November 16, 2022
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek a refund of individual income tax paid by ***** (the “Taxpayers”) for the taxable years ended December 31, 2012 through 2014.
FACTS
The Taxpayers timely filed their Virginia individual income tax returns for the 2012 through 2019 taxable years without claiming a subtraction for Social Security income that was taxable on their federal returns. See Virginia Code § 58.1-322.02 3. Subsequently, they filed amended returns to claim the subtraction each year and request refunds. The Department issued refunds for the 2015 through 2019 taxable years. The Department, however, notified the Taxpayers that the refunds for the 2012 through 2014 taxable years were denied because the amended returns were filed outside of the statute of limitations. The Taxpayers appeal, requesting that the Department issue the refunds.
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:
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].
In addition, the general rule is that an amended return must be filed within three years of the original or extended due date, as applicable, to claim a refund. See Virginia Code § 58.1-1823. This code section includes a number of exceptions to the general rule when specific circumstances are present. In this case, none of those circumstances apply and thus the general three year rule must be used to determine the dates by which the Taxpayers may claim a refund by filing amended returns.
The Department’s records show that the Taxpayers’ original 2012, 2013 and 2014 returns were due on May 1, 2013, May 1, 2014, and May 1, 2015, respectively. Under the general rule, the Taxpayers had until May 2, 2016 (May 1, 2016, was a Sunday), May 1, 2017, and May 1, 2018, to file amended returns for the relevant taxable years. The Taxpayers did not file their amended 2012 through 2014 Virginia returns until September 17, 2020, well after the three year statute of limitations had expired.
The Taxpayers contend that they filed their amended returns late because they did not understand that Virginia law allowed them to exclude their social security benefits from income until sometime in 2020. The Supreme Court of Virginia has long accepted the principle that individuals may not avoid the legal consequences of their actions by pleading ignorance of the law. See Brown v. Armistead, 27 Va. 594, 601, 1828 Va. LEXIS 43 (1828). The Taxpayers, therefore, could not avoid the application of the statute of limitations by being unaware of their eligibility for the subtraction.
While I empathize with your situation, the Department is bound by the clear requirements under the law and has no authority to waive the statute of limitations in this case. Accordingly, I am unable to grant the Taxpayers’ request for refunds for the 2012 through 2014 taxable years.
The Code of Virginia sections cited are available online at www.tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. 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/4178.X