78495558.1-535Virginia Decodedhttps://vacode.org2016TaxationTaxes Administered By The Department Of TaxationIncome TaxSetoff Debt Collection ActApplication of funds on deposit1988, cc. 563, 768; 1989, c. 77; 1999, c. 631.Polytechnic Inst. v. Interactive Return Service, Inc.050710626 S.E.2d 4362006-03-03https://www.courtlistener.com/opinion/1058847/polytechnic-inst-v-interactive-return-service-inc/ . . . application to tax refunds, our focus turns to Code § 58.1-535. In doing so, we note that there is . . . <abbr title="Supreme Court of Virginia">SCV</abbr>http://law.lis.virginia.gov/vacode/58.1-535/58.1-3916Counties, cities and towns may provide dates for filing returns, set penalties, interest, etc/58.1-3916/58.1-3918Interest on taxes not paid by following day/58.1-3918//58.1-535/58.1/I/3/21/58.1-53519.2-305.1In addition to the collection remedy provided in this article, if a claimant agency has on deposit any funds which are due to the debtor, the claimant agency may apply such funds to the payment of any delinquent debt which the debtor owes to the claimant agency, provided that the claimant agency first provides written notification to the debtor of its intent to apply the funds against the debt.sectionAA1The contents of the written notification to the debtor shall clearly set forth the basis for the claim to the funds on deposit, the intention to apply the funds against the debt to the claimant agency, and the right of the debtor to contest the validity of the claim before the claimant agency.sectionBB1If as the result of an error by the claimant agency a debtor is denied all or a portion of his funds under the provisions of this section, interest shall be paid by the claimant agency to the debtor at the overpayment rate provided in § 58.1-15 for the time such funds were denied, except that a county, city or town shall pay interest in the manner prescribed in § 58.1-3916 or § 58.1-3918.sectionCC1