My husband's serious medical condition delayed us filing our tax returns by years — can Virginia still deny our refund because of the statute of limitations?

Plain-English summary

A husband and wife filed their 2015 Virginia income tax return in November 2019 and their 2016 return in July 2020 — in both cases, well after the original due dates, and in both cases asking that any overpayment be credited forward as an estimated payment for the following year rather than refunded outright. The Department denied both overpayment credits as untimely, and because those credits had been used to offset later tax, denying them created a shortfall that triggered an assessment for the 2018 tax year.

The three-year rule applies to credits too. Virginia Code § 58.1-499 D bars any refund — whether discovered by the Department or claimed by written application — unless it happens within three years from the original due date of the return. The couple argued they weren't asking for an actual refund, just a credit carried forward, but the Department held the same three-year rule governs both: an overpayment credit is legally treated the same as a refund claim for timing purposes. The 2015 return was due May 1, 2016; the 2016 return was due May 1, 2017. Filed in November 2019 and July 2020 respectively, both were filed more than three years past their due dates — so the credits were properly denied.

Medical hardship doesn't pause the clock. The couple explained that the husband's medical condition prevented timely filing. Virginia law does address disability directly — Va. Code § 58.1-341 F requires someone unable to file due to a disability to have a return filed on their behalf by a fiduciary or authorized agent — but that provision doesn't suspend or extend the three-year refund statute of limitations. The Department noted it has no statutory discretion to waive the deadline for hardship, however genuine.

Result: assessment upheld. The Department said it "empathize[d] with the Taxpayers' difficult circumstances" but found itself bound by the statute's plain terms. The denial of the overpayment credits, and the resulting 2018 assessment, were both upheld, with a revised bill (including accrued interest) to follow, due within 30 days to avoid further interest and collection action.

What this means for you

Anyone facing a serious illness or family medical crisis that delays filing

However sympathetic your circumstances, Virginia's three-year refund/credit deadline has no built-in medical exception. If illness prevents you from filing, use Va. Code § 58.1-341 F's fiduciary/authorized-agent mechanism to get someone else to file on time — waiting until you recover can cost you the refund or credit entirely.

Anyone asking for a credit-forward instead of a cash refund

Don't assume asking for a credit toward next year's estimated tax, instead of an actual refund check, buys you more time. The Department treats both the same way under the three-year statute.

Accountants and tax professionals

If a client is medically unable to file, arrange for a power of attorney, guardian, or other authorized agent to file the return on time rather than waiting — the statute anticipates exactly this situation, but its remedy is having someone else file, not an extended deadline.

Common questions

Q: Does asking for a credit instead of a refund give me more time to file?
A: No — the Department treats overpayment credits the same as refund claims for purposes of the three-year statute of limitations in Va. Code § 58.1-499 D.

Q: Is there any way to get more time if I'm seriously ill?
A: Virginia law provides that a fiduciary or authorized agent can file on behalf of someone who is disabled and unable to file — but the statute itself doesn't pause the three-year clock, so arranging for someone else to file on time is the real solution.

Q: Can the Department use its discretion to waive the deadline in a sympathetic case?
A: No — the ruling states the statute is clear and gives the Department no discretion to extend the three-year limitations period, regardless of the taxpayer's circumstances.

Q: What happened to this couple's case?
A: The Department upheld the denial of both overpayment credits and the resulting 2018 assessment, with a revised bill including accrued interest, due within 30 days to avoid further interest and collection action.

Citations and references

Statutes:

• Va. Code § 58.1-499 A — Department must order a refund of an overpayment
• Va. Code § 58.1-499 D — no refund without a claim within three years of the original filing due date
• Va. Code § 58.1-341 F — disabled individuals must have returns filed by a fiduciary or authorized agent

Other authorities cited (described here, not linked): P.D. 09-88 (5/28/2009); Joseph Richard Azar v. Virginia Department of Taxation, Circuit Court of Arlington County, Case No. 16-1910 (reported as P.D. 17-140, 6/30/2017); P.D. 10-204 (9/2/2010) (disability does not suspend the statute of limitations).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-12

Original ruling text

February 12, 2025

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 * and *** (the “Taxpayers”) for the taxable years ended December 31, 2015, and 2016.

FACTS

The Taxpayers, a husband and wife, filed their 2015 Virginia individual income tax return in November 2019 and their 2016 Virginia individual income tax return in July 2020, in each case requesting that the overpayments be credited as an estimated payment for the following taxable year. The Department denied the overpayment credits because the returns were filed beyond the refund period allowed by the statute of limitations.

The denial of the overpayment credits resulted in a corresponding increase in the amount of tax due for the 2018 taxable year, and an assessment was issued.

The Taxpayer filed an application for correction, requesting that the Department allow the overpayment credits because the husband’s medical condition caused the Taxpayers to file the returns late.

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.]

Although the Taxpayers have not requested an actual refund but have requested that the Department allow the overpayment credits for the 2015 and 2016 taxable years instead, the laws regarding refunds apply. As stated above, Virginia Code § 58.1-499 requires that an application for refund must be received within three years from the last day prescribed by law for the timely filing of the return. See Public Document (P.D.) 09-88 (5/28/2009). See also Joseph Richard Azar vs. Virginia Dep’t of Taxation, Circuit Court of Arlington County , Case No. 16-1910, the final order for which is reported as P.D. 17-140 (6/30/2017).

The Taxpayers’ 2015 and 2016 Virginia individual income tax returns were due on May 1, 2016 and 2017, respectively. The Taxpayers filed the 2015 return on November 29, 2019 and the 2016 return on July 29, 2020, in each case more than three years after the original due dates. Therefore, the Department properly denied the overpayment credits.

The Taxpayers explain that the husband’s medical condition affected his ability to timely file the returns. Virginia Code § 58.1-341 F provides that an individual who is unable to make a return because of a disability is responsible for 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 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, while we empathize with the Taxpayers’ difficult circumstances, the Department was correct in denying the overpayment credit claimed on the 2015 and 2016 returns and making the corresponding adjustment to the 2018 return.

Based on this determination, the assessment is upheld. A revised bill, with interest accrued to date, will be issued to the Taxpayer. The Taxpayer should remit the balances due within 30 days of the bill dates to avoid the accrual of additional interest and possible collection actions.

The Code of Virginia sections cited are available online at law.lis.virginia.gov. The public documents cited are available at 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 and Legal Affairs, Tax Adjudication and Resolution Division, at or **@tax.virginia.gov.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

AR/4718.Y

Related Documents

09-88

10-204

17-140