Could severe illness extend Virginia's refund deadline when a 2010 joint return claiming a refund was filed in June 2014?

Subject

The Department denied the refund on the basis that the statute of limitations for claiming a refund for that taxable year had expired

Plain-English summary

Virginia denied the 2010 refund because the joint return was filed after the three-year refund deadline. The 2010 return was due May 2, 2011 because May 1 fell on a Sunday, so a refund claim had to reach the Department by May 2, 2014. The wife and her deceased husband's estate filed in June 2014.

The husband's long illness did not suspend the deadline. Virginia law placed responsibility for filing a disabled individual's return on a fiduciary or authorized agent, and the statute contained no tolling rule for mental or physical disability.

The Commissioner said the Department was bound by the statutory limit and had no power to waive it in this situation.

What this means for you

• Calculate the refund deadline from the legal due date for the original return.
• Do not wait for an illness or incapacity issue to resolve before arranging for an authorized person to file.
• A fiduciary or authorized agent may need to act for a taxpayer who cannot prepare a return.
• Sympathy or hardship alone does not give the Department authority to waive a statutory refund limit.

Common questions

Q: What was the refund deadline?

A: May 2, 2014 for the 2010 taxable year.

Q: When was the return filed?

A: June 2014, after the refund period expired.

Q: Did severe illness extend the time?

A: No. The cited statutes did not suspend the limitation period for disability.

Citations and references

• Va. Code §§ 58.1-499(A), (D) and 58.1-341(A), (F).
• P.D. 10-204.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 15-57

Original ruling text

April 3, 2015

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you appeal the denial of an individual income tax refund on behalf of your clients, * (the "Taxpayers") for the taxable year ended December 31, 2010.

FACTS

The Taxpayers were a husband and wife. The husband died in February 2014. In June 2014, the wife and the husband's estate filed a joint Virginia individual income tax return for the 2010 taxable year, reporting a refund due. The Department denied the refund on the basis that the statute of limitations for claiming a refund for that taxable year had expired. The Taxpayers appeal, requesting an exception to the statute of limitations because the husband had been ill for many years prior to his death, including the taxable year at issue.

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 Tax Commissioner 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.]

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. Based on Virginia statutes, the due date for the 2010 taxable year was May 2, 2011 (May 1 was on a Sunday). As such, a return was required to be filed by May 2, 2014, in order to receive a refund for the 2010 taxable year.

In addition, Va. Code § 58.1-341 F provides that an individual who is unable to make a return because of a disability has the responsibility of 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 Va. 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 Public Document (P.D.) 10-204 (9/2/2010).

The Department's records indicate that the Taxpayers' original return for the 2010 taxable year was filed in June 2014, after the applicable statute of limitations period had expired. Accordingly, the Taxpayers' refund request is denied. While I empathize with the Taxpayers' situation, the Department is bound by the clear requirements under the law. The Department is not empowered to waive the statue of limitations in this situation.

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

Sincerely,

Craig M. Burns
T ax Commissioner

AR/1-5888720861.M