Could a taxpayer challenge a Virginia sales-tax assessment after the 90-day appeal deadline and avoid the post-amnesty penalty?

Plain-English summary

Virginia refused to consider the taxpayer's sales-tax appeal because it was filed after the 90-day statutory deadline. The assessment was dated September 6, 2012, so a complete appeal was due December 5, 2012. The Department's records showed that the only appeal correspondence arrived April 16, 2013.

The Department also upheld the 20% post-amnesty penalty added after the assessment remained unpaid. Although this was the Department's first sales-and-use-tax audit of the taxpayer, the audit had included a fraud penalty for underreported sales exceeding 50%, and no timely appeal established that any liability was contested. The taxpayer therefore did not meet all four conditions for avoiding or later waiving the penalty.

What this means for you

• Count Virginia's administrative-appeal period from the assessment date.
• A complete appeal must reach the Tax Commissioner within the statutory period; late correspondence does not preserve the claim.
• Penalty relief can require every listed condition, not merely a first audit.
• Paying or contesting the undisputed and disputed portions on time can matter under the amnesty rules described in the determination.

Common questions

Q: When was the appeal due?
A: December 5, 2012, 90 days after the September 6 assessment.

Q: When did the Department receive the appeal?
A: April 16, 2013.

Q: Why did the post-amnesty penalty remain?
A: The taxpayer did not satisfy all four stated conditions, including the no-penalty and timely-contest requirements.

Citations and references

• Va. Code §§ 58.1-1821 and 58.1-1840.1 F 1.
• 23 VAC 10-20-165.
• Virginia Public Document 09-140, Virginia Tax Amnesty Guidelines.

Subject

Statute of limitations not met to file an appeal

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 13-99

Original ruling text

June 11, 2013

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

Dear *:

This will reply to your letter in which you seek correction of the retail sales and use tax assessment issued to * (the "Taxpayer") for the audit period August 2006 through July 2012.

Timely Filing of Appeal

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."

Pursuant to Va. Code § 58.1-1821 and Title 23 of the Virginia Administrative Code 10-20-165, a complete appeal must be filed with the Tax Commissioner within ninety days from the date of assessment. In this case, the assessment issued to the Taxpayer is dated September 6, 2012. Based on the provisions of Va. Code § 58.1-1821, the Taxpayer was required to file a complete administrative appeal by December 5, 2012.

The Department's records indicate your letter received by the Department on April 16, 2013 is the only correspondence from the Taxpayer regarding an administrative appeal of the assessment at issue. 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.

Post-Amnesty Penalty

In accordance with Va. Code § 58.1-1840.1 F 1 and section VI of P.D. 09-140 (9/28/09), the Virginia Tax Amnesty Guidelines, a 20% post-amnesty penalty was added to the assessment on December 17, 2012 for non-payment of the assessment within the 30-day period allowed for payment of the assessment.

Pursuant to subsection VI (6) of the amended Virginia Tax Amnesty Guideline, the post-amnesty penalty does not apply to:

Any assessment generated from a field audit on of a business for an amnesty eligible period, provided that the audit is TAX's first audit of the taxpayer, no penalty has been applied to the tax deficiency, any uncontested liability is paid with 30 days from the date of the assessment, and payment for any contested liability remaining upon resolution of an appeal under Va. Code §§ 58.1-1821 or 58.1-1825 is paid within 30 days from the date of the Tax Commissioner's or the court's final determination.

The Taxpayer did not meet all four conditions to avoid the post-amnesty penalty or to have it waived after it is imposed. This audit was the Department's first audit of the Taxpayer for sales and use tax purposes. Fraud penalty was initially assessed in the audit for underreported sales by more than 50%. The Taxpayer's appeal was not filed within the 90-day statutory time period. By not filing the appeal, the Taxpayer never established that it was contesting all or a portion of the liability at issue. Accordingly, the post-amnesty penalty of * is due and payable. An updated bill, with interest accrued to date, will be issued to the Taxpayer and should be paid within 30 days.

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

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-5377635923.T