Tax Type
Estate Tax
Description
Statute of limitations; Refund of estate taxes
Topic
Payment and Refund
Date Issued
09-12-1995
September 12, 1995
Re: § 58.1-1821 Application: Estate Tax
Dear****************
This will reply to your letter of April 6, 1995, in which you request that the department reconsider its position on a refund of estate taxes on behalf of the Estate of **********, (the"Taxpayer").
FACTS
The Taxpayer's original Virginia estate tax return was timely filed, and the tax thereon paid. After an audit by the Internal Revenue Service (IRS), the Taxpayer requested a Virginia estate tax refund due to adjustments made by the IRS. The refund request was timely filed with the department, and the requested Virginia refund was issued.
Subsequently, the Taxpayer became liable to pay a large sum due to litigation, which reduced the gross estate. The Taxpayer submitted a refund claim to the IRS, and on October 26, 1994, the IRS notified the Taxpayer that it had agreed to the refund request as submitted. The Taxpayer received this determination on October 28, 1994. This notification constituted a final determination within the meaning of Virginia Regulation (VR) 630-1-1823 B. 2. (copy attached).
The Taxpayer's representative failed to notify the department of the changes within the statutory 90 day period required for refund claims. After the 90 day refund period had expired, the Taxpayer's representative submitted a claim for the Virginia refund, which was denied since it was out of statute. The Taxpayer's representative now asks that the department reconsider its position in view of a number of circumstances enumerated in his letter.
DETERMINATION
Under Code of Virginia § 58.1-1823, a taxpayer has three years from the date a return is due, or 90 days from the final determination of a federal change or correction, whichever is later, to file an amended return to request a refund. This is consistent with Code of Virginia § 58.1-31 1, which requires a taxpayer audited by the IRS to file an amended return and report the change within 90 days.
The Taxpayer in this case did not file an amended return until February 6, 1995. This is clearly not within the 90 day statute. As such, the department does not have the necessary statutory authority to issue a refund.
Further, the Taxpayer's representative states that the IRS made representations that it would notify the department of the changes, and that the Virginia refund would be automatic. Although the department receives information from the IRS regarding certain IRS adjustments, the receipt of this information is seldom within the statutory 90 day period. In addition, there is no guarantee that we will receive information regarding all IRS adjustments, especially where the estate's executor is not a Virginia resident. In this case, the department did not receive any information from the IRS regarding the change. Although we are sympathetic to your situation, reliance on the advice given by the IRS does not override the statutory restrictions placed on the department with respect to refunds.
It is noted that you requested a conference if needed to resolve this matter. As we have already discussed with you, the law is clear on this issue. Thus, a ruling has been issued without a conference. However. should you have any additional questions, please contact***********at*******.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/9580P
Rulings of the Tax Commissioner