Could Virginia consider an individual's challenge to corporate-officer assessments filed more than two years after the latest assessment?

Subject

Taxpayer claims he is not a corporate officer and not liable for Corporations bills

Plain-English summary

Virginia converted a corporation's unpaid corporate income, sales and use, and withholding tax liabilities into assessments against an individual under the corporate-officer-liability statute. The individual argued that he had not been an employee or involved in daily operations for years and did not qualify as a corporate officer.

The Tax Commissioner did not decide that issue. The assessments were issued in July, August, and September 2004. Even using the latest assessment date, the 90-day appeal deadline was December 16, 2004. Because the individual's application was dated December 5, 2006, Virginia held it was barred by the limitations period.

What this means for you

• A challenge to a converted corporate-officer assessment must be filed within Virginia's 90-day administrative-appeal period.
• Missing that deadline can prevent review of whether the person actually qualifies as a responsible corporate officer.
• Track the date of every assessment separately and preserve evidence of timely filing.

Citations and references

• Va. Code § 58.1-1813, converted corporate-officer assessments.
• Va. Code § 58.1-1821, 90-day administrative-appeal deadline.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 07-90

Original ruling text

May 25, 2007

Re: § 58.1-1821 Application: Corporate Officer Liability

Dear *:

This will reply to your letter in which you seek correction of converted assessments issued to * (the "Taxpayer").

FACTS

The Department issued numerous assessments to the * (the "Corporation") for corporate income tax, sales and use tax and withholding tax for liabilities owed for taxable periods October 2000 through June 2004. When the Corporation failed to pay the deficiencies, the Department timely assessed the Taxpayer penalties in the amount of the taxes, penalties and interest owed by the Corporation pursuant to Va. Code § 58.1-1813. These assessments were issued to the Taxpayer in July, August, and September 2004.

By letter dated December 5, 2006, the Taxpayer contests the assessments, asserting that he was not an employee or involved in any of the day-to-day operations of the Corporation for a number of years. The Taxpayer claims that he is not a corporate officer as defined in Va. Code § 58.1-1813 and, therefore, he cannot be held liable for the taxes, penalties and interest assessed to the Corporation.

DETERMINATION

Virginia Code § 58.1-1821 provides that "[a]ny person assessed with any tax administered by the Department of Taxation may, within ninety days from the date of such assessment, apply for relief to the Tax Commissioner." [Emphasis added.] In this case, the assessments issued to the Taxpayer were dated July 20, 2004, August 20, 2004, and September 17, 2004. The Taxpayer was required to file an administrative appeal within 90 days after the assessment dates, or by December 16, 2004, for the latest assessment date.

The Taxpayer's administrative appeal is dated December 5, 2006, well after the 90-day limitations period. Therefore, the Taxpayer's application for correction pursuant to Va. Code § 58.1-1821 is barred by the statute of limitations.

The Code of Virginia section cited and other reference documents are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this response, you may contact * in the Department's Office of Policy and Administration, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-1104955190B