June 16, 2020
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek a refund of the overpayment of individual income tax paid by ***** (the “Taxpayer”) for the taxable year ended December 31, 2014.
FACTS
The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia individual income tax return for the 2014 taxable year. A review of the Department’s records showed that the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer in order to determine if his income was taxable in Virginia. When no response was received, an assessment was issued.
In April 2019, the Taxpayer filed a Virginia resident return showing a tax due and a new assessment was issued based off that return. Eventually, the Department determined that the Taxpayer was not a resident of Virginia for the 2014 taxable year. As a result, the assessment was abated and a refund issued for a refund from another taxable year that had been applied towards the assessment. The Taxpayer then filed an amended return in November 2019 to change his filing status to nonresident and claim a refund of Virginia income tax withheld from his wages in 2014. The Department denied the refund because the statute of limitations on claiming a refund had expired. The Taxpayer appeals, contending he was unaware of the law.
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 Department shall order a refund of the overpayment. Virginia Code § 58.1-499 D specifies, however, in pertinent part that:
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 . . . [Emphasis added.]
In cases where a taxpayer has had Virginia income tax withheld but does not have a Virginia income tax liability for the year in question, the taxpayer may file a Virginia Special Nonresident Claim for Individual Income Tax Withheld (Form 763-S) for a refund. In such cases, the Form 763-S functions as the taxpayer’s return for the year in question. Virginia Code § 58.1-341 A requires that a taxpayer file an individual income tax return by May 1 of the year following the tax year for which the return is filed. Based on Virginia statutes, the due date for the Taxpayer’s 2014 individual income tax return was May 1, 2015.
If the Taxpayer wished to claim a refund for the Virginia income tax withheld for the 2014 taxable year, he had to file the Form 763-S or otherwise make the claim by May 1, 2018, three years from the original due date. The Taxpayer, however, made no claim for refund on a Form 763-S or otherwise until he filed the amended nonresident return in November 2019. Even if his original resident return had made a refund claim, it was not filed until April 2019. In either case, the statute of limitations had already expired.
In addition, the Supreme Court of Virginia has long accepted the principle that individuals may not avoid the legal consequences of their actions by pleading ignorance of the law. See Brown v. Armistead, 27 Va. 594, 601, 1828 Va. LEXIS 43 (1828). The Taxpayer, therefore, could not avoid the application of the statute of limitations by being unaware of it. See Public Document (P.D.) 17-211 (12/19/2017). Accordingly, your request for refund of the overpayment of individual income tax for the taxable year ended December 31, 2014, cannot be granted.
The Code of Virginia sections and public document cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department’s web site. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/3382.M