Could taxpayers obtain a refund on a 2010 Virginia return first filed in October 2014 by measuring the deadline from an extended due date?

Plain-English summary

The taxpayers could not obtain a refund on a 2010 Virginia return they first filed in October 2014. Their return arrived after the applicable three-year refund limitation period.

Virginia generally allowed a six-month filing extension, but a taxpayer had to file within the extended period and timely pay the properly estimated balance due. When an original return was filed after the extended due date, the extension was negated and the refund period was measured from the original due date.

The original due date for the 2010 return was May 2, 2011 because May 1 fell on a Sunday. The taxpayers therefore had three years from that original due date to submit a return claiming a refund. The limitation period expired after May 2, 2014, months before their October filing.

Their federal extension did not change the result. Virginia's conformity to federal law did not import federal extension rules where Virginia law specifically governed its own filing extension and refund period.

What this means for you

Late filers expecting a refund

An extension does not preserve the refund period indefinitely. Filing the original return after the extended due date can cause the limitation period to revert to the original due date.

Taxpayers with a federal extension

Do not assume the federal extension controls the Virginia deadline. Virginia's own statutory requirements determine the state filing extension.

Tax professionals

Calendar refund deadlines independently from return-filing deadlines and confirm whether the taxpayer satisfied every condition for a valid Virginia extension.

Common questions

Q: Why did the Department deny the refund?
A: The original return claiming it was filed after the three-year limitation period expired.

Q: Why was the period measured from the original due date?
A: The taxpayers did not file the original return by the extended due date, so the extension was treated as not granted.

Q: Did the federal extension save the claim?
A: No.

Citations and references

• Va. Code § 58.1-301 — Virginia conformity
• Va. Code § 58.1-499(A) and (D) — refunds and limitation period
• Va. Code § 58.1-341(A) — individual return due date
• Va. Code § 58.1-344 — Virginia filing extension
• P.D. 10-238, P.D. 13-94, and P.D. 97-360

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-195

Original ruling text

November 30, 2018

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek a refund of the overpayment of individual income tax paid by * (the “Taxpayers”) for the taxable year ended December 31, 2010.

FACTS

The Taxpayers filed a 2010 Virginia individual income tax return in October 2014, reporting an overpayment of income tax and requesting a refund. The Department denied the refund because the return was filed beyond the refund period allowed by the statute of limitations. The Taxpayers appeal the Department’s denial, contending that the return was timely filed within three years of the extended due date.

DETERMINATION

Virginia’s conformity to federal law is set forth in Virginia 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 Internal Revenue Code (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 extension requirements cited by the Taxpayer, while informative, have no direct impact on the Department’s interpretation of Virginia statute in this case.

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 Department 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. Virginia Code § 58.1-344 provides a six-month filing extension of the due date for filing the income tax return.

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. See Virginia Code § 58.1-344. If the taxpayer intends to take the extension but then does not file a return or pay the full amount of the tax due by the extended due date, the taxpayer is treated as if no extension had been granted. See Public Document (P.D.) 10-238 (9/30/2010).

When an original return has been filed after the extended due date, the taxpayer has from three years after the original due date to file an amended return. This is because Virginia Code § 58.1-344 A permits an individual to elect “an extension of time within which to file the income tax return . . . .” If a taxpayer has not filed an original return by the extended due date, a valid election to extend the due date has not been made. In such cases, the extension is negated and the last day allowed for the timely filing of the return reverts to the original due date of such return.

The Taxpayers argue that because they filed a federal extension, the due date for the Virginia return was automatically extended six months from the original due date in accordance with Virginia’s conformity with federal law. Prior to 2005, a taxpayer who was granted an extension of time for filing his federal income tax return could receive an extension of time for filing the Virginia return provided he filed a tentative tax return with Virginia and paid the full amount of the estimated balance of tax due in order to gain a valid extension. See P.D. 97-360 (9/05/1997). In 2005, Virginia’s General Assembly eliminated the need for a taxpayer to file a federal extension in order to be granted an automatic extension for Virginia income tax purposes. See Chapter 100, 2005 Acts of Assembly . As such, the fact that the Taxpayers filed an extension for federal income tax purposes has no bearing on whether an extension was granted to file a 2010 Virginia income return. See P.D. 13-94 (6/11/2013).

In this case, the Taxpayers’ original 2010 income tax return was filed beyond the extended due date for the 2010 taxable year. As such, the Taxpayers had three years from the original due date, May 2, 2011 (May 1, 2011, was on a Sunday), in which to file a timely request for refund. The statute of limitations for filing a return claiming a refund for the 2010 taxable year expired the day after May 2, 2014. The Taxpayers filed their original 2010 return in October 2014, after the applicable statute of limitations had expired. Accordingly, the Taxpayers’ request for a refund of income tax paid for the 2010 taxable year cannot be granted.

The Code of Virginia sections and public documents 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

Tax Commissioner

AR/1787.M