How long do I have to claim a refund of Virginia income tax I actually paid on a return I filed?

Plain-English summary

A taxpayer filed his 2017 Virginia resident return on time and paid the tax shown as due. He didn't file a 2018 return at all. Years later, the IRS tipped the Department off that he might have owed a 2018 Virginia return; when he didn't respond to the Department's request for information, it assessed him for 2018. He paid that 2018 assessment and appealed, arguing he'd actually been a resident of a different state -- and, while he was at it, also asked for a refund of the tax he'd genuinely paid for 2017.

The Department agreed with him on 2018: based on the residency information he provided, it abated that assessment and refunded what he'd paid. But 2017 was a different story. Virginia law gives a taxpayer exactly three years from a return's original due date to claim a refund of an overpayment -- no exceptions written into the statute. The 2017 return was due May 1, 2018, so the refund deadline was May 3, 2021 (the actual May 1 fell on a Saturday). The taxpayer's appeal, which is what raised the 2017 refund request, wasn't filed until September 2022 -- about 16 months after that deadline had already passed, and there was no record of him asking for a 2017 refund at any earlier point. With the statute of limitations already expired, the Department had no authority to grant the refund, regardless of the outcome on the related 2018 year.

What this means for you

Anyone who thinks they overpaid a past year's Virginia income tax

The clock starts running from your return's original due date, not from when you eventually realize you overpaid or file an appeal on a different year. Three years passes quickly -- if you suspect an overpayment, file the refund claim promptly rather than waiting to see how a related issue (like a different year's assessment) resolves.

Taxpayers appealing one year's assessment while trying to also claim a refund for a different year

Winning your appeal on one tax year doesn't extend or revive the refund deadline for a separate year. Here, the taxpayer's 2018 assessment appeal succeeded, but that had no bearing on the independently expired 2017 refund deadline -- each year's statute of limitations runs on its own.

Accountants and tax professionals

Calendar the three-year refund deadline (from the original due date, not any extended due date the client may have used) for every client who may have overpaid, and treat it as a hard cutoff -- Virginia's statute gives the Department no discretion to grant a refund once the three years have run, no matter how sympathetic the surrounding facts are.

Common questions

Q: How long do I have to claim a refund of Virginia income tax I overpaid?
A: Three years from the original due date of the return for that tax year (May 1 for individual returns, adjusted for weekends/holidays) -- there's no discretionary extension available.

Q: Does filing an appeal on a different tax year pause or extend the refund deadline for another year?
A: No. Each tax year's refund statute of limitations runs independently; winning an appeal on one year doesn't revive an expired refund claim for a different year.

Q: What if I file my refund request through an appeal letter rather than an amended return?
A: The date that counts is when the Department actually receives your refund request in some form -- in this case, the appeal letter itself (filed in September 2022) was treated as the refund request, but it still came too late relative to the May 3, 2021 deadline.

Q: Is there any exception if I genuinely didn't realize I'd overpaid until later?
A: Not based on this ruling -- the statute of limitations applies regardless of when the taxpayer becomes aware of the overpayment.

Citations and references

• Va. Code § 58.1-499 A, D (refund of overpayment; three-year statute of limitations)
• Va. Code § 58.1-341 A (individual income tax return due date)

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 23-70

Original ruling text

June 7, 2023

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond to your letter in which you seek a refund of individual income tax paid by * (the “Taxpayer”) for the taxable year ended December 31, 2017. The Taxpayer also seeks correction of an assessment of individual income tax issued to him for the taxable year ended December 31, 2018.

FACTS

The Taxpayer filed a Virginia resident income tax return for the 2017 taxable year and paid the tax shown as due in April 2018. The Taxpayer did not, however, file a return for the 2018 taxable year. The Department subsequently received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia income tax return for the 2018 taxable year. A review of the Department’s records showed that the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer in order to determine if his income was taxable in Virginia. When a response was not received, the Department issued an assessment.

The Taxpayer paid the assessment and appealed, contending he was a resident of * (State A). The Taxpayer sought refunds for the tax paid for both the 2017 and 2018 taxable years. Based on the information provided with the appeal, the Department abated the assessment for the 2018 taxable year and refunded the Taxpayer’s payment. The Department, however, did not issue a refund for the 2017 taxable year. This determination, therefore, will be limited to addressing the refund requested for the 2017 taxable year.

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 that:

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. Accordingly, the Taxpayer had three years from the original due date, May 1, 2018, in which to file a timely request for refund. The statute of limitations for claiming a refund for the 2017 taxable year expired the day after May 3, 2021 (May 1, 2021, was a Saturday). The Taxpayer’s appeal was filed in September 2022, after the statute of limitations had expired. Further, it does not appear that the Taxpayer requested a refund of the tax paid for the 2017 taxable year at any other time on or before May 3, 2021. Therefore, the request for a refund of the overpayment of Virginia income tax for the taxable year ended December 31, 2017, cannot be granted.

The Code of Virginia sections cited are available online at www.tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at (804) ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/4326.X