May 16, 2024
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 “Taxpayers”) for the taxable year ended December 31, 2018.
FACTS
The Taxpayers filed a 2018 Virginia individual income tax return in May 2023, 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 Taxpayers filed an application for correction, contending that their original 2018 return and an amended 2018 return were mailed to the Department in 2019. The Taxpayers also argue that the Department should have notified them that they did not have a return on file for the 2018 taxable year.
DETERMINATION
Statute of Limitations
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.]
Although the Taxpayers did not request a refund payment, but instead requested that an overpayment of tax for the 2018 taxable year be applied against the income tax liability for the 2019 taxable year, the laws regarding refunds apply. 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 v. Virginia Dep’t of Taxation, Circuit Court of Arlington County, Case No. 16-1910 (2017), the final order for which is reported as P.D. 17-140 (6/30/2017).
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. Accordingly, the Taxpayers had three years from the original due date, May 1, 2019, in which to file a timely request for refund. The statute of limitations for claiming a refund for the 2018 taxable year expired May 3, 2022 (May 1, 2022, fell on a Saturday). The Taxpayers explain that their preparer electronically filed their 2018 federal and Virginia income tax returns in April 2019. They also state that they subsequently mailed a Virginia amended 2018 return in July 2019. The Department, however, has no record of receiving any return for the 2018 taxable year before May 2023, well after the statute of limitations had expired.
Notification
The Taxpayers contend that they timely filed their 2018 return, and that the Department was responsible for notifying them that the return had not been received. As discussed above, the Department has no record of receiving a 2018 return from the Taxpayers before May 2023.
Virginia’s taxing system is based largely on the concept of self-assessment. A taxpayer computes their own income tax, completes their own return, files the return, and pays the tax indicated. Virginia has implemented a self-assessment system based on the federal system because it is less intrusive upon taxpayers, simpler, and less costly to administer. Consequently, taxpayers are responsible for making sure their returns are filed on a timely basis.
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. Further, it is incumbent upon taxpayers to ensure their tax returns are received by the Department on a timely basis. Accordingly, the Taxpayers’ request for a refund of the overpayment of individual income tax for the taxable year ended December 31, 2018, cannot be granted.
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,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/4708.X