer for the equipment on July 27, 2013. Effective July 1, 2013, the Virginia retail sales and use tax was increased from 5% to 6% in the locality in which the Taxpayer was located. The vendor correctly charged the 6% retail sales tax on the Taxpayer’s invoice which was paid by the Taxpayer in two installments on July 29, 2013 and August 29, 2013.

The Taxpayer contacted the Department in writing on October 27, 2016 and requested a refund of the one percent sales tax rate increase that took effect between the time the purchase contract was entered into and the actual delivery date of the equipment. This request was in accordance with the rate increase transitional provisions set forth in the Guidelines for the Retail Sales and Use Tax Changes Enacted by the 2013 General Assembly Session (HB 2313) issued as Public Document 13-103 by the Department on June 13, 2013. In response to this refund request, the Taxpayer was advised that due to the expiration of the three-year statute of limitations for refunds or credits found in Virginia Code § 58.1-1823, the refund would not be granted. The Taxpayer appeals the denial of the refund, stating that it was unaware of the Department’s refund request process. The Taxpayer asks that the statute of limitations be extended in this instance and the refund granted.

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 (VAC) 10-210-3040 addresses the refund of sales tax to dealers and provides, in pertinent part, that “Refunds cannot be authorized unless the request is made within three years from the due date of the return.”

The transitional provisions set forth in the Department’s Guidelines for the Retail Sales and Use Tax Rate Changes address contracts for the sale of tangible personal property and provides the following:

Refunds of the additional tax paid on and after July 1, 2013 may be claimed for tangible personal property purchased under sales contracts entered into before April 3, 2013, provided the property is delivered to the purchaser on or before September 30, 2103. Refunds will not be available if a sale contract was entered into on or after April 3, 2013, or if the property purchased is delivered to the purchaser after September 30, 2013.

Based upon the facts presented, the vendor invoiced the Taxpayer for the medical equipment and the sales tax on July 27, 2013. The sales tax collected by the vendor became due and payable to the Department on or before August 20, 2013. As provided in the cited authorities, the statute of limitations to file a refund request in this instance expired on August 20, 2016. The Taxpayer’s written request for refund was filed with the Department on October 27, 2016, 68 days beyond the three-year statute of limitations. There are no exceptions to the three-year statute of limitations for refunds. Accordingly, I am unable to extend the statute of limitations and cannot approve the Taxpayer’s request for refund.

The Code of Virginia section, regulation and guidelines cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department’s website. If you have any questions about this response, you may contact * in the Department’s Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

Related Documents

13-103