Tax Type
Estate Tax
Description
Application of Interest on Refunds
Topic
Payment and Refund
Date Issued
11-30-2001
November 30, 2001
Re: Request for Ruling: Virginia Estate Tax
Dear *****
This will reply to your letter in which you request a ruling regarding the application of interest on refunds due to the overpayment of the Virginia estate tax.
FACTS
The department's existing policy on the computation of interest with regard to an overpayment of estate tax is embodied in Public Document ("P.D.") 87-206 (9/15/87), copy enclosed. In this P.D., the department held that interest on the overpayment of estate tax would accrue from a date 60 days after the latter of the due date for paying the tax or the date the tax was paid.
Prior to 1990, Virginia allowed an extension for time to file estate tax returns. In 1990, the General Assembly amended Code of Virginia § 58.1-905 to conform Virginia's estate tax extension to the same time and terms as the federal estate tax extension. As a result, Virginia now permits fiduciaries to request an extension of the time to pay estate taxes and/or file the estate tax return. P.D. 92-148 (8/20/92), copy enclosed, further provided that any Virginia extension includes the election to pay the estate tax in installments provided under federal extension rules.
You contend that P.D. 92-148 supercedes P.D. 87-206 with regard to interest on overpayments of estate tax where the date to pay the estate tax has been extended. As such, you believe the interest on a refund due to the overpayment of Virginia estate tax should be calculated after 45 days from the date of payment according to Internal Revenue Code ("IRC") § 6611 and request a ruling as to proper application of interest to an overpayment of estate tax when an extension of time to pay the tax has been granted.
RULING
Under Code of Virginia § 58.1-905(B), if a federal extension to file a federal estate tax return or pay estate tax is obtained, then a Virginia extension to file an estate tax return or pay estate tax will be allowed for the time period granted in the federal extension.
Code of Virginia § 58.1-905(C) further provides that if a taxpayer obtains an extension to file a federal estate tax return or to pay federal estate tax liability, interest shall be added for the underpayment of tax for the period between the date when such tax would have been due had no extensions been granted and the date of full payment. The substance of this provision was not changed by the 1990 amendments.
Further, neither the 1990 Virginia estate tax legislation nor P.D. 92-148 addresses the overpayment of estate tax interest. Rather, the 1990 legislation was specifically intended to apply federal extension rules to Virginia estate tax extensions and P.D. 92-148 addresses how the Virginia estate tax follows the federal statutes by allowing payments to be deferred for up to five years and installments payments to be made over ten years.
P.D. 92-148 expresses the General Assembly's intent to conform Virginia's estate tax extension to the same time and terms as the federal estate tax extension. The statutes regarding the extensions of estate tax returns and payments are found in Subchapter B of Chapter 12 of the IRC. IRC § 6166, which addresses deferred estate tax payments, falls under Subchapter B of Chapter 62.
Accordingly, neither the 1990 Virginia estate tax legislation nor P.D. 92-148 would supercede P.D. 87-206. As such, P.D. 87-206 would apply to overpayments resulting after an extension of time to pay the tax. P.D. 87-206 provides that the overpayment of estate tax interest is governed under Code of Virginia § 58.1-1833, which is the general Code section that addresses the overpayment of any tax administered by the department. Under this provision, if an estate tax return was filed on extension or the payment of the tax was extended, interest would accrue from the latter of 60 days after the original due date or the payment of the tax.
I trust that this ruling has answered your questions. If you have any further questions regarding this ruling, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
AR/36744B
Rulings of the Tax Commissioner