Tax Type
Estate Tax
General Provisions
Description
Refund of interest paid on disputed tax
Topic
Payment and Refund
Date Issued
04-16-1987
April 16, 1987
Re: §58.1-1821 Application; Estate Tax
Interest on disputed tax
Dear **************
This is in response to your letter of March 24, 1987, in which you raise questions concerning an assessment of interest and the potential refund of interest after a final decision in pending litigation. You interpret §58.1-1833 as permitting a refund only of the tax, not interest which may have been paid on the tax.
Although §58.1-1833 authorizes the payment of interest on refunds of the "overpayment of any tax" (emphasis added), the term tax includes penalties and interest. See §58.1-1832. Thus, if the department is ordered to refund a tax, any interest paid will also be refunded.
However, the department is no longer a party to the pending litigation because the circuit court dismissed the department as a party and none of your assignments of error to the Virginia Supreme Court question the dismissal. Therefore, even if a final decision is rendered in your favor, the judgment will simply ascertain the amount that one estate owes to the other estate. The department will not be ordered to refund anything to anyone. (For a description of the dispute between the two estates see the Ruling dated July 31, 1985, copy enclosed.)
Accordingly the interest is now due and payable. Although we would refund the interest in the event that the assessment of tax were found to be erroneous, we do not believe that the assessment is being challenged in the pending litigation. As we stated in the previous letter of July 31, 1985, (copy attached) the amount of estate tax owed to Virginia has not been questioned. The sole issue in the pending litigation is how much one estate owes the other estate with respect to the Qualified Terminable Interest Property.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner