10-38 | Virginia Tax

Tax Type

Individual Income Tax

Description

Commissioner is not authorized to waive the statute of limitations

Topic

Federal Conformity

Statute of Limitations

Date Issued

04-08-2010

April 8, 2010

Re: § 58.1-1821 Application: Individual Income Tax

Dear *****:

This is in response to your letter in which you seek a refund of the Virginia individual income tax paid by ***** (the "Taxpayer") for the taxable year ended December 31, 2003.

FACTS

The Taxpayer filed his Virginia individual income tax return for the 2003 taxable year on March 31, 2008. The Department denied the refund reported on the return because it was filed beyond the statute of limitations.

The Taxpayer appeals the Department's denial of his refund claim for the 2003 taxable year, asserting that his accountant failed to prepare the return. The Taxpayer further asserts that he was severely disabled following several back surgeries in 2005 and 2006.

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 Tax Commissioner 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 . . . .

Virginia Code § 58.1-341 A requires that taxpayers file individual income tax returns by May 1 of the year following the tax year for which the return is filed. The Taxpayer's original individual income tax return for the 2003 taxable year was filed on March 31, 2008. The statute of limitations for filing a return claiming a refund for the 2003 taxable year expired May 1, 2007. If an extension for filing was on file with the Department, the statute of limitations would have expired on November 1, 2007, still well before the income tax return was filed. Accordingly the 2003 return was not filed within the limitations period provided in Va. Code § 58.1-499.

The Taxpayer argues that his accountant failed to timely prepare the return resulting in the late filing. According to the Taxpayer's letter, he did not provide the information to the accountant until 2006. The return was due May 1, 2004. Further, in a situation where a taxpayer relies on his accountant, lawyer, or tax preparer for services that are not performed, the taxpayer has recourse against the accountant, lawyer, or tax preparer. The Department does not have the authority to extend the statute of limitations in such circumstances.

In addition, the Taxpayer has provided some documentation concerning his medical condition during 2005 and 2006. Internal Revenue Code (IRC) § 6511(h) suspends the statute of limitations on filing refund claims when a taxpayer is physically or mentally unable to handle his financial affairs due to severe disability. Under IRS Rev. Proc. 99-21, 1999-1-CB.960 a refund claim for a "financial disability" must include a statement of medical impairment by a certified physician, and a statement certifying no other person was authorized to act on taxpayer's behalf during the period of disability.

Virginia's conformity to federal law is set forth in Va. Code § 58.1-301, which provides that the terms used in the Virginia income tax statutes will have the same meanings as used in the IRC unless a different meaning is required. As such, Virginia's conformity to federal law is limited to the actual use of a specific term in a Virginia statute. Further conformity does not extend to terms, concepts, or principles specifically provided for in Title 58.1 of the Code of Virginia. The statute of limitations for Virginia income tax purposes is enumerated at Va. Code § 58.1-499. The statute makes no special provision for taxpayers with severe disabilities. As such, The Tax Commissioner is not authorized to waive the statute of limitations period in this situation.

As noted above, the 2003 individual income tax return was due on May 1, 2004, well before the Taxpayer or the accountant incurred their medical issues. If the Taxpayer had timely filed his 2003 return in 2004, he would not have run the risk of missing the statutory deadline for receiving a refund. Accordingly, I must deny your request for refund for the 2003 taxable year.

The Code of Virginia sections cited, along with other reference documents, are available on line www.tax.virginiai.gov in the Tax Policy Library section of the Department's web site. If you have any questions regarding this determination, you may contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.

- - - - Sincerely,

- - - - Janie E. Bowen
        Tax Commissioner

AR/1-2720543015.E

Rulings of the Tax Commissioner