Did notices of intent and information requests preserve appeals of Virginia nonfiler assessments without complete appeals filed within 90 days?

Subject

Failure to file income tax returns.

Plain-English summary

Virginia held that the taxpayer never completed timely appeals for either assessment. Federal information showed income for 2005 and 2006. When the taxpayer did not file Virginia returns or adequately explain why the income was not taxable, the Department assessed tax.

The 2005 assessment was issued July 14, 2008, and the 2006 assessment July 28, 2009. Although the taxpayer sent a notice of intent and later correspondence, Virginia had not received complete appeals setting out the grounds and relevant facts within 90 days.

The taxpayer also claimed Virginia improperly received the IRS information, but supplied no objective evidence that it was incorrect or improperly obtained. Both assessments remained due.

What this means for you

• A notice of intent or records request is not necessarily a complete administrative appeal.
• Each assessment has its own 90-day appeal period.
• Rebut federal-source information with objective evidence, not unsupported assertions.

Citations and references

• Va. Code § 58.1-1821.
• 23 VAC 10-20-165.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 11-31

Original ruling text

February 28, 2011

Re: § 58.1-1821: Individual Income Tax

Dear *:

This will reply to your letters concerning the Virginia individual income tax assessments issued to * (the "Taxpayer") for the taxable years ended December 31, 2005 and 2006. I apologize for the delay in responding to your letters.

The Department received information from the Internal Revenue Service (IRS) indicating the Taxpayer had income for the 2005 and 2006 taxable years. The Department requested that the Taxpayer file the proper Virginia income tax return or provide an explanation concerning why his income was not taxable. When an adequate response was not received, the Department issued assessments for the taxable years at issue, as provided in the Department's letters.

The Taxpayer requested information concerning the records provided by the IRS. Further, he asserts that the Department's request for return is in violation of the Information Practices Act. The Department provided the requested information by letters dated July 26, 2009.

Virginia Code § 58.1-1821 states, "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. Such application shall be in the form prescribed by the Department and shall fully set forth the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention."

The individual income tax assessment for the 2005 taxable year, cited in your notice of intent to appeal on August 1, 2008, was issued to the Taxpayer on July 14, 2008. The individual income tax assessment for the 2006 taxable year, cited in your appeal on August 19, 2009, was issued to the Taxpayer on July 28, 2009. Pursuant to Va. Code § 58.1-1821 and Title 23 of the Virginia Administrative Code 10-20-165, a complete appeal was required to be filed with the Tax Commissioner within ninety days after the date of each respective taxable year assessment.

As of the date of this letter, complete appeals for the 2005 and 2006 taxable years, detailing the grounds upon which the Taxpayer relies and all relevant facts, have not been received. Pursuant to Va. Code § 58.1-1821, the Taxpayer's appeals to the Tax Commissioner are barred by the statute of limitations.

Finally the Taxpayer claims the Department illegally received tax information from the IRS. The Taxpayer has provided no objective evidence to show that the information from the IRS is incorrect or improperly obtained.

Accordingly, the Virginia income tax assessments issued for the 2005 and 2006 taxable years are correct and remain due and payable. Payment of the outstanding balance, as shown on the enclosed schedule, should be remitted within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *. If payment is not received within the allotted time, additional interest will accrue and collection action will resume on the outstanding balance.

The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department of Taxation's web site. If you have any questions about this determination, please contact * at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-3937696455.E