Does a notice saying a taxpayer plans to appeal preserve Virginia's 90-day tax-appeal deadline if it gives no grounds or supporting facts?

Plain-English summary

The taxpayer did not file a Virginia resident return for 2014, so the Department issued an assessment based on IRS information and the best information available. She sent a letter saying she would file a return, but it did not state grounds for contesting the assessment or facts supporting her position.

Virginia law required a complete appeal within 90 days after the assessment notice was mailed. The Department treated her letter only as a notice of intent and warned that a complete submission still had to arrive by the deadline. The assessment was dated July 5, 2018, making the deadline October 3, 2018. No complete appeal arrived, so a later application for correction was barred.

Missing the appeal deadline did not stop the Department from seeking the correct tax amount. Because the original assessment was an estimate and was presumed correct until rebutted, the Commissioner gave the taxpayer 30 days to file the actual 2014 return. The Department would process it and adjust the assessment; without it, the estimate would stand and collection would resume.

What this means for you

Taxpayers receiving a Virginia assessment

A placeholder letter is not enough. Within 90 days, identify the grounds for relief and provide all relevant facts in the form required by the Department.

Nonfilers assessed from third-party data

File the missing return even if the formal appeal deadline has passed. A return can give the Department better information to adjust an estimated liability, but it does not revive a time-barred appeal.

Common questions

Q: When is an assessment treated as made?
A: When the written assessment notice is mailed to the taxpayer's last known address.

Q: What made the appeal incomplete?
A: It stated no grounds for contesting the assessment and supplied no relevant facts.

Q: Could the assessment still change after the appeal deadline?
A: Yes, if the taxpayer supplied the requested return and it showed a more accurate liability; the formal appeal itself remained barred.

Citations and references

• Va. Code § 58.1-1821 and 23 VAC 10-20-165 (complete appeal within 90 days)
• Va. Code § 58.1-1820 (mailing date of assessment)
• Va. Code § 58.1-111 (best-information assessment)
• Va. Code § 58.1-205 (presumption that assessment is correct)

Subject

Statute of Limitations

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-218

Original ruling text

December 28, 2018

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, 2014.

FACTS

The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a 2014 Virginia resident individual income tax return. Subsequently, an assessment was issued. The Taxpayer filed an appeal, stating that she would file a return.

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 Virginia Code § 58.1-1821 and Title 23 of the Virginia Administrative Code (VAC) 10-20-165, a complete appeal must be filed with the Department within 90 days from the date of assessment. In addition, Virginia 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 his last known address.

Because the Taxpayer’s appeal did not set forth any grounds upon which she was relying to contest the assessment or any facts relevant to her contention, the Department notified the Taxpayer by letter dated September 21, 2018, that it was treating her letter only as a notice of intent to appeal. The Department also informed the Taxpayer that she had 90 days from the date of the assessment to file a complete appeal.

In this case, the Department issued the assessment on July 5, 2018. Thus, based on the provisions of Virginia Code § 58.1-1821, the Taxpayer was required to file an administrative appeal by October 3, 2018. To date, the Taxpayer has not filed a complete appeal. Therefore, any application of correction the Taxpayer may now submit as to the 2014 assessment is barred by the statute of limitations.

Assessment Based on Available Information

T he assessment at issue was made based on the best information available to the Department pursuant to Virginia 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 2014 taxable year to reflect more accurately 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 (if any) 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/1822.M