Statutes of Limitations Overview

• Legal statutes of limitations provide timeframes in which parties can pursue legal actions. After the statute of limitations period expires, then claims are time-barred. Virginia's tax code requires the Department of Taxation to collect interest payments when taxpayers fail to pay their taxes by the state's annual tax deadline. Interest is not discretionary in Virginia, and the Department of Taxation must assess and collect interest payments at 2 percent above the federal Treasury's rates.
  
  

Three-Year Limitations Law

• The Department of Taxation has three years to assess income taxes. The limitations period starts on the Commonwealth's annual filing date for annual filers. Taxes are due on the first day of May unless that day is a weekend day or holiday. For taxpayers who pay estimated quarterly tax payments, the Department of Taxation has three years from each quarter the incomes taxes were originally due.
  
  

Unlimited Limitations Periods

• The Department of Taxation can collect taxes for more than three years from taxpayers who intentionally filed false tax returns or intentionally failed to disclose income. The Commonwealth can pursue late tax payments from these taxpayers for unlimited periods. Similarly, the Commonwealth can collect tax payments indefinitely from taxpayers who did not file tax returns. The Commonwealth recommends that residents file state tax returns regardless of their tax liabilities. Taxpayers who failed to file tax returns are not entitled to receive tax refunds and are subject to indefinite limitations laws.
  
  

IRS Amendments

• Taxpayers who adjust their federal tax returns must also adjust their state tax returns, if necessary. Under the Virginia Code, taxpayers must file Virginia tax return amendments if they filed federal amendments. The Commonwealth can pursue late tax payments from taxpayers who filed federal amendments for one year. After one year, the Department of Taxation has no legal right to demand payment from delinquent taxpayers who adjusted their federal tax returns. The Commonwealth has one additional year to demand reimbursement from taxpayers who received incorrect refund checks. Residents can amend their state tax returns by filing VA Form 760, Amended Return.
  
  

Considerations

• Since tax laws can frequently change, you should not use this information as a substitute for legal or tax advice. Seek advice through a certified accountant or tax attorney licensed to practice law in your jurisdiction.