I missed the 90-day deadline to appeal my corporate tax assessment because we'd just been acquired, moved offices, and then hit a pandemic shutdown -- can Virginia still hear my appeal?

Plain-English summary

A corporation filed Virginia corporate income tax returns for taxable years ending March 2010 through 2012, reporting intercompany intangible expense add-backs. On audit, the Department increased those add-backs to match the amounts reported on the corporation's federal return, and issued assessments on December 12, 2019. The corporation wanted to contest the increase — arguing, much like the substantive dispute in this corpus's companion ruling P.D. 24-125, that part of the added-back payments represented research expenses not subject to the add-back, and that it was entitled to a full statutory exception. But it didn't file its application for correction until June 18, 2020 — over six months, and well past the 90-day deadline.

The 90-day rule, and when the clock starts. Virginia Code § 58.1-1821 gives a taxpayer only 90 days from the date of an assessment to apply for relief with the Tax Commissioner, and 23 VAC 10-20-165 requires that appeal to be a complete filing within that window. Under Virginia Code § 58.1-1820, an assessment counts as "made" — starting the 90-day clock — when written notice is mailed to the taxpayer's last known address, regardless of whether the taxpayer actually receives it.

Why the corporation's explanations didn't help. The corporation offered three reasons for the delay: (1) it had recently been sold to another company, causing a transition among tax personnel; (2) its office had relocated, so the mailed assessments were never received; and (3) a pandemic-related mandatory shutdown later prevented personnel from retrieving notices. The Department rejected all three. It had fulfilled its statutory obligation by mailing the assessments to the corporation's last known address on file — and critically, the corporation hadn't told the Department about the sale or the new address until February 2020, months after the December 2019 mailing. The pandemic explanation failed for an even simpler reason: the assessments were issued well before any mandated shutdown even began. With no basis to extend the 90-day period, the Department couldn't reach the merits of the add-back dispute at all — the case was dismissed on timeliness alone.

What this means for you

Corporations undergoing a sale, merger, or office relocation

Update your address of record with the Department of Taxation immediately when it changes — the 90-day appeal clock runs from when the Department mails a notice to whatever address it has on file, not from when you actually see it. A late address update, even if made in good faith during a business transition, won't excuse a missed deadline for notices mailed beforehand.

Anyone missing an appeal deadline due to disruptive circumstances (M&A, relocation, force majeure events)

Virginia's 90-day deadline under § 58.1-1821 is strictly enforced; sympathetic circumstances generally won't extend it, especially where the assessment predates the disruptive event or the taxpayer could have kept its address current.

Businesses with a substantive tax dispute they want the Department to actually decide

File your application for correction well within 90 days of the assessment date — missing the deadline means the Department won't even reach the merits of your argument, however strong it might otherwise be.

Common questions

Q: When does Virginia's 90-day appeal deadline start running?
A: From the date the Department mails the assessment notice to your last known address on file — not from when you actually receive or open it.

Q: Does being acquired, relocating, or a shutdown excuse a late appeal?
A: Generally no, especially if you hadn't updated your address with the Department before the notice was mailed, or if the assessment predates the disruptive event, as was true here.

Q: What happens if my appeal is filed after the 90-day window?
A: The Department will not address the substance of your dispute at all — the appeal is dismissed on timeliness grounds regardless of the merits.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-1821 — 90-day deadline to apply to the Tax Commissioner for correction of an assessment
• Va. Code § 58.1-1820 — an assessment is deemed made when notice is mailed to the taxpayer's last known address
• 23 VAC 10-20-165 — a complete appeal must be filed within 90 days of the assessment date

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 24-122

Original ruling text

November 18. 2024

Re: § 58.1-1821 Application: Corporate Income Tax

Dear *:

This will reply to your letter in which you seek correction of the corporate income tax assessments issued to * (the “Taxpayer”) for the taxable years ended March 31, 2010, through 2012.

FACTS

The Taxpayer filed Virginia corporate income tax returns for the taxable years at issue, on which it reported intercompany intangible expense add-backs. Under audit, the Department increased the amounts of the add-backs to correspond to amounts reported on the Taxpayer’s federal income tax return. The Taxpayer filed an application for correction, contending that a portion of the payments added back by the Department represented research expenses not subject to the add-back and it was entitled to a full exception to the add-back as permitted by the plain language of the statute.

DETERMINATION

Virginia Code § 58.1-1821 states, “[A]ny 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. 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 their last known address.

The assessments were issued on December 12, 2019, and the Taxpayer’s application for correction was filed on June 18, 2020, long after the 90-day time period for filing an application for correction under Virginia Code § 58.1-1821 had expired.

The Taxpayer acknowledges that it did not timely file its application for correction but believes that the Department should address its application for the following reasons: 1) it was sold to another company and there was a transition of tax personnel; 2) the office was relocated and the assessments were not received; and 3) personnel could not retrieve the notices because of a mandated pandemic shutdown.

The Taxpayer did not notify the Department of the sale or subsequent address change until February 2020, after the assessments had been mailed. While it is unfortunate that the Taxpayer failed to receive the assessments, the Department fulfilled its statutory obligation by mailing the assessments to the Taxpayer’s last known address. Further, the assessments were issued well before the mandatory shutdown. Accordingly, the Department finds no basis to extend the 90-day time period and thus cannot address the Taxpayer’s application for correction.

The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at or email at **.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

AR/3474.B