Tax Type
Individual Income Tax
Description
Statute of Limitations, lost refund check
Topic
Taxpayers' Remedies
Date Issued
03-15-1982
March 15, 1982
Re: Claim for Refund, Statute of Limitations
Dear ******************
In your letter of January 25, 1982 you stated that a refund claimed on taxpayer's 1972 return was never received and requested that the Department issue the refund. Because of the long delay in bringing the matter to the attention of the Department there are no administrative or judicial remedies available to you. For administrative convenience I have treated this matter as a § 58-1118 application for correction of an erroneous assessment.
FACTS
Taxpayer's 1972 return was timely filed on or before September 15, 1973 claiming a refund due to overpayment of estimated tax. The return was received by the Department on September 17, 1973 and routinely processed on September 24, 1973. Normally a refund check would have been issued in late September or early October for the amount claimed on the return. There is no indication that the Department disallowed or in any way adjusted the refund claim. Unfortunately the Department cannot now locate the records which would prove whether or not a refund check was actually issued and paid.
Taxpayer made no inquiry concerning the refund until its letter of January 25, 1982, and it was not until February 16, 1982 that the Department received the correct name and taxpayer I.D. No. to enable the Department to locate the file.
In view of the fact that the Department cannot prove whether or not a refund check was issued, the determination that follows is based upon alternative assumptions: (1) that the Department for unknown reasons never issued a refund check; (2) that the refund check was issued by the Department in the normal course of business but was lost in transit to, or by, the taxpayer.
Because taxpayer has twice changed its corporate name since the taxable year in question, and one of the name changes occurred in 1973, the second assumption is quite plausible.
DETERMINATION
Assumption (1): Refund check never issued
The timely filing of the 1972 return was both a self-assessment of the corporate income tax due and an amendment of the estimated tax returns previously filed for the 1972 taxable year.
Under §58-1118.1, as then in effect, the failure of the Department to act within three months upon an amended return claiming a refund is deemed an assessment for the purposes of pursuing administrative remedies under §58-1118 or judicial remedies under §58-1130.
If the Department failed to issue a refund check then the Department's failure to act would have been deemed an assessment of additional tax in the amount of the claimed refund on December 15, 1973.
Under §58-1118 taxpayer's right to administrative relief expired 90 days after the deemed assessment. However the Department has a long established policy of granting administrative relief as long as the taxpayer is entitled to seek judicial relief.
Under § 58-1130, as then in effect, taxpayer's right to seek judicial relief expired on December 31, 1975.
Assumption (2): Refund check issued and lost
If the Department issued a refund check then the Department has exercised its administrative discretion involved in assessment of taxes. Taxpayer's right to relief depends upon general law as to whether or not the Commonwealth of Virginia is required to replace the lost check.
§ 2.1-223.1 provides that any pecuniary claim against the Commonwealth shall be presented to the head of the Department involved (in this case the State Tax Commissioner) or to the Comptroller. §8.01-255 provides that any such claim shall be barred unless presented to the comptroller or other authorized person no later than 5 years after such claim shall arise.
A claim for a lost check arises when the check is lost. Even if it is assumed that such a claim does not arise until taxpayer knows, or has reason to know, that the check is lost, §58-1118.1 creates a presumption that taxpayer has reason to know something is amiss if it has received no communication from the Department within three months after the 1972 return is filed.
In any event taxpayer did not contact either the Department of Taxation or the Comptroller until more than eight years after the claim for a lost refund check arose.
I therefore deny your request for a refund, or in the alternative, your request to have the refund check re-issued.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner