Tax Type
Estate Tax
Description
Refund; Date of federal determination; Statute of limitations
Topic
Payment and Refund
Statute of Limitations
Date Issued
09-10-1992
September 10, 1992
Re: §58.1-1821 Application; Estate Tax
Dear************************
This will reply to your letter of November 19, 1991, in which you seek a refund of estate tax for the *******************(the "Taxpayer").
FACTS
The original federal and Virginia estate tax returns for the Taxpayer were timely filed and taxes timely paid. The federal return was completed in accordance with an IRS audit, which the personal representatives of the estate believed incorrectly limited the marital deduction. The matter was litigated in the U.S. Tax Court.
The Tax Court ruled in the estate's favor and a decision was rendered with a recomputation of the tax liability on April 10, 1991. The IRS had until July 10, 1991 to file an appeal. You maintain that, due to an internal transfer in handling the case at the IRS, you were unable to ascertain if an appeal had been filed and did not learn of the final determination until August 10, when you were advised that a refund check would be issued.
An amended Virginia return for refund was filed on September 16, 1991. The department denied the refund request because the amended return was not filed within the applicable limitations period. You ask that the department reconsider its position in view of the circumstances and issue the refund claimed on the amended return.
DETERMINATION
The period for filing an amended return claiming a refund expires three years after the last day prescribed by law for the timely filing of the original return or, if later, 60 days after 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. See Va. Code §58.1-1823. In this case, the amended return claiming a refund was filed more than three years after the due date of the return. Therefore, it is timely filed only if filed within 60 days from the date of final determination of federal tax liability.
Virginia Regulation (VR) 630-1-1823(B)(3) provides that the expiration of the 90-day period within which a petition for redetermination may be filed with the U.S. Tax Court with respect to a statutory notice of deficiency issued by the IRS constitutes a final determination if a petition is not filed with that court. In this case, the appeal period expired on July 10, 1991; sixty days after that date was September 8, 1991. The Taxpayer s amended return claiming a refund was filed on September 16, 1991, after the expiration of the limitations period.
However, the attorney for the Taxpayer encountered problems ascertaining if the determination of federal tax liability was final. The Taxpayer's case, tried by the IRS District Office, was transferred to the IRS National Office for review and consideration in light of a similar decision in another case. The attorney contacted someone with the IRS District Counsel shortly after July 10; this person indicated that an appeal may have been filed by the National Office without immediate notice to the attorney or the District Counsel. This situation existed for four weeks until August 10, when the Taxpayer's attorney was advised by the District Counsel that the IRS would not appeal the case and that a refund check had been authorized by the National Office and the District Counsel. This was the first time the Taxpayer's attorney could confirm that the court decision (and the determination of federal tax liability) was final.
The amended Virginia return claiming a refund was filed within 60 days of the date of Taxpayer's attorney was advised that the IRS would not appeal the Tax Court's decision. In view of the extenuating circumstances, your amended return for refund is accepted as timely filed. A refund will be issued in due course.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/5768P
Rulings of the Tax Commissioner