Can a Virginia taxpayer challenge old nonfiler assessments and recent self-reported tax bills with a general statement that the amount owed is disputed?

Plain-English summary

An individual appealed Virginia income-tax assessments for 2006, 2007, 2009, 2010, 2011, 2017, and 2018 by a letter postmarked September 12, 2019. The older years involved best-information assessments after the taxpayer did not file returns or respond to Department requests. For 2017 and 2018, he filed resident returns but did not pay the self-reported liabilities.

The 90-day appeal deadline left the Department with jurisdiction only over assessments issued on or after June 14, 2019 -- the 2017 and 2018 bills. The older assessments, issued between 2009 and 2015, could not be reviewed through this appeal.

The recent-year appeal also failed because it was incomplete. Saying only that the amount owed was disputed did not identify each error, relevant facts, requested remedy, or controlling authority as required by 23 VAC 10-20-165. The taxpayer had signed returns reporting those liabilities himself.

All assessments remained due. The Department nevertheless gave the taxpayer 30 days to file the missing older returns or amended 2017-2018 returns, with supporting documents. It would process them and adjust assessments as warranted.

What this means for you

File administrative appeals within 90 days and explain the actual errors. For a best-information assessment, filing the missing return may still establish the correct liability even when the appeal deadline has passed. For self-reported tax, use an amended return if the original return was wrong.

Common questions

Which assessments were timely appealed? Only the 2017 and 2018 assessments fell within 90 days.

Why was the recent-year appeal incomplete? It lacked alleged errors, grounds, facts, requested relief, and legal authority.

Could the liabilities still change? Yes, if the taxpayer timely submitted missing or amended returns that showed different amounts.

Citations and references

• Va. Code § 58.1-1821 -- 90-day appeal period.
• Va. Code § 58.1-111 -- best-information assessments.
• 23 VAC 10-20-165 A and D -- complete-appeal requirements.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 20-45

Original ruling text

March 18, 2020

Re: § 58.1-1821 Appeal: Individual Income Tax

Dear *:

This will respond to your letter in which you seek correction of the individual income tax assessments issued to * (the “Taxpayer”) for the taxable years ended December 31, 2006, 2007, 2009, 2010, 2011, 2017, and 2018.

FACTS

For the 2006, 2007, 2009, 2010, and 2011 taxable years, the Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file Virginia individual income tax returns. The Department requested information to verify whether the Taxpayer was subject to Virginia income tax. When responses were not received, the Department’s assessments for the 2006, 2007, 2009, 2010, and 2011 taxable years were issued between June 2009 and March 2015.

For the 2017 and 2018 taxable years, the Taxpayer filed Virginia resident individual income tax returns with the Department but did not provide payment of the corresponding tax liability. The Department issued assessments for the reported liability plus penalty and interest. The Taxpayer appeals the assessments for all of the taxable years at issue, stating that he is contesting the amount owed.

DETERMINATION

Statute of Limitations

Virginia Code § 58.1-1821 states, “Any person assessed with any tax administered by the Department of Taxation may, within 90 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 taxpayers 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.

The Taxpayer filed this appeal with the Department by letter postmarked September 12, 2019. Accordingly, the Department has jurisdiction to address only those assessments which were issued on and after June 14, 2019. The only assessments issued after that date are the assessments for the 2017 and 2018 taxable years.

Appeal Requirements

Title 23 of the Virginia Administrative Code (VAC) 10-20-165 A defines a complete appeal as “an administrative appeal containing sufficient information as prescribed in subsection D of this section, 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.”

Title 23 VAC 10-20-165 D provides that:

1. In order to be complete, an administrative appeal shall contain the following: … (e) Remedy sought; (f) A statement … 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 (g) Controlling legal authority (statutes, regulations, rulings of the Tax Commissioner, court decisions, etc.) upon which the taxpayer’s position is based.

The Taxpayer filed Virginia individual income tax returns for the 2017 and 2018 taxable years. The Taxpayer signed those returns, declaring that to the best of his knowledge the information on those returns was true, correct, and complete. Because the Taxpayer did not provide payment of the self-reported liabilities, the Department issued assessments for the liabilities, penalties, and interest. The Taxpayer now contests the Department’s assessments, without providing the information or documentation required under Title 23 VAC 10-20-165.

CONCLUSION

The Department cannot consider the Taxpayer’s appeal of the assessments for the 2006, 2007, 2009, 2010, and 2011 taxable years because the appeal was filed beyond the relevant statute of limitations. Further, the Taxpayer’s form contesting the 2017 and 2018 assessments does not constitute a complete appeal. Accordingly, the assessments at issue are correct and remain due and payable. The Taxpayer will receive an updated bill which will include accrued interest to date.

Because the Taxpayer never filed the required returns, the assessments for the 2006, 2007, 2009, 2010, and 2011 taxable years were based off the best information available to the Department pursuant to Virginia Code § 58.1-111. If the Taxpayer continues to believe that the assessments are not correct, then he should file the appropriate Virginia individual income tax returns and provide any required supporting documentation. The Taxpayer self-reported his tax liability for the 2017 and 2018 taxable years. If he continues to believe there are errors, then he should file the appropriate amended Virginia individual income tax returns and provide any required supporting documentation.

The Taxpayer should submit any returns within 30 from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23161-7203, Attention: *. Any returns will be reviewed and processed, and the relevant assessments will be adjusted as warranted. If no returns are received within the allotted time, the assessments will be considered correct and collection action may 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/2167C