June 9, 2022
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the denial of refund to ***** (the “Taxpayers”) for the taxable year ended December 31, 2016. I apologize for the delay in responding to your request.
FACTS
The Taxpayers, Virginia residents, filed an amended Virginia individual income tax return for the 2016 taxable year and claimed a greater amount of credit for income tax paid to another state as a result of an audit by ***** (State A). The Department denied the resulting refund on the basis that the amended return was filed outside of the statute of limitations. The Taxpayer appealed, asserting that their amended return was timely filed.
DETERMINATION
Generally, Virginia Code § 58.1-1823 allows a taxpayer to file an amended return within three years from the last day prescribed by law for the timely filing of the return. Virginia Code § 58.1-1823, however, also includes a number of exceptions to the general rule when specific circumstances are present.
Under Virginia Code § 58.1-1823 (v), a taxpayer has “one year from the final determination of any change or correction in the income tax of the taxpayer for any other state, provided that the refund does not exceed the amount of the decrease in Virginia tax attributable to such change or correction.”
The Taxpayers received a notice of assessment from State A on September 23, 2020, resulting from an adjustment to the nonresident apportionment percentage on their State A return. In response, the Taxpayers filed an amended State A return to contest the adjustment, which State A accepted and deemed the assessment to be satisfied as of June 18, 2021.
Because the amended nonresident return reported higher nonresident apportionment percentage than their original State A return, the Taxpayers filed an amended Virginia return on October 6, 2020, less than one month after receiving the State A correction letter and well within the one-year limitations period set forth in Virginia Code § 58.1-1823 (v).
Accordingly, the amended return will be processed as timely filed and a refund will be issued as warranted. The Department reserves the right to review the computation of the credit within the applicable statute of limitations for such review. If any adjustment is made to the amount of credit claimed, the adjustment must be fully explained and communicated to the Taxpayers in writing. If the credit is adjusted, the Taxpayers will have 90 days from the date of being notified of such adjustment within which to appeal, if they believe the adjustment was erroneous.
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 *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/4017.Y