Could a taxpayer reopen two sales-tax audits to submit records its former bookkeeper had not provided?

Subject

Taxpayer requests the audits be reopened for additional information not all qualify

Plain-English summary

A taxpayer asked Virginia to reopen two sales-and-use-tax audits because its former bookkeeper had not supplied correct information. The taxpayer believed the missing records would reduce both assessments.

Virginia split the result by filing date. The assessment for January 2000 through December 2002 was issued December 24, 2003, so an administrative appeal was due within 90 days, by March 23, 2004. The only appeal correspondence was dated February 15, 2007. That audit was closed to further review.

The appeal for September 2003 through August 2006 was timely. Virginia reopened that audit, allowed additional documentation, and directed the audit staff to schedule a review. Any remaining issues after that review could be appealed.

What this means for you

• Missing records do not extend Virginia's statutory administrative-appeal deadline.
• Track each assessment separately; one audit period may be timely even when another is barred.
• A timely appeal can preserve an opportunity to supplement the audit record and challenge remaining issues later.

Common questions

Did the former bookkeeper's mistake excuse the late appeal?

No. The older assessment remained barred by the 90-day deadline.

Was any audit reopened?

Yes. The later 2003-2006 audit was timely appealed and reopened for documentation review.

Citations and references

• Va. Code § 58.1-1821, 90-day deadline for applying to the Tax Commissioner for relief.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 07-97

Original ruling text

June 27, 2007

Re: § 58.1-1821 Application: Retail Sales and Use Tax

Dear *:

This is in response to your letter submitted on behalf of * (the "Taxpayer"), in which you seek correction of the retail sales and use tax assessments issued for the periods January 2000 through December 2002 and September 2003 through August 2006.

FACTS

The Taxpayer requests that the audits for the aforementioned periods be reopened and that it be allowed to submit additional documentation to the Department for review. TP represents that its previous bookkeeper did not provide the Department with the correct information at the time the audits were conducted. The Taxpayer maintains that this information will result in a reduction in the audit assessments.

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 assessment issued to the Taxpayer for the period January 2000 through December 2002 was dated December 24, 2003. Pursuant to the provisions of Va. Code § 58.1-1821, the Taxpayer was required to file its administrative appeal for this assessment no later than March 23, 2004.

The Department's records indicate your letter dated February 15, 2007 is the only correspondence from the Taxpayer regarding an administrative appeal for this assessment issued on December 24, 2003. This filing is well after the expiration of 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 audit for this period will not be reopened, and the Taxpayer will not be permitted to submit additional documentation to the Department for review.

The appeal filed for the period September 2003 through August 2006 is timely filed. The audit for this period will be reopened and the Taxpayer will be permitted to submit additional documentation to the Department for review. The audit staff will contact the Taxpayer within 30 days from the date of this letter to schedule an appointment, at which time it will provide the Department with its documentation. If any issues remain after the audit staff has completed its review, you may submit an appeal for those issues to the Tax Commissioner.

The Code of Virginia section cited is 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/1-1278052607P