I appealed my Virginia sales tax audit assessment by disputing the audit method, but the Department closed my case without addressing it — why?

Plain-English summary

A company that provides glass for automobiles, replacement windows, and storefronts — and also installs commercial doors and shower enclosures — was audited for October 2019 through November 2022. The audit found untaxed sales and purchases and assessed tax, penalty, and interest. The taxpayer filed an application for correction, but its letter only said it disputed "the audit method and findings" in general terms.

That wasn't enough. Virginia Code § 58.1-1821 gives a taxpayer 90 days from the date of assessment to apply for relief from the Tax Commissioner, but the regulation implementing it, 23 VAC 10-20-165, says an incomplete appeal — or even a notice of intent to appeal — does not satisfy or extend that 90-day window. To count as a "complete appeal," the filing must fully set out: (1) the specific errors alleged in the assessment, (2) the grounds the taxpayer relies on, (3) all facts relevant to the taxpayer's position, and (4) the legal authority (statutes, regulations, Tax Commissioner rulings, or court decisions) supporting that position.

The taxpayer's correspondence identified no specific error in the assessment and cited no legal authority at all. Because of that, the Department concluded a complete appeal was never filed within the statutory window. The case was closed, the assessment remains outstanding, and an updated bill with interest accrued to date would be mailed — with no further interest accruing if the taxpayer paid within 30 days of that bill.

What this means for you

Businesses appealing a Virginia tax assessment

Disagreement alone doesn't preserve your appeal rights. Saying you dispute "the audit method" or that a bill is wrong, without identifying what specifically is wrong and why it's wrong under the law, is legally the same as filing nothing — the Department will close the case once the 90 days run, no matter how promptly you wrote in.

Accountants and tax professionals drafting an appeal letter

Build the letter around 23 VAC 10-20-165 D's checklist: name each disputed item or category, state the specific error, lay out the supporting facts, and cite the statute, regulation, ruling, or case that backs the position. A one-paragraph objection — even a timely one — will not stop the clock.

If you've already sent a vague letter

There's no cure once the 90 days expire; the reconsideration process (addressed in the companion ruling P.D. 25-28, discussed elsewhere in this library) does not revive a filing that was never complete to begin with. If time remains, supplement your letter immediately with specifics before the deadline.

Common questions

Q: What makes an appeal to the Virginia Tax Commissioner "complete"?
A: Under 23 VAC 10-20-165 A and D, it must identify the alleged errors, the taxpayer's grounds, the relevant facts, and the legal authority supporting the taxpayer's position — not just a statement of disagreement.

Q: Does filing something within 90 days protect me even if it's vague?
A: No. The regulation is explicit that an incomplete appeal, or a notice of intent to appeal, does not satisfy or extend the 90-day limitation period.

Q: What happened to this taxpayer's case?
A: The Department closed it. The audit assessment stands, and an updated bill with accrued interest was to be mailed, payable within 30 days to stop further interest from accruing.

Q: Is there a similar ruling?
A: Yes — the companion ruling P.D. 25-24, issued the same day, closed a different taxpayer's appeal for the same reason: a bare assertion that an assessment was "overstated," with no supporting facts or legal authority.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-1821 — 90-day administrative appeal to the Tax Commissioner
• 23 VAC 10-20-165 A — definition of a "complete appeal"
• 23 VAC 10-20-165 D — required contents of a complete appeal; incomplete appeals don't satisfy or extend the deadline

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-23

Original ruling text

February 18, 2025

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

Dear *:

This is in response to your letter submitted on behalf of * (the “Taxpayer”) in which you seek correction of the retail sales and use tax assessment issued for the period October 2019 through November 2022.

FACTS

An audit was conducted on the books and records of the Taxpayer, a provider of glass for automobiles, replacement windows, and storefronts, as well as an installer of commercial doors and shower enclosures, for the period at issue. The audit resulted in an assessment of tax, penalty, and interest for untaxed sales, and purchases. The Taxpayer filed an application for correction contesting the audit method and findings.

DETERMINATION

Virginia Code § 58.1-1821 states that “[a]ny 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.” Title 23 of the Virginia Administrative Code (VAC) 10-20-165 interprets Virginia Code § 58.1-1821 and sets out requirements for the filing of administrative appeals. Subsection D 4 of this regulation states: “An incomplete appeal or notice of intent to appeal does not satisfy or extend the 90-day limitation period."

Title 23 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.” Subsection D provides a list of the information required for a complete appeal. The required information includes alleged errors in the assessment, the grounds upon which the taxpayer relies, and all facts relevant to the taxpayer's contention. In addition, taxpayers must provide the legal authority (statutes, regulations, rulings of the Tax Commissioner, court decisions, etc.) which is the basis for the taxpayer's position in the application for correction.

In this instance, the correspondence submitted by the Taxpayer does not constitute a complete appeal. The correspondence fails to identify any specific errors in the assessment, or any legal authority upon which the Taxpayer’s position is based. Because the Taxpayer has failed to submit any grounds for contention or controlling legal authority, we conclude a complete appeal was not filed within the time prescribed by law.

Consequently, the Department is closing this case, and the assessment remains outstanding. An updated bill, with interest accrued to date, will be mailed shortly to the Taxpayer. No further interest will accrue provided the outstanding assessment is paid within 30 days from the date of the bill.

The Code of Virginia section and regulation cited are available online at law.lis.virginia.gov. If you have any questions regarding this response, you may contact * in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at or **.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

AR\4659.F

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