Tax Type
Corporation Income Tax
Description
Appeal to Tax Commissioner; Limitations Period for Refunds
Topic
Taxpayers' Remedies
Date Issued
10-08-1991
October 8. 1991
Re: §58.1-1821 Application; Corporation Income Tax
Dear********************
This will reply to your letter of November 28, 1990, in which you request a refund of additional interest on refunds issued by the Department of Taxation to*********** ("Taxpayer #1") *********** ("Taxpayer #2).
FACTS
Taxpayer #1 carried back net operating losses (NOL's) from 1978, 1979 and 1980 to 1975, 1976 and 1977, respectively, and received a refund check dated March 31, 1982. Taxpayer #2 carried back a NOL from 1981 to 1978, 1979 and 1980 and received a refund check dated March 16, 1983. Both refunds included interest. By letter dated September 27, 1990, you notified the department that the interest computations on the refunds were erroneous and submitted your own computations, requesting a refund of the additional interest. The department agreed that an error was made, but has not yet issued the refund because a question has developed concerning the statute of limitations related to correcting the error.
DETERMINATION
Title 58.1 contains several provisions pertaining to the limitations periods for the assessment and refund of taxes. Generally, the law provides that a taxpayer may claim a refund for income taxes within three years from the last day prescribed by law for the timely filing of the return. The general three year limitations period bars the taxpayer's claim for refund because more than three years passed from the last day prescribed by law for the timely filing of the amended returns based on the NOL's (10/15/85, assuming an extension was granted for the filing of the 1981 return) and your request for refunds of additional interest.
Even if the department accepts your argument that the limitations periods in Title 58.1 are inapplicable because they relate only to taxes, and your request involves refunds of interest, then one must look to general law to determine whether or not the Commonwealth of Virginia is required to issue a refund for additional interest.
Va. Code §2.1-223.1 provides that any pecuniary claim against the Commonwealth shall be presented to the head of the Department involved (in this case the Tax Commissioner) or to the Comptroller. Va. Code §8.01-255 provides that any such claim shall be barred unless presented to the comptroller or other authorized person no later than 5 years after such claim shall arise.
A claim for additional interest on a refund arises when the refund is issued. In this case, the refund for Taxpayer #1 was issued on March 31, 1982. Taxpayer #1 did not contact the department until more than 8 years after the refund was issued. The refund for Taxpayer #2 was issued on March 16, 1983; Taxpayer #2 waited over 7 years before presenting its claim for additional interest. Therefore, your request for refund of interest is barred by statute.
Accordingly, your request for refund of additional interest is denied.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner