Tax Type
Retail Sales and Use Tax
Description
Erroneously remitted taxes, Expiration of statute of limitations
Topic
Exemptions
Returns and Payments
Statute of Limitations
Date Issued
07-03-2003
July 3, 2003
Re: § 58.1-1824 Protective Claim for Refund: Retail Sales and Use Tax
Dear *****:
This is in reply to your letter of November 26, 2002, in which you submit a protective claim for refund on behalf of ***** (the "Taxpayer") for use tax accrued and paid to the Department.
FACTS
The Taxpayer was audited for the period of July 1996 through June 1999. As a result of the audit, the Taxpayer was assessed tax, penalty, and interest on July 25, 2000 and paid the assessment shortly thereafter. The Taxpayer does not dispute the assessed transactions the Department's audit staff included in the assessment. Rather, you maintain that the auditor did not take into consideration taxes that the Taxpayer erroneously accrued and paid to the Department on exempt purchases.
The audit of the Taxpayer's records did not uncover the erroneously remitted taxes. It was not until you conducted your later review that the Taxpayer discovered what you contend to be erroneously remitted taxes. Accordingly, you request that credit for the erroneously paid tax be made a part of the audit sample and the audit and compliance ratio be recalculated. Because the assessment has been paid, the Taxpayer requests a refund of any overpayment of tax, penalty and interest based on this recalculation.
DETERMINATION
Virginia Code § 58.1-1824 provides that "any person who has paid an assessment of taxes administered by the Department of Taxation may preserve his judicial remedies by filing for refund with the Tax Commissioner ...within three years of the date such tax was assessed."
Virginia Code § 58.1-1823 authorizes the refund of any tax within three years from the date such tax was paid. Title 23 of the Virginia Administrative Code 10-210-3040 addresses the refund of sales taxes to a dealer, and specifically states that "[r]efunds cannot be authorized unless the request is made within three years from the due date of the return."
During an audit, erroneously remitted taxes will generally be included as a credit in the audit; otherwise, the refund request would be handled as a separate transaction. In either case, the credit or refund request would be timely if (1) the request is made within the general three-year statute of limitations from the due date of the original return payment, or (2) the request is made within the time covered by a waiver of the statute agreed to by the Taxpayer and the Department.
Neither of these criteria is applicable in this case. The tax in question was remitted to the Department on the Taxpayer's sales and use tax returns for the period January 1999 through June 1999. Pursuant to Va. Code § 58.1-1823, the three-year statute of limitations expired prior to your November 26, 2002 refund request. The latest date a protective claim for a refund could have been filed for any part of the six-month period was July 20, 2002. Further, the waiver of the statute of limitations agreed to by the Taxpayer and the Department expired on September 30, 2000. Based on the foregoing, I cannot accept your protective claim for refund.
I note that this letter makes no determination whether the taxes that are the subject of the Taxpayer's protective claim were, in fact, overpaid. The Code of Virginia sections and the regulation cited are available on-line in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.state.va.us. If you have any questions regarding this letter, please contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Kenneth W. Thorson
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- Tax Commissioner
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- Kenneth W. Thorson
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AR/43885T
Rulings of the Tax Commissioner