February 12, 2025
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 years ended December 31, 2015, and 2016.
FACTS
The Taxpayers, a husband and wife, filed their 2015 Virginia individual income tax return in November 2019 and their 2016 Virginia individual income tax return in July 2020, in each case requesting that the overpayments be credited as an estimated payment for the following taxable year. The Department denied the overpayment credits because the returns were filed beyond the refund period allowed by the statute of limitations.
The denial of the overpayment credits resulted in a corresponding increase in the amount of tax due for the 2018 taxable year, and an assessment was issued.
The Taxpayer filed an application for correction, requesting that the Department allow the overpayment credits because the husband’s medical condition caused the Taxpayers to file the returns late.
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.]
Although the Taxpayers have not requested an actual refund but have requested that the Department allow the overpayment credits for the 2015 and 2016 taxable years instead, 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 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’ 2015 and 2016 Virginia individual income tax returns were due on May 1, 2016 and 2017, respectively. The Taxpayers filed the 2015 return on November 29, 2019 and the 2016 return on July 29, 2020, in each case more than three years after the original due dates. Therefore, the Department properly denied the overpayment credits.
The Taxpayers explain that the husband’s medical condition affected his ability to timely file the returns. Virginia Code § 58.1-341 F provides that an individual who is unable to make a return because of a disability is responsible for 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).
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 we empathize with the Taxpayers’ difficult circumstances, the Department was correct in denying the overpayment credit claimed on the 2015 and 2016 returns and making the corresponding adjustment to the 2018 return.
Based on this determination, the assessment is upheld. A revised bill, with interest accrued to date, will be issued to the Taxpayer. The Taxpayer should remit the balances due within 30 days of the bill dates to avoid the accrual of additional interest and possible collection actions.
The Code of Virginia sections cited are available online at law.lis.virginia.gov. The public documents cited are available at 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 and Legal Affairs, Tax Adjudication and Resolution Division, at ***** or *****@tax.virginia.gov.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/4718.Y