February 4, 2026
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the individual income tax assessment issued to you (the “Taxpayers”) for the taxable year ended December 31, 2018.
FACTS
The Internal Revenue Service (IRS) notified the Department that it had adjusted the Taxpayers’ 2018 federal income tax return. Because the Department had no record of having received an amended Virginia income tax return to report the federal change, an assessment was issued in March 2022 for additional tax due. In October 2022, the Department applied a portion of the Taxpayers’ Virginia income tax overpayment for the 2021 taxable year in complete satisfaction of the 2018 tax liability. In March 2025, the Taxpayers requested that the Department abate the assessment and issue a refund because the United States Tax Court had determined that the IRS adjustment was incorrect. The Department denied the refund request on the basis that the request was not received within one year of the final determination reversing the IRS adjustment. The Taxpayers applied for correction.
DETERMINATION
The history of this case raises several different issues with respect to statutes of limitations. Each of these limitations periods will be addressed in turn.
Deadlines for Filing Appeals
Virginia Code § 58.1-1821 states, “Any person assessed with any tax administered by the Department of Taxation may, within 90 days from the date of such assessment, apply for relief to the Tax Commissioner. Such application shall be in the form prescribed by the Department and shall fully set forth the grounds upon which the taxpayer relies and all facts relevant to the taxpayer’s contention.” Pursuant to Title 23 of the Virginia Administrative Code (VAC) 10-20-165, a complete appeal must be filed with the Department within 90 days from the date of assessment. In addition, Virginia Code § 58.1-1820 provides that assessments made by the Department are deemed to be made when a written notice of assessment is mailed to the taxpayer’s last known address.
The assessment for the 2018 taxable year was issued on March 15, 2022. The Taxpayers filed the present application for correction with the Department in June 2025, well after the 90 day statute of limitations had expired.
Protective Claims
Virginia Code § 58.1-1824 provides that “[a]ny person who has paid an assessment of taxes administered by the Department of Taxation may preserve his judicial remedies by filing a claim for refund with the Tax Commissioner . . . within three years of the date such tax was assessed.” Virginia Code § 58.1-1824, therefore, expressly limits the right to file a protective claim to cases in which both the filing of the claim and the payment of the assessment occurred within three years of the assessment. See Public Document (P.D.) 86-224 (11/3/1986) and P.D. 24-10 (2/28/2024). In addition, all assessed taxes, penalties, and accrued interest for the year or years subject to the request must be paid in full before a taxpayer may file a protective claim. See 23 VAC 10-20-190 A 1.
In this case, the last day for filing a protective claim for refund was March 15, 2025, three years after the assessment was issued for the 2018 taxable year. The Taxpayers first requested a refund by letter dated March 22, 2025, bearing a postmark date of March 26, 2025. As such, the Taxpayers could not apply for correction of the assessment as a protective claim under Virginia Code § 58.1-1824.
Statute of Limitations for Amended Returns
The general rule is that an amended return must be filed within three years of the original or extended due date, as applicable, to claim a refund. See Virginia Code § 58.1-1823. This code section includes a number of exceptions to the general rule when specific circumstances are present. In this case, two of those circumstances are potentially applicable.
First, under Virginia Code § 58.1-1823 (ii), a taxpayer may file an amended return within 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. The IRS issued a final determination in November 2021, and the United States Tax Court decision was issued in December 2022. In addition, it does not appear that any further litigation occurred in the case. For purposes of Virginia Code § 58.1-1823, the date a decision by the United States Tax Court becomes final is considered the final determination date, provided the case is not appealed further. See Title 23 of the Virginia Administrative Code (VAC) 10-20-180 B 5. Accordingly, the last day to file an amended return based on the federal correction would have been in December 2023.
Alternatively, under Virginia Code § 58.1-1823 (iv), a taxpayer may file an amended return within two years from the payment of an assessment, provided the amended return raises issues related solely to such assessment and that the refund does not exceed the amount of such payment. The assessment at issue was paid in October 2022. Accordingly, the last day to file an amended return would have been in October 2024.
The Taxpayers first requested a refund in March 2025. As such, the Department is unable to treat the refund request as a timely filed amended return under either Virginia Code § 58.1-1823 (ii) or § 58.1-1823 (iv).
CONCLUSION
As discussed above, the Department is limited by statutory periods during which a taxpayer can pursue an administrative remedy with the agency. Based on the facts presented, the Department finds no basis to abate the assessment. In addition, the statutory period during which the Taxpayers could have requested a refund of the tax paid has expired. Accordingly, although the Department empathizes with the Taxpayers’ situation, the Department cannot abate the assessment or grant the Taxpayers’ refund request. Because the assessment has already been paid in full, no further action from the Taxpayers is required.
The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. The public document cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at ***** or *****@tax.virginia.gov.
Sincerely,
Kristin L. Collins
Tax Commissioner
Commonwealth of Virginia
AR/5251.T