My tax preparer submitted our Virginia Research and Development Expenses Tax Credit application 8 days after the September 1 deadline -- can we still get the credit since the delay wasn't our fault?

Plain-English summary

A corporation's tax preparer filed its Form RDC application for the Research and Development Expenses Tax Credit for the 2020 taxable year on September 9, 2021 -- eight days after the statute's September 1 deadline. The Department denied the application as untimely, and the corporation appealed, arguing the application should still count as timely because it had relied on its preparer to file on time and missing the deadline was beyond its own control.

The Department's answer was short and firm. The credit statute, Va. Code § 58.1-439.12:08 E, says applications "must be received by the Department no later than September 1" -- language the Department read as leaving it no discretion to accept a late filing for any reason. It also pointed to a consistent line of its own prior rulings holding that reliance on a tax professional, however understandable, doesn't excuse a taxpayer from responsibility for timely filing. Because the application was received eight days late, the denial was upheld with no further relief available.

What this means for you

Any business applying for Virginia's Research and Development Expenses Tax Credit

Treat September 1 (of the year following the tax year the expenses were paid or incurred) as an absolute deadline with no grace period, regardless of the reason for a delay. Build in a buffer before the deadline rather than filing at the last possible moment.

Anyone whose preparer or advisor missed a Virginia filing deadline on their behalf

This ruling is part of a consistent line of Department rulings holding that a taxpayer bears ultimate responsibility for timely filing even when a professional was engaged to handle it. If a deadline matters to you, confirm directly (not just through your preparer) that the filing actually went in on time.

Anyone considering whether "the delay was beyond my control" will excuse a missed statutory deadline

Where a statute's deadline language is unconditional ("must be received... no later than"), the Department treats it as having no built-in exception for hardship or third-party error -- don't count on an equitable argument to save a late filing under this kind of statute.

Common questions

Q: Does the Research and Development Expenses Tax Credit application have any grace period past September 1?
A: Not based on this ruling. The Department read the statute's deadline language as mandatory with no discretion to accept late applications, even a matter of days late.

Q: If my accountant or tax preparer causes a filing to be late, can that excuse the deadline?
A: No, according to this ruling and the several prior published rulings it cites -- reliance on a preparer does not shift or excuse the taxpayer's own responsibility for timely filing.

Q: What can a business do to protect an R&D credit claim from this kind of risk?
A: File well ahead of the September 1 deadline and independently confirm with your preparer (or the Department) that the application was actually received, rather than assuming it was submitted on time.

Citations and references

• Va. Code § 58.1-439.12:08 (Research and Development Expenses Tax Credit; applications must be received no later than September 1 of the year following the taxable year)
• P.D. 11-82 (5/31/2011), P.D. 12-93 (6/8/2012), P.D. 16-169 (8/29/2016), P.D. 19-69 (6/25/2019) (prior rulings holding reliance on a tax professional does not excuse a late filing)

Subject

Credit : Research and Development - Application Due Date Strictly Enforced, Reliance on Tax Practitioner

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 22-17

Original ruling text

January 25, 2022

Re: § 58.1-1821 Application: Corporate Income Tax

Dear *:

This will reply to your letter submitted on behalf of your client, * (the “Taxpayer”), in which you appeal the denial of its application for the Research and Development Expenses Tax Credit (the “Credit”) for the 2020 taxable year.

FACTS

The Taxpayer’s preparer submitted Form RDC, Application for Research and Development Expenses Tax Credit, for the 2020 taxable year (the “Application”) on September 9, 2021. The Department denied the Application as it was filed after the September 1, 2021, deadline. The Taxpayer appeals, contending the Application should be treated as timely filed because it relied on its preparer to timely file the Application and missing the deadline was beyond its control.

DETERMINATION

Pursuant to Virginia Code § 58.1-439.12:08, an individual, corporation, or pass-through entity may apply for the Credit. Virginia Code § 58.1-439.12:08 E provides that applications for the Credit “ must be received by the Department no later than September 1 of the calendar year following the close of the taxable year in which the expenses were paid or incurred.” [Emphasis added]

The Department has consistently ruled that reliance on a tax professional, while understandable, does not relieve a taxpayer of the responsibility for ensuring returns are timely filed. See, e.g ., Public Document (P.D.) 11-82 (5/31/2011), P.D. 12-93 (6/8/2012), P.D. 16-169 (8/29/2016) and P.D. 19-69 (06/25/2019).

The provisions of Virginia Code § 58.1-439.12:08 E are clear and do not provide the Department with any discretion in enforcing the application due date. In this case, the Department received the Application on September 9, 2021, which was after the September 1, 2021, deadline. Accordingly, I find that the Application was properly 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/3966.X

Related Documents

11-82

12-93

16-169

19-69