My spouse died, then COVID hit, and I had serious health problems -- can those circumstances excuse filing our tax return late enough to still get our refund/credit?

Plain-English summary

A husband and wife filed their 2017 Virginia individual income tax return in May 2021 -- about four years after it was due -- reporting an overpayment and asking that it be credited toward their 2018 tax liability instead of refunded. The Department denied the credit because the return was filed after the statute of limitations for refunds had run, which correspondingly increased the couple's 2018 tax bill and led to an assessment. The taxpayers paid it and appealed, arguing that the husband's death in October 2019, the COVID-19 pandemic, and the wife's serious health problems together explained the late filing.

The statute of limitations applies to credits too, and it's strict. Va. Code § 58.1-499 D bars any refund -- whether requested by the taxpayer or discovered by the Department -- unless it's applied for within three years of the return's original due date. The Department treats a request to credit an overpayment forward the same as a refund request for this purpose. The couple's return was filed May 13, 2021, well beyond the three-year window measured from the return's original due date.

Why none of the three excuses worked.

• Death of the husband: Virginia law (Va. Code § 58.1-341 E) specifically requires an executor, administrator, or other person responsible for a deceased taxpayer's affairs to timely file the return anyway -- the death itself doesn't excuse late filing, and the surviving spouse or another responsible person remained obligated to file on time.
• The COVID-19 pandemic: The 2017 return's due date came nearly two years before the pandemic began, and the only income-tax filing relief the Governor announced applied to 2020 taxable-year returns (per Virginia Tax Bulletins 20-4 and 21-5) -- it had no bearing on a return due years earlier.
• The wife's medical condition: Virginia law (Va. Code § 58.1-341 F) does let a fiduciary or authorized agent file on behalf of a taxpayer who can't due to disability, and a serious illness or mental health condition can qualify as a "disability" for that purpose -- but that provision only shifts who can file, it does not pause or extend the statute of limitations itself.

Outcome. Because § 58.1-499's three-year deadline leaves the Department no discretion, the credit denial and the resulting 2018 assessment were upheld -- the Department noted its sympathy for the taxpayers' circumstances but had no legal basis to waive the deadline.

(This is an earlier entry in the same refund-statute-of-limitations doctrine as the trio of May 2024 rulings P.D. 24-48, P.D. 24-49, and P.D. 24-53, each rejecting a different excuse for a late refund/credit claim -- this ruling adds spousal death, the COVID-19 pandemic, and medical disability to that list of rejected excuses.)

What this means for you

Anyone filing a very late return that reports an overpayment

You generally have only three years from the return's original due date to claim a refund or ask that an overpayment be credited forward -- personal hardship (bereavement, a pandemic, illness) does not toll or extend that deadline under Virginia law, however sympathetic the circumstances.

Executors, administrators, or family members handling a deceased taxpayer's final returns

The obligation to timely file doesn't disappear with the taxpayer's death -- someone (an executor, administrator, or other person charged with the decedent's property) must still file on time, and missing that deadline isn't excused by the death itself.

Taxpayers unable to file due to illness or disability

You can have a fiduciary or authorized agent file on your behalf, but doing so doesn't buy you extra time -- the underlying filing and refund deadlines still run on the normal schedule.

Common questions

Q: Does my spouse's death excuse a late-filed return that would have gotten us a refund?
A: No. Virginia law requires the decedent's executor, administrator, or another responsible person to file on time regardless of the death.

Q: Did the COVID-19 pandemic extend refund deadlines for all tax years?
A: No. Virginia's pandemic-related filing and payment relief applied specifically to 2020 taxable-year returns, not to earlier years like 2017.

Q: If I was too sick to file on time, can I still get my refund years later?
A: Having a fiduciary or authorized agent file for a disabled taxpayer is allowed, but it doesn't pause the three-year statute of limitations for claiming a refund or credit -- the deadline still applies.

Citations and references

Statutes and guidance:

• Va. Code § 58.1-499 A, D -- refund of overpaid tax; 3-year statute of limitations to claim it
• Va. Code § 58.1-341 E -- return-filing duty upon a taxpayer's death
• Va. Code § 58.1-341 F -- return-filing duty for a taxpayer with a disability
• Virginia Tax Bulletin 20-4 (3/20/2020) and VTB 21-5 (4/9/2021) -- COVID-19 filing/payment relief limited to 2020 returns

Prior rulings referenced (described here, not linked): P.D. 09-88 (5/28/2009) -- the 3-year refund statute of limitations applies to credit-forward requests too; P.D. 17-140 (6/30/2017, reporting Joseph Richard Azar v. Virginia Dep't of Taxation) -- the same 3-year rule applies to a requested credit, not just a cash refund; P.D. 10-204 (9/2/2010) -- a qualifying disability doesn't suspend the statute of limitations.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 24-22

Original ruling text

March 13, 2024

Re: § 58.1-1821 Appeal: Individual Income Tax

Dear *:

This will respond to your letter in which you seek a refund of the overpayment of individual income tax paid by * and *** (the “Taxpayers”) for the taxable year ended December 31, 2017.

FACTS

The Taxpayers, a husband and wife, resided in Virginia during the taxable year at issue. The husband died in October 2019. The Taxpayers filed a 2017 Virginia individual income tax return in May 2021, reporting an overpayment of income tax and requesting that the overpayment be credited as an estimated payment for the following taxable year. The Department denied the credit because the return was filed beyond the refund period allowed by the statute of limitations. The denial of the overpayment credit caused a corresponding increase in the amount of tax for the 2018 taxable year, and an assessment was issued. The Taxpayers paid the assessment and appealed, contending that the husband’s death, the COVID-19 pandemic, and the wife’s health problems all contributed to the late filing of the return.

DETERMINATION

Statute of Limitations for Refunds

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:

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.]

Although the Taxpayers have not requested an actual refund, but have requested that an overpayment of tax for the 2017 taxable year be applied against the income tax liability for the 2018 taxable year, the laws regarding refunds applies. As stated above, Virginia Code § 58.1-499 requires that an application for refund must be received within three years from the last day prescribed by law for the timely filing of the return. See Public Document (P.D.) 09-88 (5/28/2009). See also Joseph Richard Azar vs. Virginia Dep’t of Taxation, Circuit Court of Arlington County , Case No. 16-1910, the final order for which is reported as P.D. 17-140 (6/30/2017). The Taxpayers’ 2017 Virginia individual income tax return was due on May 1, 2021. Their return was filed on May 13, 2021, which was beyond the three year statute of limitations after the due date of the return for requesting a refund or the crediting of an overpayment to the following taxable year.

Deceased Taxpayers

The Taxpayers state that the death of the husband was an obstacle in timely filing the return. Virginia law addresses the requirements of filing returns for taxpayers who have died. Virginia Code § 58.1-341 E provides that a return must be timely filed by a taxpayer’s executor, administrator, or other person charged with his property upon the death of a taxpayer. Regardless of the husband’s death, the wife or other person legally accountable for filing the income tax return was required to timely file the return.

Pandemic

The Taxpayers also assert that the COVID-19 pandemic was a factor in the late filing of the 2017 return. The due date of the Taxpayers’ 2017 Virginia return was nearly two years prior to the start of the pandemic. While the Governor announced certain income tax filing and payment relief as a result of the pandemic, there was no filing extension that would have impacted individual income tax returns other than those being filed for the 2020 taxable year. See Virginia Tax Bulletin (VTB) 20-4 (3/20/2020) and VTB 21-5 (4/9/2021).

Medical Conditions

The Taxpayers cite a serious injury to the wife and her deteriorating mental health condition as affecting her ability to timely file her return. 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 Virginia 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 P.D. 10-204 (9/2/2010).

CONCLUSION

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, while I empathize with the Taxpayers’ difficult circumstances, the Department was correct in denying the overpayment credit claimed on the 2017 return and making the corresponding adjustment to the 2018 return. Because the balance of the liability due for the 2018 taxable year has been paid by the Taxpayers, no further action is required.

The Code of Virginia sections, Tax Bulletins 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/4445.B

Related Documents

09-88

10-204

17-140

20-4

21-5