Tax Type
Individual Income Tax
Description
Refunds of tax; Statute of limitations.
Topic
Returns and Payments
Date Issued
10-31-1997
October 31, 1997
Re: § 58.1-1821 Application: Individual Income Tax
Dear**************
This is in reply to your letter of June 27, 1997 in which you (the "Taxpayer") request a correction for assessments of additional individual income tax for the 1992 taxable year. I apologize for the delay in responding to your request.
FACTS
The Taxpayer, a Virginia domiciliary resident, was in the military for the 1985 through 1992 taxable years. Monies were withheld from the Taxpayer's paychecks and remitted to Virginia during these years. The Taxpayer failed to file Virginia returns on their due date from 1985 through 1990. In 1992, the Taxpayer filed income tax returns for the 1985 through 1991 tax years and requested refunds for each of these years. The department issued the Taxpayer refunds for the 1988 through 1991 taxable years. The department did not issue refunds for the 1985 through 1987 taxable years on the basis of the statute of limitations for refund claims.
The Taxpayer filed his 1992 Virginia income tax return and offset tax shown on the return in an amount equal to the denied refunds for the 1985 through 1987 taxable years. The department disallowed the offset and issued an assessment. The Taxpayer contends that the statute of limitations for refund claims did not begin to toll until his military discharge pursuant to the Soldiers and Sailors Civil Relief Act. Thus, he was entitled to the refunds for the 1985 through 1987 taxable years which he offset against his 1992 liability.
DETERMINATION
Code of Virginia § 58.1499 (D), copy enclosed, provides that a person may file an amended return for a refund within three years from the last day prescribed by law for the timely filing of the return. Pursuant to this statutory limitation, the department issued refunds for the 1988 through 1991 taxable years. The Taxpayer contends that § 525 of the Soldiers' and Sailors' Civil Relief Act tolls the running of the statutory limitation on filing an amended return until he was discharged from military service. Since the Taxpayer was not discharged until 1992, he asserts that he is entitled to refunds for the 1985 through the 1987 taxable years.
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- 50 U.S.C. Appendix § 525 of the Soldiers' and Sailors' Civil Relief Act Provides that:
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- The period of military service shall not be included in computing any period now or hereafter to be limited by any law, regulation, or order for the bringing of any action or proceeding in any court, board, bureau, commission, department, or other agency of government by or against any person in military service ... whether such course of action or the right or the privilege to institute such action or proceeding shall have accrued prior to or during the period of such service ... (Emphasis Added.)
The tolling of limitations occurs only when there are any actions or proceedings by or against a person who is in the military. A taxpayer must file a return to receive a refund. The determinative question is whether the filing of a tax return constitutes an action or proceeding for purposes of the Soldiers' and Sailors' Civil Relief Act.
An "action or proceeding" refers to a specified case or procedure which is brought before a court, board or government agency. Filing an income tax return is not an action or proceeding which is tolled by § 525. Taxpayers in the military are required to timely file returns and pay their income taxes unless their military service materially impairs their ability to do so. See Soldiers and Sailors Civil Relief Act § 573. Clearly, a military taxpayer should not be rewarded for failing to timely or correctly file his or her income tax returns by having the statute of limitations tolled.
There is no evidence that your failure to timely file your returns was materially impaired by your service in the military. Accordingly, your request for relief must be denied. An updated bill will be issued as shown on the enclosed schedule. Interest has been accrued through the date of the appeal letter. The assessment should be paid in full within 60 days to avoid the accrual of additional interest. Please remit your payment to the attention of **** Virginia Department of Taxation, Office of Tax Policy, P.O. Box 1880, Richmond, Virginia 23218-1880. If additional information is needed, you may contact him at********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12828B
Rulings of the Tax Commissioner