Did a letter saying Virginia's nonfiler assessment was overstated constitute a complete administrative appeal without the promised return and proof?

Subject

Virginia resident who failed to file an individual income tax return

Plain-English summary

Virginia found the nonfiler's administrative appeal incomplete because it did not explain or prove why the 2004 assessment was overstated. The taxpayer filed a timely letter but supplied neither the promised Virginia return nor supporting documents.

A complete appeal had to identify each alleged error, state the supporting facts and grounds, and provide controlling legal authority. The assessment remained presumed correct because the taxpayer presented no objective evidence of the correct liability.

The Department nevertheless allowed 30 days for additional substantiating information before proceeding on the revised bill.

What this means for you

• A timely placeholder letter may not be a complete Virginia administrative appeal.
• Include the missing return, calculations, supporting records, alleged errors, facts, and legal basis.
• An assessment remains presumed correct until the taxpayer supplies contrary evidence.
• Respond promptly to Department requests for information.

Common questions

Q: Was the appeal letter filed within 90 days?
A: Yes, but timeliness alone did not make it complete.

Q: What was missing?
A: The promised return, a detailed explanation of errors, relevant facts, legal authority, and objective evidence.

Q: Was there another chance to submit proof?
A: Yes. The Department allowed 30 days from the ruling date.

Citations and references

• Va. Code §§ 58.1-1821 and 58.1-205.
• Administrative Appeal Guidelines § 4.2 A.
• P.D. 06-140 (Nov. 29, 2006).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 08-126

Original ruling text

June 26, 2008

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek correction of the individual income tax assessment issued to * (the "Taxpayer") for the taxable year ended December 31, 2004.

FACTS

The Taxpayer was a Virginia resident who failed to file an individual income tax return for 2004. The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer had income for the 2004 taxable year and issued an assessment.

The Taxpayer appeals the assessment, contending the assessment is overstated. In her appeal, the Taxpayer indicates that a 2004 Virginia income tax return and other supporting documentation would be provided that would reduce the assessment.

DETERMINATION

Virginia Code § 58.1-1821 provides, "Any 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." The Administrative Appeal Guidelines for Tax Assessments Issued by the Virginia Department of Taxation (the "Guidelines") § 4.2 A, mandate that a taxpayer file a complete appeal within the 90-day limitations period. See Public Document (P.D.) 06-140 (11/29/2006). A complete appeal means an administrative appeal containing sufficient information so that the grounds upon which the taxpayer relies in contesting an assessment are fully set forth to allow the Tax Commissioner to make an informed final determination.

In this case, an assessment was issued on September 27, 2007, and the Taxpayer filed an administrative appeal on October 26, 2007. Other than the assertion that the assessment is overstated based on information that the Taxpayer would later provide, the Taxpayer's correspondence provides no detailed explanation as to the basis of the appeal. Further, the information referenced in the Taxpayer's letter has not been received. Under the Guidelines § 4.2 A, a complete appeal must include:

6. A statement signed by the taxpayer or duly appointed or authorized agent or attorney setting forth each alleged error in the assessment, the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention; and 7. Controlling legal authority (statutes, regulations, rulings of the Tax Commissioner, court decisions, etc.) upon which the taxpayer's position is based.

By letter dated February 8, 2008, a member of the Appeals and Rulings Unit requested information to substantiate the Taxpayer's appeal. No such information has been provided. As such, the letter submitted by the Taxpayer cannot be considered to constitute a complete administrative appeal.

Virginia Code § 58.1-205 provides that any assessment of a tax by the Department shall be deemed prima facie correct. The Taxpayer has not shown that the assessment issued by the Department is incorrect. Moreover, she has failed to provide objective evidence as to the correct liability for the 2004 taxable year. The Department will, however, review any additional information the Taxpayer can provide that substantiates her claim, provided it is received within 30 days of the date of this letter.

A revised bill, with interest accrued to date, will be mailed shortly. The information requested or payment of the assessment should be sent to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attn: *.

The Code of Virginia sections and public document cited, along with other reference materials, 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 * at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-1868481486.E