Tax Type
Individual Income Tax
Description
Refunds of tax, statute of limitations
Topic
Payment and Refund
Returns and Payments
Date Issued
05-28-1999
May 28, 1999
Re: Protective Claim: Individual Income Tax
Dear********************
This will reply to your letter filing a protective claim for the refund of your Virginia individual income taxes for taxable years 1992 through 1995. The protective claim was based on the decision of the Virginia Supreme Court in the case of Joseph J. and Sarah G. Mathy v. Department of Taxation. I am addressing this letter to you because the department does not have a power of attorney for your attorney. I apologize for the delay in responding to your letter.
Code of Virginia § 58.1-1824 requires that a protective claim be filed within three years from the last day the taxpayer could have timely filed his return. Your last day to timely file the 1992 return was October 15, 1993, the extended due date that you requested. You would, therefore, have had to file your protective claim for the 1992 return by October 15, 1996. Unfortunately, your protective claim was actually filed on December 6, 1996. Consequently, the statute of limitations expired before you filed a protective claim on the 1992 return.
The case of Mathy v. Department of Taxation was reviewed in the Fairfax County Circuit Court, and the Virginia and United States Supreme Courts [Joseph J. Mathy, et al v. Commonwealth of Virginia Department of Taxation, 253, Va. 356; 483 S.E. 2d 802 (1997), S.Ct. Dkt. 97-412]. The Taxpayer's position was that the District of Columbia's Unincorporated Business Tax was an income tax; therefore, an out-of-state tax credit was allowable pursuant to Code of Virginia § 58.1-332(A). The department's position, however, was that Code of Virginia § 58.1-332(A) specifically excluded the Unincorporated Business Tax from the computation of the out-of-state tax credit.
The Fairfax Circuit Court issued a judgment in favor of the department. The Taxpayer appealed to the Virginia Supreme Court, and again, judgment was made in favor of the department for reasons different from those of the circuit court. The Taxpayer, subsequently, petitioned for a writ of certiorari to the United States Supreme Court. Certiorari, however, was denied.
Accordingly, the Taxpayers' protective claim for refund for the taxable years 1992 through 1995 must now be denied. Should you have any questions regarding this matter, please contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11963N
Rulings of the Tax Commissioner