Ezel / Tax Rulings / VA
VA P.D. 10-183 Individual Income Tax 2010-08-16

Was a 1996 Virginia refund claim timely when the amended return was filed in 2000 but the IRS accepted the NOL carryback in 2007?

Short answer: Yes, on the specific facts. The taxpayers filed the federal and Virginia amended returns in January 2000. Virginia delayed processing while the IRS reviewed the net-operating-loss carryback; the IRS ultimately accepted it and paid a refund in April 2007. Virginia held that the state amended return had been timely filed and ordered it processed as filed, with any resulting refund and applicable interest.

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This page answers the general question as of 2010. Ezel answers yours, under current Virginia tax law, with citations.

Currency note: this ruling is from 2010
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official published Ruling of the Virginia Tax Commissioner (Virginia Department of Taxation), issued as a redacted public document. It is based on the specific facts the taxpayer presented and the law in effect when issued; different facts or later changes in the law can change the result, and another taxpayer should not assume it applies to their situation. Virginia's retail sales and use tax is administered by the Department, but many Virginia local taxes, including the business license (BPOL) tax, business tangible personal property tax, and machinery and tools tax, are administered by local commissioners of the revenue. This summary is informational only and is not legal or tax advice. Consult a licensed Virginia tax professional about your specific situation.
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Subject

Taxpayers timely filed their amended Virginia return reporting the NOL carryback

Plain-English summary

A 1996 Virginia amended return reporting a net-operating-loss carryback was timely because the taxpayers had filed it in January 2000, even though the IRS did not accept the federal carryback until 2007. Virginia had held the state return while the federal dispute was unresolved.

After additional information was provided, the IRS accepted the federal amended return and issued a refund in April 2007. When the taxpayers then asked Virginia to finish the state refund, the Department initially concluded that the filing period had expired.

The Tax Commissioner found that the Virginia amended return had already been timely filed. The later IRS acceptance supplied the federal proof needed to process it; it did not change the original state filing date.

Virginia ordered the 1996 amended return processed as filed and directed issuance of the refund with applicable interest.

What this means for you

  • Preserve proof of when an amended state return was originally filed.
  • A pending IRS review may delay state processing without making a timely state filing late.
  • Virginia can require proof that a federal adjusted-gross-income change was accepted.
  • The ruling expressly depended on its specific facts.

Common questions

When was the Virginia amended return filed?

January 2000.

When did the IRS accept the carryback?

The IRS issued the federal refund in April 2007.

What relief did Virginia order?

Processing of the 1996 amended return and a refund with applicable interest.

Citations and references

  • Va. Code § 58.1-1823.

Source

Original ruling text

August 16, 2010

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter concerning the denial of a Virginia individual income tax refund for * (the "Taxpayers") for the taxable year ended December 31, 1996. I apologize for the delay in the Department's response.

FACTS

In January 2000, the Taxpayers filed amended returns to report a net operating loss (NOL) carryback for both federal and Virginia individual income tax purposes. The Internal Revenue Service (IRS) initially denied the Taxpayers' refund claim. The Department held up processing the Virginia amended return pending the Taxpayers' resolution with the IRS.

After the Taxpayers provided additional information to the IRS, the amended federal return was accepted as filed and a refund was issued in April 2007. When the Taxpayers requested their Virginia refund, the Department concluded that the statutory period for filing the 1996 amended return had expired. The Taxpayers filed an appeal, contending the amended Virginia return was filed timely.

DETERMINATION

Pursuant to Va. Code § 58.1-1823, an amended return claiming a refund may be filed within three years from the last day prescribed by law for the timely filing of the return. When a Taxpayer files an amended return that changes the federal adjusted gross income (FAGI), the Department routinely requests proof that changes were accepted by the IRS. In this case, the IRS initially questioned the Taxpayer's 1996 amended federal return, but later accepted the net operating loss (NOL) carryback, as reported, and issued refunds.

Based on the specific facts of this case, the Taxpayers timely filed their amended Virginia return reporting the NOL carryback and the return should be processed as filed. The Department will process and review the Taxpayers' 1996 amended Virginia return and issue a refund, with applicable interest.

The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions regarding this response, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Linda Foster

Deputy Tax Commissioner

AR/1-3730479745.C

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