I couldn't file my Virginia return on time because of serious health problems, and now I'm past the three-year refund deadline -- can the Department waive it?

Plain-English summary

A taxpayer filed her 2016 Virginia individual income tax return in August 2020, claiming a refund of overpaid tax. Under Virginia law, the return for the 2016 tax year was originally due May 1, 2017, and Virginia's refund statute of limitations requires that a refund claim (whether discovered by the Department itself or applied for by the taxpayer) arrive within THREE YEARS of that original due date -- meaning her 2016 refund needed to be claimed by May 1, 2020. Because her return wasn't filed until August 2020, nearly four months after that cutoff, the Department denied the refund.

She appealed, explaining that physical and mental health conditions she developed in 2015 had prevented her from filing on time, and asking the Department to waive the deadline in light of her circumstances. The Tax Commissioner acknowledged Virginia law DOES have a mechanism for taxpayers who can't file their own returns due to disability -- it requires that a fiduciary or duly authorized agent file the return on the disabled person's behalf -- but that provision addresses WHO can file the return, not WHETHER the refund statute of limitations itself can be paused or excused for a taxpayer's disability. The statute setting the three-year refund deadline is written in mandatory terms and gives the Department no discretion to extend or waive it under any circumstances, including illness. However sympathetic the situation, the Tax Commissioner could not grant the refund once the three-year window had closed.

What this means for you

Anyone facing a serious illness or disability that might delay filing a Virginia tax return

If you can't personally handle your tax filings due to illness, Virginia law expects a fiduciary or authorized agent (a family member with power of attorney, a guardian, a trusted advisor, etc.) to file on your behalf -- arranging for that BEFORE a filing or refund deadline passes is the available remedy, since the deadline itself cannot be waived after the fact based on the illness.

Anyone who may be owed a Virginia refund from a prior year

Track your three-year refund window carefully: it runs from the ORIGINAL due date of the return (typically May 1 of the following year for individuals), not from when you eventually get around to filing. Once that three-year period closes, the refund is permanently lost, with no discretion for the Department to make an exception -- regardless of the reason for the delay.

Family members or caregivers managing taxes for someone with a serious illness

If a loved one is unable to manage their own tax filings, set up the legal authority (power of attorney, guardianship, or similar) to file returns and claim refunds on their behalf as early as possible -- waiting until after a refund deadline has passed leaves no remedy, even with a compelling medical explanation.

Common questions

Q: Can Virginia's three-year refund statute of limitations be waived for a taxpayer's illness or disability?
A: No. While Virginia law addresses how a disabled taxpayer's return should be filed (via a fiduciary or authorized agent), it does not authorize suspending or waiving the refund statute of limitations itself -- the Department has no discretion to grant a refund after the three-year window closes, regardless of the reason for the delay.

Q: When does the three-year refund clock start running?
A: From the ORIGINAL due date prescribed by law for filing the return (May 1 of the year following the tax year, for individual income tax) -- not from whenever the return is actually filed.

Q: What should someone do if a health condition might prevent them from filing their own tax return on time?
A: Arrange for a fiduciary or duly authorized agent to file the return on their behalf, since Virginia law places that responsibility on the disabled taxpayer -- doing this before a deadline passes is the available remedy, since the deadline itself can't be excused afterward.

Citations and references

• P.D. 10-204 (9/2/2010) (a severe illness or medical condition may qualify as a "disability" under the fiduciary/authorized-agent filing provision, but does not toll or suspend the refund statute of limitations)

Subject

Administration : Refunds - Statute of Limitations

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 21-114

Original ruling text

August 24, 2021

Re: § 58.1-1821 Appeal: Individual Income Tax

Dear *:

This will respond to your letter in which you seek a refund of the overpayment of individual income tax paid by * (the “Taxpayer”) for the taxable year ended December 31, 2016.

FACTS

The Taxpayer filed her 2016 Virginia individual income tax return in August 2020 claiming a refund. The Department denied the refund because the return was filed beyond the statute of limitations for claiming a refund. The Taxpayer appeals, asking for the statute of limitations to be waived because of physical and mental health conditions she developed in 2015.

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 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 a taxpayer file an individual income tax return 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 Taxpayer’s 2016 individual income tax return was May 1, 2017. As such, the return was required to be filed by May 1, 2020, in order to receive a refund for the 2016 taxable year. The Taxpayer’s original 2016 income tax return was not filed until August 2020, after the statute of limitations had expired.

The Taxpayer cites her physical and mental health conditions as prohibiting her ability to timely file her return. Virginia 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 Virginia 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 provisions of Virginia Code § 58.1-499 D are clear and do not provide the Department with any discretion in enforcing the three-year limitations period to apply for a refund. Accordingly, although I empathize with your difficult circumstances, I cannot grant your request for a refund of the overpayment of individual income tax for the taxable year ended December 31, 2016.

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

Tax Commissioner

AR/3721.B

Related Documents

10-204