I told Virginia my sales tax assessment was 'overstated' — why wasn't that enough to get my appeal reviewed?

Plain-English summary

This ruling is a same-day companion to P.D. 25-23, applying the identical "complete appeal" rule to a different taxpayer. A real property and plumbing contractor headquartered and operating in Virginia was audited for July 2020 through August 2022. It was already on its third consecutive ("third-generation") audit, and the Department found unpaid tax on various transactions, assessing tax, penalty, and interest. The taxpayer's application for correction consisted of a single argument: the assessment was "excessive."

That's a conclusion, not grounds. As explained more fully in P.D. 25-23 (discussed in prose here, not linked), Virginia Code § 58.1-1821 requires a complete appeal within 90 days of the assessment — one that, per 23 VAC 10-20-165, identifies the specific errors, states the taxpayer's grounds, lays out the relevant facts, and cites the legal authority supporting the position. Simply asserting the number is too high, without more, does not meet that standard.

Because the taxpayer supplied no relevant facts, no specific grounds of contention, and no controlling legal authority, the Department found it had insufficient contentions to act on and concluded no complete appeal was filed within the statutory window. The case was closed, the assessment remains outstanding, and an updated bill with accrued interest was to be mailed — avoidable only by payment within 30 days.

What this means for you

Contractors and other businesses under a repeat ("generation") audit

A prior audit history doesn't change the appeal standard. Whether it's your first audit or your third, an appeal letter needs to do more than declare the bill wrong — it needs the specific errors, the facts, and the legal authority behind your position.

Accountants and tax professionals

"The assessment is overstated" or "the amount is too high" reads as a bare conclusion to the Department, not as grounds for an appeal. Anchor every appeal letter to 23 VAC 10-20-165 D's checklist before the 90-day clock runs out.

Common questions

Q: Is this a different rule from P.D. 25-23?
A: No — it's the same "complete appeal" requirement under Va. Code § 58.1-1821 and 23 VAC 10-20-165, applied the same day to a different taxpayer whose letter simply called the assessment excessive rather than identifying any specific error.

Q: What happened to this taxpayer's audit?
A: The Department closed the case because no complete appeal was filed in time. The assessment stands, and an updated bill with accrued interest was to be mailed, payable within 30 days to stop further interest.

Q: Does it matter that this was a "third-generation" audit?
A: The ruling doesn't treat repeat-audit status as relevant to whether the appeal was complete — the same 90-day, complete-appeal standard applies regardless of audit history.

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. 25-24

Original ruling text

February 18, 2025

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

Dear *:

This will respond to your letter in which you seek correction of the retail sales and use tax assessment issued to * (the “Taxpayer”) for the period July 2020 through August 2022.

FACTS

An audit was conducted on the books and records of the Taxpayer, a real property and plumbing contractor with its headquarters and operations in Virginia, for the period at issue. Under a third-generation audit, the Department found that the Taxpayer did not pay tax on various transactions and issued an assessment for the unpaid tax, penalty, and interest. The Taxpayer filed an application for correction, contending that the assessment is excessive.

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 guidelines 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 a taxpayer’s position in the application for correction.

In this instance, the Taxpayer’s entire application is a statement that the assessment is overstated. Such an argument does not constitute sufficient grounds of contention upon which a taxpayer may rely. Further, no relevant facts or legal authority supporting the Taxpayer’s position was provided. Because the Taxpayer has failed to submit any relevant facts, grounds of contention, or controlling legal authority, the Department has insufficient contentions on which to act. Accordingly, a complete appeal was not filed within the time prescribed by law.

Accordingly, 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 determination, 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/4575.B

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