August 18, 2020
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letters in which you seek a refund of individual income tax paid by ***** (the “Taxpayer”) for the taxable year ended December 31, 2014.
FACTS
The Taxpayer filed amended federal and Virginia income tax returns in October 2016 increasing the itemized deduction claimed for the 2014 taxable year. The Internal Revenue Service (IRS) issued a notice in June 2017 accepting the federal amended return as filed. The Taxpayer submitted the IRS acceptance to the Department in February 2020 requesting that the Virginia amended return be processed and a refund issued. The Department disallowed the refund request because it was outside the statute of limitations. The Taxpayer appealed contending he was unable to timely submit the refund request because he suffered from medical issues.
DETERMINATION
Virginia Code § 58.1 311 requires any individual to report a change or correction in federal taxable income within one year of the final determination of such change or correction by filing an amended return with the Department. The Taxpayer’s February 2020 refund request in response to the June 2017 IRS notice was submitted after the one year limitations period.
Pursuant to Virginia Code § 58.1 1823, however, an amended return claiming a refund may be filed within three years from the last day prescribed by law for the timely filing of the return. In this case, the Taxpayer’s amended return for the 2014 taxable year that reported the increase in the itemized deduction was filed in October 2016, well within the three years limitations period.
When a taxpayer files an amended Virginia return within the limitations period, the Department may request verification that the changes were accepted by the IRS. Under such circumstances, the taxpayer is not required to file another amended return after an IRS final determination if that determination is in agreement with the amended return. See Public Document (P.D.) 10-183 (8/16/2010).
In this case, the itemized deductions reported on the Virginia amended return were the same amount accepted by the IRS notice. As such, the Taxpayer was not required to file an amended Virginia return within one year of the IRS notice. Accordingly, the amended return will be processed as timely filed and the liability adjusted accordingly. A refund will be issued for any overpayment amount.
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/3405.B