Tax Type
Individual Income Tax
Description
Statute of Limitations
Topic
Federal Conformity
Statute of Limitations
Date Issued
06-11-2013
June 11, 2013
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which ***** (the "Taxpayers") request a refund of individual income tax for the taxable year ended December 31, 2008.
FACTS
The Taxpayers filed a part-year Virginia individual income tax return for the 2008 taxable year on May 22, 2012. The Department processed the return, but denied the refund because the return was not filed within the statute of limitations. The Taxpayers filed an appeal, contending the return was filed within three years of the extended due date.
DETERMINATION
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. Accordingly, the federal extension requirements cited by the Taxpayer, while informative, have no direct impact on the Department's interpretation of Virginia statute in this case.
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. Virginia Code § 58.1-344 provides a six-month filing extension of the due date for filing the income tax return.
Taxpayers are allowed to elect to take a six month extension to file their returns. In order to elect an extension, a taxpayer must (i) file the return within the extended period, and (ii) on or before the original due date for the filing of the return, pay the full amount properly estimated as the balance of the tax due for the taxable year. See Va. Code § 58.1-344. If the taxpayer intends to take the extension but then does not file a return or pay the full amount of the tax due by the extended due date, the taxpayer is treated as if no extension had been granted. See Public Document (P.D.) 10-238 (9/30/2010).
When an original return has been filed after the extended due date, the taxpayer has from three years after the original due date to file an amended return. This is because Va. Code § 58.1-344 A permits an individual to elect "an extension of time within which to file the income tax return . . . ." If a taxpayer has not filed an original return by the extended due date, a valid election to extend the due date has not been made. In such cases, the extension is negated and the last day allowed for the timely filing of the return reverts to the original due date of such return.
The Taxpayers argue that because they filed a federal extension, the due date for the Virginia return was automatically extended six months from the original due date in accordance with Virginia's conformity with federal law. They cite P.D. 90-11 (1/11/1990), in which the Department ruled that a claim for refund would be considered to be filed within the statutory period if it is filed by the extended due date when a valid extension had been filed.
Prior to 2005, a taxpayer who was granted an extension of time for filing their federal income tax return could receive an extension of time for filing, the Virginia return provided they filed a tentative tax return with Virginia and paid the full amount of the estimated balance of tax due in order to gain a valid extension. See P.D. 97-360 (9/05/1997). In 2005, Virginia's General Assembly eliminated the need for a taxpayer to file a federal extension in order to be granted an automatic extension for Virginia income tax purposes. See Chapter 100, 2005 Acts of Assembly. As such, the fact that the Taxpayers filed an extension for federal income tax purposes has no bearing on whether an extension was granted to file a 2008 Virginia income return.
The Taxpayers also assert that their return was filed within one year from the final determination of a federal change as permitted under Va. Code § 58.1-1823. Under Title 23 of the Virginia Administrative Code (VAC) 10-20-180 B, a final determination by the Internal Revenue Service (IRS) includes a refund, with certain exceptions, of any federal income tax. The IRS issued a refund to the Taxpayers in August 2012. The original 2008 Virginia return was filed in May 2012.
Virginia Code § 58.1-1823 states in pertinent part:
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- Any person filing a tax return or paying an assessment required for any tax administered by the Department of Taxation may file an amended return with the Department within the later of: . . . one year 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, provided that the refund does not exceed the amount of the decrease in Virginia tax attributable to such federal change or correction. . . . [Emphasis added].
In this case, the Taxpayers' original part-year individual income tax return for the 2008 taxable year was filed on May 22, 2012. Virginia Code § 58.1-1823 is limited to the filing of amended income tax returns. Because the Taxpayers were not amending their 2008 tax liability, they would not be eligible for the exceptions to the statute of limitations provided under Va. Code § 58.1-1823.
Based on the evidence, the Taxpayer's original 2008 income tax return was filed beyond the extended due date for the 2008 taxable year. As such, the Taxpayers had three years from the original due date (May 1, 2009) in which to file a timely request for refund. The statute of limitations for filing a return claiming a refund for the 2008 taxable year expired the day after May 1, 2012. The Taxpayers filed their original 2008 part-year return after the applicable statute of limitations had expired. Accordingly, the Taxpayers' request for a refund of income tax paid for the 2008 taxable year is denied.
The Code of Virginia sections, regulation, and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions 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 *****.
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- Sincerely,
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Craig M. Burns
Tax Commissioner
AR/1-5226342599.B
Rulings of the Tax Commissioner