Virginia is still collecting income tax assessments from the late 1990s and 2000s — doesn't the seven-year collection statute of limitations make them uncollectible?

Plain-English summary

A taxpayer who never filed Virginia returns for twelve taxable years — 1998 through 2006, 2008, 2010, and 2011 — was assessed by the Department, which has been collecting on the balances ever since. He applied for correction under Va. Code § 58.1-1821, arguing the assessments are no longer collectible because the seven-year collection statute of limitations had expired. The Tax Commissioner denied relief.

The seven-year limit doesn't reach these assessments. Va. Code § 58.1-1802.1 A does limit the Department's collection actions to seven years from assessment — but by its terms it applies only to assessments made on or after July 1, 2016. These assessments all predate that. The limitation period has been a moving target legislatively:

• Before 1990 — no limit at all on collecting Virginia assessments;
• 1990 — collection action had to be instituted within 20 years of assessment;
• 2010 — reduced to 10 years;
• 2012 — reduced to 7 years;
• 2016 — the current statute, applying prospectively to post-July 1, 2016 assessments.

Once started in time, collection continues. For pre-2016 assessments, the Department's longstanding policy is that if any collection action was initiated within the applicable window, collection can continue until the assessment is satisfied (P.D. 14-177, 23-27). A "collection effort" begins when the Department levies the assessment and includes all statutory collection means. So the 1998–2006 assessments needed action within 20 years, the 2008 assessment within 10, and the 2010–2011 assessments within 7.

The records beat the recollection. The taxpayer said he received no collection notices until May 2023 — but Department records showed consolidated bill notices, bank liens, and Treasury Offset Program (TOP) notifications issued from May 2004 through June 2023, all treated as collection actions and all within the respective limitation periods. The assessments remain collectible; updated bills including accrued interest are due within 30 days to avoid additional interest and further collection action.

What this means for you

Anyone with old Virginia assessments

Don't assume today's seven-year rule erases pre-2016 debts. The rule that governs is the one tied to when the assessment was made, and for older assessments the question isn't "how long ago was it assessed?" but "did the Department start collecting within the window?" — bank liens, offset notices, and even consolidated bills count as collection actions, and once started, collection runs until the debt is paid.

Nonfilers

Skipping the return doesn't start any clock in your favor: the Department can assess from available information and then hold the debt open for decades through periodic collection activity. The durable fix is filing and resolving the years, not waiting out a limitations period that may never expire.

Practitioners triaging old balances

Map each assessment date to its regime (pre-1990: none; 1990+: 20 years; 2010+: 10; 2012+: 7; on/after July 1, 2016: current § 58.1-1802.1), then pull the collection history — TOP notices and liens from many years back will usually show the window was met. A client's memory of "no notices" rarely outweighs the Department's records.

Common questions

Q: Virginia's collection statute of limitations is seven years — why are 1998 assessments still collectible?
A: The seven-year statute applies only to assessments made on or after July 1, 2016. Older assessments are governed by the law in effect for them — 20 years (1990 legislation) for the 1998–2006 assessments here, 10 years for 2008, and 7 years for 2010–2011 — and only require collection action to have been initiated within that period.

Q: What counts as a "collection action"?
A: The Department reads it broadly: consolidated bill notices, bank liens, and Treasury Offset Program notifications all qualified here, and the ruling describes a collection effort as commencing with the assessment and encompassing all statutory collection means.

Q: The taxpayer says he never saw notices until 2023. Why didn't that matter?
A: The Department's records showed collection activity from May 2004 through June 2023 within each applicable window. The determination turned on what the records showed was issued, not on what the taxpayer recalled receiving.

Q: Does collection ever have to stop once it's begun in time?
A: For pre-2016 assessments, the Department's longstanding policy is that timely-initiated collection continues until the assessment is satisfied.

Citations and references

Statutes:

• Va. Code § 58.1-1802.1 A — the current seven-year collection limitation, applicable to assessments made on or after July 1, 2016
• Va. Code § 58.1-1821 — administrative appeal (application for correction) to the Tax Commissioner

Authorities the Department relied on (described here, not linked): P.D. 14-177 (10/14/2014) and P.D. 23-27 (3/15/2023) (for pre-2016 assessments, collection initiated within the limitation period may continue until the assessment is satisfied); the 1990, 2010, 2012, and 2016 legislative changes to the collection limitation period as recounted in the ruling.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-50

Original ruling text

April 16, 2025

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond to your letter in which you dispute the collectibility of the individual income tax assessments issued to * (the “Taxpayer”), for the taxable years ended December 31, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2008, 2010, and 2011.

FACTS

The Taxpayer failed to file Virginia individual income tax returns for the taxable years at issue. As a result, the Department issued assessments. The Department has collected some of the balance due. The Taxpayer filed an application for correction asserting that the assessments are no longer collectible because the seven-year statute of limitations has expired.

DETERMINATION

Although Virginia Code § 58.1-1802.1 currently limits the Department’s collection actions to seven years from the date of assessment, even if collection action has been initiated within the seven-year period, the statute of limitations has been amended several times due to legislative action. The current statute of limitations applies only to assessments made on or after July 1, 2016. See Virginia Code § 58.1-1802.1 A. Because the assessments at issue were made prior to that date, the statute as currently enacted does not apply to the Taxpayer’s assessments.

Until 1990, Virginia law provided no limitation on the Department’s ability to collect assessments. In 1990, legislation was passed that required the Department to institute collection action within 20 years from the date of the assessment. This period of limitations was reduced from 20 years to 10 years from the date of assessment in 2010 and from 10 years to seven years in 2012.

For assessments made prior to the 2016 amendments, it is the Department’s longstanding policy that, as long as any collection action was initiated or made before the end of the period of limitations, collection can continue until the assessment is satisfied. A collection effort with regard to a taxpayer commences when the Department levies an assessment and encompasses all means of collecting taxes enumerated under Virginia statutes. In general, some form of collection action is usually taken early within the limitations period. As such, if the Department instituted a collection action within 20 years of the assessments issued for the 1998 through 2006 taxable years, within 10 years for the assessment issued for the 2008 taxable year, and within seven years for the assessments issued for the 2010 and 2011 taxable years, the assessments remained eligible for collection. See Public Document (P.D.) 14-177 (10/14/2014) and P.D. 23-27 (3/15/2023).

The Taxpayer states that he did not receive any collection notices until May 2023. According to the Department’s records, however, from May 2004 through June 2023, the Department issued various consolidated bill notices, bank liens, and Treasury Offset Program (TOP) notifications concerning the assessments at issue, all of which the Department considers collection actions. These actions were taken within the respective statute of limitations for the assessments at issue. As such, the Department considers the assessments to remain collectible, and the Taxpayer’s request for relief cannot be granted.

The Taxpayer will receive updated bills that will include accrued interest to date. The Taxpayer should remit the balances due within 30 days of the bill dates to avoid the accrual of additional interest and possible collection actions.

The Code of Virginia sections cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. 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/5004.Q

Related Documents

14-177

23-27