Did Virginia's 2020 COVID-19 payment-deadline extension also extend the 3-year deadline to claim a refund for an old tax year?

Plain-English summary

In early 2020, in response to the COVID-19 pandemic, Virginia extended the deadline for INCOME TAX PAYMENTS that would otherwise have been due in April or May 2020 out to June 1, 2020 -- and waived late-payment penalties for anyone who paid by that later date. A taxpayer here read that relief as also giving her until June 1, 2020 to file her 2016 Virginia return and claim a refund of tax she'd overpaid that year. She filed the 2016 return (and refund request) on exactly that date.

The Department denied the refund. The COVID-19 extension, spelled out in Virginia Tax Bulletin 20-4, extended only the payment deadline -- it never touched the separate deadline for filing a return to claim a refund. Under the ordinary statute, an individual return is due May 1 of the following year, and a refund claim must be filed within three years of that original due date (extensions for filing, when properly elected, only apply if the taxpayer both files within the extended period AND paid the estimated balance by the original due date). None of that machinery helped here: the taxpayer's original due date for the 2016 return was May 1, 2017, so her refund deadline was three years later -- May 1, 2020. Her return, filed June 1, 2020, missed that deadline by a month, and the statute gives the Department no discretion to make an exception.

What this means for you

Anyone who relied on a pandemic-era filing/payment extension to claim an old refund

Read emergency extensions narrowly. Virginia's 2020 COVID-19 relief only pushed back when income tax PAYMENTS were due -- it did not extend the deadline to file a return or claim a refund. If you're filing a late return specifically to claim a refund for a closed year, check whether any extension you're relying on actually covers filing deadlines, not just payment deadlines.

Accountants and tax professionals

Don't assume that a well-publicized payment-relief announcement also moves the refund statute of limitations. The two deadlines are legally distinct in Virginia, and conflating them cost this taxpayer a refund she otherwise would have been due.

Anyone with an old return they still haven't filed

The three-year refund clock runs from the ORIGINAL due date of the return (here, May 1, 2017 for the 2016 tax year), not from any later date you may believe applies. If you suspect a past year's return would show a refund, file it well before the three-year mark.

Common questions

Q: Did Virginia's COVID-19 relief extend the deadline to file a return and claim a refund?
A: No. It extended only the deadline to PAY income tax that would otherwise have been due in April or May 2020, per Virginia Tax Bulletin 20-4 -- it did not create any extended filing deadline.

Q: How long do I actually have to claim a refund of overpaid Virginia income tax?
A: Three years from the tax return's original due date (May 1 of the following year for individuals), with no extension available once that window closes.

Q: If I properly elect Virginia's normal six-month filing extension, does that change my refund deadline?
A: The filing extension moves the deadline for filing the return itself, but only if you both file within the extended period and pay the full estimated balance by the original due date -- and even then, it doesn't relax the three-year refund statute of limitations discussed here.

Q: Is there any exception if I missed the refund deadline because of pandemic-related confusion?
A: Not based on this ruling. The statute's three-year limitations period is applied strictly, without a hardship or good-faith exception.

Citations and references

• Va. Code § 58.1-499 A, D (refund of overpayment; three-year statute of limitations)
• Va. Code § 58.1-341 A (individual income tax return due date)
• Va. Code § 58.1-344 (six-month filing extension, conditioned on timely payment)
• Virginia Tax Bulletin 20-4 (3/20/2020) (COVID-19 payment-deadline extension to June 1, 2020)
• P.D. 10-238 (9/30/2010) (failure to timely file/pay negates a filing extension election)

Subject

Administration: Refund - Extended Due Date, Statute of Limitations, Income Tax Payment Extension in Response to the COVID-19 Crisis

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 23-56

Original ruling text

May 17, 2023

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek a refund of individual income tax paid by * (the “Taxpayer”) for the taxable year ended December 31, 2016.

FACTS

The Taxpayer filed a 2016 Virginia individual income tax return on June 1, 2020, requesting a refund of the overpayment of income tax. The Department denied the request because the return was filed beyond the refund period allowed by the statute of limitations. The Taxpayer appeals, contending that the filing deadline was extended to June 1, 2020, as the result of the COVID-19 pandemic.

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 that:

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 taxpayers file individual income tax returns by May 1 of the year following the tax year for which the return is filed. Virginia Code § 58.1-344 provides a six-month filing extension of the due date for filing the income tax return.

Taxpayers are allowed to elect to take a six month extension to file their returns. In order to elect an extension, a taxpayer must (i) file the return within the extended period, and (ii) on or before the original due date for the filing of the return, pay the full amount properly estimated as the balance of the tax due for the taxable year. See Virginia Code § 58.1-344. If the taxpayer intends to take the extension but then does not file a return or pay the full amount of the tax due by the extended due date, the taxpayer is treated as if no extension had been granted. See Public Document (P.D.) 10-238 (9/30/2010).

When an original return has been filed after the extended due date, the taxpayer has from three years after the original due date to file an amended return. This is because Virginia Code § 58.1-344 A permits an individual to elect “an extension of time within which to file the income tax return . . . .” If a taxpayer has not filed an original return by the extended due date, a valid election to extend the due date has not been made. In such cases, the extension is negated and the last day allowed for the timely filing of the return reverts to the original due date of such return.

The Taxpayer contends that her refund claim was timely filed because the Department extended the due date of filing a 2016 income tax return to June 1, 2020 to claim a refund. The Department extended the time to make income tax payments that would have been due in April or May of 2020 to June 1, 2020. Any such payments would not have been assessed with late payment penalties. This extension, however, applied to payments only and did not create a filing extension, as expressly stated in Virginia Tax Bulletin (VTB) 20-4 (3/20/2020).

Accordingly, because the Department had not received the Taxpayer’s 2016 return before the extended due date described in Virginia Code § 58.1-344 and because no other extended due date for filing applied because of the pandemic or for any other reason, the Taxpayers had three years from the original due date, May 1, 2017, in which to file a timely request for refund. The statute of limitations for filing a return claiming a refund for the 2016 taxable year expired the day after May 1, 2020. The Taxpayer’s 2016 income tax return was filed on June 1, 2020, after the statute of limitations had expired.

The provisions of Virginia 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, your request for the refund of the overpayment of individual income tax for the taxable year ended December 31, 2016, cannot be granted.

The Code of Virginia sections, tax bulletin 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/4330.B

Related Documents

10-238

20-4