Virginia Sales and Use Tax Protest

VIRGINIA SALES AND USE TAX PROTEST AND REFUND CLAIM

TABLE OF CONTENTS

1. Cover Letter and Caption
2. Identification of Taxpayer / Dealer / Remote Seller
3. Identification of Assessment or Refund Claim
4. Statement of Timeliness
5. Issues Presented
6. Statement of Facts
7. Argument and Authorities
8. Wayfair Economic-Nexus Analysis
9. Computation of Disputed Amount or Refund Sought
10. Request for Relief
11. Stay of Collection and Hearing Election
12. Reservation of Rights
13. Verification, Signature, and Certificate of Service
14. Virginia Practice Notes
15. Sources and References

1. COVER LETTER AND CAPTION

[DATE]

VIA CERTIFIED MAIL — RETURN RECEIPT REQUESTED
AND ELECTRONIC SUBMISSION

Tax Commissioner
Virginia Department of Taxation
Office of Tax Policy / Appeals & Rulings
P.O. Box 27203
Richmond, Virginia 23218-7203

Re: Sales and Use Tax — Administrative Appeal and/or Refund Claim

Pursuant to Va. Code §§ 58.1-1821 and/or 58.1-1822

Taxpayer / Dealer: [NAME]

Virginia Sales Tax Account No.: [NUMBER]

FEIN: [XX-XXXXXXX]

Tax Period(s): [MONTH/YEAR — MONTH/YEAR]

Bill / Assessment No. (if applicable): [NUMBER]

Date of Assessment (if applicable): [DATE]

Refund Amount Claimed (if applicable): $[AMOUNT]

Disputed Amount: $[AMOUNT]

Dear Tax Commissioner:

Pursuant to Va. Code §§ 58.1-1821 and 58.1-1822, the above-named Taxpayer ("Taxpayer") respectfully submits this Administrative Appeal and/or Refund Claim concerning Virginia retail sales and use tax for the periods identified above.

2. IDENTIFICATION OF TAXPAYER / DEALER / REMOTE SELLER

2.1. Legal Name. [TAXPAYER NAME], a [ENTITY TYPE] organized under the laws of [STATE].

2.2. Principal Place of Business. [ADDRESS].

2.3. Virginia Registration Status. ☐ Registered in-state dealer; ☐ Registered remote seller; ☐ Marketplace facilitator; ☐ Marketplace seller; ☐ Not registered (nexus disputed).

2.4. Business Activity. [DESCRIBE — e.g., online retailer of consumer electronics; SaaS provider; wholesaler; contractor; etc.].

2.5. Authorized Representative. [NAME / FIRM / VA BAR or CPA NUMBER / ADDRESS / PHONE / EMAIL]. Form PAR 101 is enclosed as Exhibit A.

3. IDENTIFICATION OF ASSESSMENT OR REFUND CLAIM

3.1. Assessment Path (Va. Code § 58.1-1821)

Disputed portion: $[AMOUNT].

3.2. Refund Path (Va. Code § 58.1-1822)

Taxpayer claims a refund of $[AMOUNT] of Virginia sales and/or use tax paid for the periods identified above. The basis of the refund claim is set forth in Sections 5–7 below. Supporting schedules are attached as Exhibit B.

4. STATEMENT OF TIMELINESS

4.1. Assessment-based filings. This Appeal is filed within ninety (90) calendar days of the date of assessment as required by Va. Code § 58.1-1821.

4.2. Refund claims. This Refund Claim is filed within three (3) years from the last day prescribed by law for the timely filing of the applicable return, as required by Va. Code § 58.1-1823.

4.3. Protective claim (if applicable). To the extent any claim depends on contingent or future events, this filing also constitutes a Protective Claim for Refund under Va. Code § 58.1-1824.

5. ISSUES PRESENTED

5.1. Whether Taxpayer has economic nexus with Virginia under Va. Code § 58.1-612(C)(10)–(11) for the periods at issue.

5.2. Whether the transactions in dispute are taxable retail sales of tangible personal property or non-taxable services / digital goods / [OTHER].

5.3. Whether claimed exemptions under Va. Code §§ 58.1-609.1 through 58.1-609.13 (governmental, manufacturing, agricultural, nonprofit, etc.) apply.

5.4. Whether resale, ingredient/component, or other exemption certificates were timely received and substantially complete under Va. Code § 58.1-623.

5.5. Whether the Department properly sourced the transactions under Va. Code § 58.1-612.2 (destination sourcing).

5.6. Whether marketplace-facilitator collection responsibilities under Va. Code § 58.1-612.1 properly attach the tax to the facilitator and not to Taxpayer.

5.7. Whether penalties asserted should be abated for reasonable cause under Va. Code § 58.1-105.

6. STATEMENT OF FACTS

6.1. Taxpayer's Virginia activity for the audit period consisted of [DESCRIBE — sales channels, fulfillment locations, marketing, sales-rep visits, ownership of property, etc.].

6.2. Taxpayer's Virginia gross revenue and transaction count for each calendar year of the audit period are summarized in Exhibit C and as follows:

6.3. Taxpayer's marketplace-facilitator relationships during the audit period are summarized at Exhibit D.

6.4. Taxpayer's exemption documentation, including resale certificates and ST-10 / ST-11 / ST-12 / ST-13 / ST-14 forms, is collected at Exhibit E.

6.5. [Describe additional facts material to the contested transactions — product classification, service/tangible mix, bundled-transaction analysis, true object test, etc.].

7. ARGUMENT AND AUTHORITIES

7.1. The Department's Adjustment Misapplies Virginia Sales and Use Tax Law.

Virginia imposes sales tax on the gross sales price of retail sales of tangible personal property and certain enumerated services. Va. Code § 58.1-603. Use tax complements the sales tax. Va. Code § 58.1-604. The Department's adjustment [describe the misapplication — e.g., taxing a non-enumerated service, ignoring the true-object test, or denying a properly documented exemption].

7.2. Exemptions Are Construed Strictly but Not So Narrowly as to Defeat Their Purpose.

While Virginia construes exemptions strictly against the taxpayer, Commonwealth v. Wellmore Coal Corp., 228 Va. 149 (1984), exemptions must be given effect according to their plain terms. Taxpayer's claimed exemption under Va. Code § 58.1-[SECTION] is supported by [evidence] and Public Document P.D. [NUMBER].

7.3. Resale and Other Exemption Certificates Were Timely and Complete.

Va. Code § 58.1-623 relieves a dealer that receives a complete exemption certificate in good faith. Taxpayer's certificates were received contemporaneously with the relevant transactions, contain all required information, and were retained as required by Va. Code § 58.1-633.

7.4. Marketplace-Facilitator Liability.

For sales facilitated through a marketplace facilitator, the facilitator is the dealer required to collect and remit Virginia sales tax. Va. Code § 58.1-612.1. The Department's assessment improperly attributes facilitated-sales liability to Taxpayer in violation of § 58.1-612.1.

7.5. Penalty Abatement.

Penalties asserted under Va. Code § 58.1-635 / § 58.1-105 should be abated for reasonable cause where Taxpayer relied in good faith on professional advice, prior Department guidance, and a reasonable interpretation of Virginia law.

8. WAYFAIR ECONOMIC-NEXUS ANALYSIS

8.1. Statutory Framework.

Following South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018), Virginia enacted economic-nexus thresholds effective July 1, 2019. Under Va. Code § 58.1-612(C)(10)–(11), a remote seller (and a marketplace facilitator) has sufficient activity in Virginia to require registration and collection if, in the previous or current calendar year, the seller:

• (a) Received more than $100,000 in gross revenue from retail sales in the Commonwealth; OR
• (b) Engaged in 200 or more separate retail sales transactions in the Commonwealth.

Either threshold (the "$100K-OR-200" test) is sufficient. Sales by commonly controlled persons must be aggregated.

8.2. Application to Taxpayer.

Based on the data summarized in Section 6.2 and Exhibit C:

• ☐ Taxpayer did NOT meet either threshold for any year of the audit period and therefore has no economic nexus with Virginia under § 58.1-612(C)(10)–(11).
• ☐ Taxpayer met the threshold beginning [DATE] and registered / began collecting on [DATE], consistent with the statute.
• ☐ Taxpayer's Virginia activity was conducted entirely through a marketplace facilitator, which is the proper collecting party under § 58.1-612.1.

8.3. Constitutional Backstop.

Even where statutory nexus is asserted, the Commerce Clause requires "substantial nexus" under Wayfair and Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977). Taxpayer's contacts with Virginia [do / do not] satisfy that standard for the periods at issue.

9. COMPUTATION OF DISPUTED AMOUNT OR REFUND SOUGHT

Detailed transaction-level reconciliation is attached as Exhibit F.

10. REQUEST FOR RELIEF

WHEREFORE, Taxpayer respectfully requests that the Tax Commissioner:

• A. Correct the Assessment by abating $[AMOUNT] of contested sales/use tax;
• B. Abate associated penalties of $[AMOUNT] under Va. Code § 58.1-105 for reasonable cause;
• C. Abate interest commensurate with the abated tax;
• D. Refund any overpaid amounts, with statutory interest under Va. Code § 58.1-1833;
• E. Confirm the marketplace-facilitator allocation under § 58.1-612.1;
• F. Confirm that Taxpayer had / did not have economic nexus under § 58.1-612(C)(10)–(11) for the periods at issue;
• G. Confirm in writing that collection is suspended pending final determination under § 58.1-1822;
• H. Grant such other and further relief as is just and proper.

11. STAY OF COLLECTION AND HEARING ELECTION

11.1. Stay. Filing of this Appeal automatically suspends collection of the contested assessment until final determination. Va. Code § 58.1-1822. Taxpayer requests written confirmation of the collection hold.

11.2. Hearing. Taxpayer [REQUESTS / WAIVES] an informal conference. If granted, please coordinate scheduling through the undersigned representative.

11.3. Payment Under Protest (Optional). [If applicable:] Taxpayer paid the contested amount under protest by check no. [####] dated [DATE] to halt the accrual of interest, without conceding liability and reserving all refund rights under § 58.1-1822.

12. RESERVATION OF RIGHTS

12.1. Taxpayer reserves the right to supplement or amend this Appeal upon receipt of further information.

12.2. Taxpayer reserves all rights to seek de novo judicial review in a Virginia Circuit Court under Va. Code § 58.1-1825 within the longer of (i) three (3) years from the date of assessment or (ii) one (1) year from the Tax Commissioner's final determination.

12.3. Taxpayer reserves all rights under the Virginia Taxpayer Bill of Rights (Va. Code § 58.1-1845) and to file additional protective refund claims under Va. Code § 58.1-1824.

13. VERIFICATION, SIGNATURE, AND CERTIFICATE OF SERVICE

13.1. Verification

I, [NAME], declare under penalty of perjury under the laws of the Commonwealth of Virginia that I have read the foregoing Appeal and Refund Claim and the accompanying exhibits, and that the factual statements are true and correct to the best of my knowledge, information, and belief.

[________________________________]

[NAME], [TITLE]

Date: [DATE]

13.2. Representative Signature

Respectfully submitted,

[FIRM NAME]

By: [________________________________]

[ATTORNEY / CPA NAME], Va. Bar / CPA No. [####]

Authorized Representative for Taxpayer

[FIRM ADDRESS] — [PHONE] — [EMAIL]

13.3. Certificate of Service

I certify that on [DATE], a true and correct copy of this Appeal and Refund Claim, with all exhibits, was served on the Virginia Department of Taxation by Certified Mail, Return Receipt Requested, addressed to:

Tax Commissioner
Virginia Department of Taxation
Office of Tax Policy / Appeals & Rulings
P.O. Box 27203
Richmond, Virginia 23218-7203

A copy was also submitted electronically through the Department's online portal.

[________________________________]

[REPRESENTATIVE NAME]

14. VIRGINIA PRACTICE NOTES

• 90-day deadline. Va. Code § 58.1-1821 imposes a strict 90-calendar-day deadline (not 30 or 60) measured from the date of assessment. Incomplete filings returned for missing information are NOT timely. Use a checklist; file by certified mail and via the online portal.
• Wayfair thresholds. Va. Code § 58.1-612(C)(10)–(11) uses an OR test ($100,000 in revenue OR 200 transactions), not AND. Aggregation across commonly controlled persons is mandatory. Marketplace-facilitator sales are also counted for facilitator threshold purposes under § 58.1-612.1.
• Marketplace-facilitator shift. Effective July 1, 2019, Virginia imposes collection responsibility on marketplace facilitators rather than marketplace sellers for facilitated sales. Sellers should reconcile facilitator collections against their own reporting and seek refunds for any double-collected tax.
• Refund-claim limitations. Refund claims under § 58.1-1822 / § 58.1-1823 generally must be filed within three years of the last day prescribed for filing the return. Use § 58.1-1824 protective claims when contingencies exist.
• Sourcing. Va. Code § 58.1-612.2 generally uses destination-based sourcing for sales tax. Confirm that the Department's tax base reflects the proper destination for each transaction.
• Local-option and regional taxes. The Virginia combined rate varies by locality (e.g., Hampton Roads, Northern Virginia, and Historic Triangle add regional surcharges). Confirm the correct combined rate when computing the disputed amount.
• Exemption certificate management. Va. Code § 58.1-623 requires good-faith acceptance of complete certificates. Maintain an audit-ready certificate library; absent or incomplete certificates are the most common cause of sales-tax assessments.
• Stay of collection / interest. Filing the protest stays collection but does not stop interest. Pay-and-protest can be the cheaper path when the dispute is large and likely to take time.
• Judicial review. Circuit-court actions under § 58.1-1825 are bench trials (no jury) and de novo. The taxpayer continues to bear the burden of proof.
• Taxpayer Rights Advocate. Where the matter has stalled, the Department's Taxpayer Rights Advocate (§ 58.1-1845) can help break the impasse.

15. SOURCES AND REFERENCES

• Va. Code Title 58.1, Chapter 6 (Retail Sales and Use Tax) — https://law.lis.virginia.gov/vacodefull/title58.1/chapter6/
• Va. Code § 58.1-612 (Tax collectible from dealers; nexus) — https://law.lis.virginia.gov/vacode/title58.1/chapter6/section58.1-612/
• Va. Code § 58.1-612.1 (Marketplace facilitators) — https://codes.findlaw.com/va/title-58-1-taxation/va-code-sect-58-1-612-1.html
• Va. Code § 58.1-1821 (Administrative appeal — 90 days) — https://law.lis.virginia.gov/vacode/title58.1/chapter18/section58.1-1821/
• Va. Code § 58.1-1822 (Refund claims) — https://law.lis.virginia.gov/vacode/title58.1/section58.1-1822/
• Va. Code § 58.1-1823 (Amended-return refund claims) — https://law.lis.virginia.gov/vacode/title58.1/chapter18/
• Va. Code § 58.1-1824 (Protective claims) — https://law.lis.virginia.gov/vacode/title58.1/chapter18/
• Va. Code § 58.1-1825 (Circuit court review) — https://law.lis.virginia.gov/vacode/title58.1/chapter18/section58.1-1825/
• Va. Code § 58.1-1845 (Taxpayer Bill of Rights) — https://law.lis.virginia.gov/vacode/title58.1/chapter18/section58.1-1845/
• Virginia Tax — Sales and Use Tax — https://www.tax.virginia.gov/retail-sales-and-use-tax
• Virginia Tax — Out-of-State Dealers / Remote Sellers — https://www.tax.virginia.gov/remote-sellers-marketplace-facilitators-and-economic-nexus
• South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018)
• Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977)

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. An attorney licensed in Virginia must review and customize this document before filing. Laws, citations, and Department procedures change frequently; verify all authorities before use.