Was a Virginia appeal timely when the assessment went to the IRS-reported last known address and the taxpayer learned of it later?

Subject

Late appeal barred, but estimated tax could be adjusted by return

Plain-English summary

Virginia barred the appeal because the 90-day period began when the assessment was mailed to the taxpayer's last known address, not when she later learned of it. The November 7, 2012 assessment produced a February 5, 2013 deadline, but the appeal was filed March 26.

The assessment had been estimated from IRS information after the taxpayer did not answer a residency inquiry. Although the administrative appeal was untimely, Virginia gave her 30 days to file a 2009 return. The Department would process that return and adjust the estimated assessment accordingly; otherwise collection would resume.

What this means for you

• Keep addresses current with tax agencies and respond to information requests.
• Mailing to the last known address can start the appeal clock even without actual receipt.
• A late merits appeal does not always prevent filing the missing return used to correct an estimate.

Citations and references

• Va. Code §§ 58.1-1820, 58.1-1821, 58.1-111, and 58.1-205.
• 23 VAC 10-20-165.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 14-100

Original ruling text

July 2, 2014

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, 2009. I apologize for the delay in responding to your letter.

FACTS

The Department received information from the Internal Revenue Service (IRS) that tax documents for the 2009 taxable year were sent to the Taxpayer at a Virginia address. The Department requested additional information from the Taxpayer in order to determine if her income was subject to Virginia income tax. When the Taxpayer did not respond to the information request, the Department concluded that the Taxpayer was a resident of Virginia and issued an assessment. The Taxpayer appeals the assessment, contending that she was not a resident of Virginia during the taxable year at issue.

DETERMINATION

Appeal — Statute of Limitations

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 (VAC) 10-20-165, a complete appeal must be filed with the Tax Commissioner within 90 days from the date of assessment. In addition, Va. Code § 58.1-1820 Provides that assessments made by the Department are deemed to be made when a written notice of assessment is mailed to a taxpayer at her last known address.

In this case, the Department issued the assessment on November 7, 2012. Thus, based on the provisions of Va. Code § 58.1-1821, the Taxpayer was required to file a complete administrative appeal by February 5, 2013.

The Taxpayer contends she did not receive the notice of assessment because it was mailed to an address that she has not used in many years. She asserts that her appeal was filed within 90 days from the time she first became aware of the assessment and should be accepted by the Department.

Virginia Code § 58.1-1820 provides that an assessment made by the Department is deemed to be made when a written notice of assessment is mailed to a taxpayer at their last known address. The Department mailed the 2009 assessment to the address listed on the information provided by the IRS. The Taxpayer did not file her appeal until March 26, 2013, well after 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.

Assessment Based on Available Information

The assessment at issue was made based on the best information available to the Department pursuant to Va. Code § 58.1-111. Virginia Code § 58.1-205 provides that in any proceeding relating to the interpretation of the tax laws of Virginia, an "assessment of a tax by the Department shall be deemed prima facie correct." As such, the burden of proof is on the Taxpayer to show she was not subject to income tax in Virginia.

The Taxpayer may have additional information that more accurately reflects her Virginia taxable income. Accordingly, the Taxpayer is hereby requested to file a Virginia income tax return for the 2009 taxable year to more accurately reflect her Virginia income tax liability.

The Taxpayer should file the requested return within 30 days of the date of this letter. Mail the return and payment for the corresponding liability to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23218-7203, Attention: *. Once the return is received, it will be processed and the assessment will be adjusted accordingly. If the return is not filed within the allotted time, the assessment will be considered to be correct and collection action will resume.

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

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-5366600663.M