Tax Type
Individual Income Tax
Description
Overpayment Credit Claimed After 3 Year Date of Filing Statute
Topic
Statute of Limitations
Date Issued
10-26-2001
October 26, 2001
RE: § 58.1-1821 Application: Individual Income Taxation
Dear *****
This will reply to your letter in which you contest the assessment of additional individual income tax against your client, ****** (the "Taxpayer') for the 1997 taxable year. I apologize for the delay in the department's response.
The Taxpayer filed his 1995 Virginia individual income tax return and overpaid his tax liability. The Taxpayer's 1995 return requested that the overpayment be credited against estimated payments for the 1996 taxable year. The Taxpayer did not file a Virginia individual income tax return in the subsequent years. The Taxpayer died in November of 1999, and the personal representative for his estate filed returns for the 1996 through 1999 taxable years on August 15, 2000.
The department credited the 1995 overpayment against the Taxpayer's 1996 individual income tax liability, creating an overpayment for 1996. The 1996 overpayment was not refunded or applied to any other subsequent taxable years because the 1996 return was filed outside the statute of limitations for claiming a refund. As a result, an assessment was issued for the 1997 taxable year.
You contend that the statute of limitations for filing individual income tax returns is extended by statute. As such, the 1996 overpayment should be applied to the Taxpayer's tax liability for the 1997 taxable year.
The Taxpayer's 1996 return was filed more than three years after the due date prescribed by law. The Taxpayer's 1995 return indicated that the overpayment from that year should be credited to estimated payments toward the Taxpayer's 1996 liability resulting in an overpayment for 1996. However, because the Taxpayer's 1996 return was not filed within the statute of limitations, Code of Virginia § 58.1-499 prevents the Department from issuing a refund or applying the overpayment from 1996 to another taxable year.
You contend that under Code of Virginia § 8.01-229(B) that the statute of limitations for applying the 1995 overpayment should have been tolled because of the Taxpayer's death in the case of a personal action. Code of Virginia § 8.01-229(B) provides in pertinent part:
1. Death of person entitled to bring a personal action. - If a person entitled to bring a personal action dies with no such action pending before the expiration of the limitation period for commencement thereof, then an action may be commenced by the decedent's personal representative before the expiration of the limitation period ... or within one year after his qualification as personal representative, whichever occurs later.
Code of Virginia § 8.01-229 applies to the statute of limitations for bringing a personal action. Code of Virginia § 8.01-228 defines a "personal action" as "...an action wherein a judgment for money is sought, whether for damages to person or property." A personal action does not include an application for a Virginia individual income tax refund. Accordingly, the statute of limitations for applying individual income tax overpayments is not extended by Code of Virginia § 8.01-229(B).
I have enclosed a schedule that reconciles the tax, penalty and interest for the taxable year ended December 31, 1997, showing the outstanding balance due. Please remit payment of the amount due as shown on the enclosed schedule to ***** Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, P.O. Box 1880, Richmond, Virginia, 23218-1880. If you have any questions about this determination, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
ARO/31531B
RE: § 58.1-1821 Application: Individual Income Taxation
Dear *****
This will reply to your letter in which you contest the assessment of additional individual income tax against your client, ****** (the "Taxpayer') for the 1997 taxable year. I apologize for the delay in the department's response.
FACTS
The Taxpayer filed his 1995 Virginia individual income tax return and overpaid his tax liability. The Taxpayer's 1995 return requested that the overpayment be credited against estimated payments for the 1996 taxable year. The Taxpayer did not file a Virginia individual income tax return in the subsequent years. The Taxpayer died in November of 1999, and the personal representative for his estate filed returns for the 1996 through 1999 taxable years on August 15, 2000.
The department credited the 1995 overpayment against the Taxpayer's 1996 individual income tax liability, creating an overpayment for 1996. The 1996 overpayment was not refunded or applied to any other subsequent taxable years because the 1996 return was filed outside the statute of limitations for claiming a refund. As a result, an assessment was issued for the 1997 taxable year.
You contend that the statute of limitations for filing individual income tax returns is extended by statute. As such, the 1996 overpayment should be applied to the Taxpayer's tax liability for the 1997 taxable year.
DETERMINATION
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- Code of Virginia § 58.1-499 provides that:
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- Whenever the annual income tax return of an individual income taxpayer indicates in the place provided thereon that the taxpayer has overpaid his tax for the taxable year by reason of excessive withholding or overestimating and overpaying estimated tax, or both, the amount of the overpayment as shown on his return, subject to correction for error, may be credited against the estimated income tax for the ensuing year at the taxpayer's election.
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- No refund . . .of any amount under this section 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, or within sixty days from the final determination of any change or correction in the liability of the taxpayer for any federal tax upon which the state tax is based, whichever is later.
- No refund . . .of any amount under this section 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, or within sixty days from the final determination of any change or correction in the liability of the taxpayer for any federal tax upon which the state tax is based, whichever is later.
The Taxpayer's 1996 return was filed more than three years after the due date prescribed by law. The Taxpayer's 1995 return indicated that the overpayment from that year should be credited to estimated payments toward the Taxpayer's 1996 liability resulting in an overpayment for 1996. However, because the Taxpayer's 1996 return was not filed within the statute of limitations, Code of Virginia § 58.1-499 prevents the Department from issuing a refund or applying the overpayment from 1996 to another taxable year.
You contend that under Code of Virginia § 8.01-229(B) that the statute of limitations for applying the 1995 overpayment should have been tolled because of the Taxpayer's death in the case of a personal action. Code of Virginia § 8.01-229(B) provides in pertinent part:
-
- The death of a person entitled to bring an action or of a person against whom an action may be brought shall toll the statute of limitations as follows:
1. Death of person entitled to bring a personal action. - If a person entitled to bring a personal action dies with no such action pending before the expiration of the limitation period for commencement thereof, then an action may be commenced by the decedent's personal representative before the expiration of the limitation period ... or within one year after his qualification as personal representative, whichever occurs later.
Code of Virginia § 8.01-229 applies to the statute of limitations for bringing a personal action. Code of Virginia § 8.01-228 defines a "personal action" as "...an action wherein a judgment for money is sought, whether for damages to person or property." A personal action does not include an application for a Virginia individual income tax refund. Accordingly, the statute of limitations for applying individual income tax overpayments is not extended by Code of Virginia § 8.01-229(B).
I have enclosed a schedule that reconciles the tax, penalty and interest for the taxable year ended December 31, 1997, showing the outstanding balance due. Please remit payment of the amount due as shown on the enclosed schedule to ***** Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, P.O. Box 1880, Richmond, Virginia, 23218-1880. If you have any questions about this determination, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
ARO/31531B
Rulings of the Tax Commissioner