May 22, 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, 2019.
FACTS
The Taxpayers filed a 2019 Virginia individual income tax return on July 6, 2023, 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 Taxpayers filed an application for correction, contending that they mailed their 2019 return on February 3, 2020.
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. 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 a return requesting a refund. 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.
Because the Department had not received the Taxpayers’ 2019 return before the extended due date described in Virginia Code § 58.1-344, the Taxpayers had three years from the original due date, May 1, 2020, in which to file a timely request for refund. The statute of limitations for filing a return claiming a refund for the 2019 taxable year expired the day after May 1, 2023. Although the Taxpayers claim they mailed their 2019 return on February 3, 2020, the Department has no record of receiving the return until July 2023, after the statute of limitations had expired. Further, the Taxpayers have not submitted any evidence that would prove that their return was mailed in 2020.
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. While I empathize with the Taxpayers’ situation, their request for the refund of the overpayment of individual income tax for the taxable year ended December 31, 2019, cannot be granted.
The Code of Virginia sections 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 (804) *****.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/4775.X