Did a six-month filing extension move the three-year Virginia refund deadline when the taxpayer did not file by the extended due date?

Subject

Return was not filed within the statute of limitations.

Plain-English summary

The taxpayer filed too late to receive the 2004 refund. He had obtained a six-month filing extension but did not file the original return by the November 1, 2005 extended due date. Under the rules then in effect, missing that date made the extension invalid.

The Department therefore measured the three-year refund period from the original due date under Virginia law, which the ruling identified as May 3, 2005. The refund period expired May 3, 2008, while the taxpayer filed on May 15, 2008. Federal refund rules and other states' statutes did not change Virginia's result because Virginia conformity did not import those separate rules into Title 58.1.

The ruling also noted that Virginia amended its extension rules for taxable years beginning on or after January 1, 2005. The determination here applied the law governing the 2004 return.

What this means for you

• A filing extension did not preserve this refund claim after the extended filing date was missed.
• The taxpayer's federal-law argument could not override Virginia's specific refund and extension statutes.
• Refund limitation periods can turn on the law for the exact tax year involved.
• This ruling addressed a 2004 return; later extension rules were different.

Common questions

Why did the Department not count three years from November 1, 2005?

Because the taxpayer did not file by that extended date, the extension became void and the original statutory due date controlled.

How late was the refund return?

The ruling states that the deadline was May 3, 2008 and the return was filed May 15, 2008.

Citations and references

• Va. Code §§ 58.1-301, 58.1-344(A)-(B), 58.1-341(A), and 58.1-499(D).
• 23 VAC 10-110-270(B).
• IRC § 6511(b)(2)(A), argued by the taxpayer but not adopted as Virginia law.
• P.D. 10-238, cited for the later extension rules.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-250

Original ruling text

November 4, 2010

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond to your letter in which you, * (the "Taxpayer"), request a refund of individual income tax for the taxable year ended December 31, 2004.

FACTS

The Taxpayer filed his 2004 taxable year individual income tax return claiming a refund of the overpayment of tax on May 15, 2008. The Department denied the refund because the return was not filed within the statute of limitations. The Taxpayer filed an appeal, contending that he filed a valid extension and the return was filed within three years of the extended due date.

The Taxpayer asserts that Va. Code § 58.1-499 D does not define what constitutes the "last day prescribed by law," for purpose of receiving an income tax return refund. He argues that, because he was granted a six-month extension for filing his 2004 Virginia income tax return, the last day for filing a 2004 return was November 1, 2005. The Taxpayer, therefore, believes that the last date for filing a request for refund for the 2004 taxable year was also extended to November 1, 2008.

In addition, the Taxpayer believes Internal Revenue Code § 6511(b)(2)(a) permits refunds to be claimed within three years of the extension date. The Taxpayer also cites statutes from two states that the last day for timely filing a return includes extensions.

DETERMINATION

Virginia's conformity to federal law is set forth in Va. Code § 58.1-301, which provides that the terms used in the Virginia income tax statutes will have the same meanings as used in the IRC unless a different meaning is required. As such, Virginia's conformity to federal law is limited to the actual use of a specific term in a Virginia statute. Further, conformity does not extend to terms, concepts, or principles specifically provided for in Title 58.1 of the Code of Virginia . Accordingly, the federal and state statutes cited by the Taxpayer, while informative, have no direct impact on the Department's interpretation of Virginia statute in this case.

As applicable to the 2004 taxable year, Va. Code § 58.1-344 A provided in pertinent part:

Whenever any individual or fiduciary has been allowed or granted an extension or extensions of time within which to file any federal income tax return for any taxable year, the due date for filing of the income tax return required under this chapter shall be extended to the date six months after such due date or fifteen days after the extended date for filing the federal income tax return, whichever is earlier .... (Emphasis added)

Based on this statue, the Department did not have the authority to allow an extension of time to file an individual income tax return beyond six months after the due date for filing such a return. However, under Title 23 of the Virginia Administrative Code (VAC) 10-110-270 B, if additional federal extensions were granted, additional extensions of time for filing the Virginia return were granted provided a taxpayer requested an additional Virginia extension in writing. Thus, while the Department regularly granted applications for an extension to file an income tax return when a taxpayer filled an extension for federal income tax purposes, Virginia's rules did not conform to IRC § 6511.

In addition, Va. Code § 58.1-344 B, as in effect for the 2004 taxable year, permitted the Department to grant an extension of time "for filing such income tax return," that could not exceed six months. Under this section, a taxpayer was required to file a return on or before the extended due date in order for the extension to be valid. If a taxpayer did not file an original return by the extended due date, the extension became void and the return was processed as if no extension was granted.

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. Generally, this date is considered to be the last day prescribed by law for the timely filing of the return. Taxpayers who did not file a return or a valid extension have three years from the original due date to file a return requesting a refund. See Va. Code § 58.1-499 D.

In this case, the Taxpayer's extension of time to file, previously granted, became invalid when the original return was not filed by the extended due date, November 1, 2005. As such, the Taxpayers had three years from the original due date, May 3, 2005 (because May 1 was on a Saturday), in which to file a timely request for refund. The Taxpayer, however, filed his original Virginia individual income tax return for the 2004 taxable year on May 15, 2008. The statute of limitations for filing a return claiming a refund for the 2004 taxable year expired three years after the last day prescribed by law to timely file a return as prescribed under Va. Code § 58.1-341, i.e. , May 3, 2008. Because the Taxpayer's return was filed after that date, I must deny the request for refund for the 2004 taxable year.

It should be noted that Virginia's statute with regard to extensions of to file timely income tax returns was amended effective for taxable years beginning on and after January 1, 2005. Under the revised rules, 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. For more information, see Public Document (P.D.) 10-238 (9/30/2010).

The Code of Virginia sections and regulation cited, along with other reference documents, 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 determination, you may contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Acting Tax Commissioner

AR/1-4097960958.E