Tax Audit Protest and Appeal — Virginia

Tax Audit Protest and Appeal (VIRGINIA)

Quick-Reference Summary

Part A — Informal Conference / Review Request Letter

Sender Letterhead

[LAW FIRM OR TAXPAYER NAME]
[Street Address]
[City], Virginia [ZIP]
Telephone: [(___) ___-____]
Email: [______________________]
[VA Bar No. (if attorney): ____________]

Date and Recipient

Date: [__/__/____]

VIA EMAIL AND CERTIFIED MAIL, RETURN RECEIPT REQUESTED

[AUDIT SUPERVISOR NAME]
Audit Division — [Field / Office Audit]
Virginia Department of Taxation
[Audit office street address]
Richmond, VA [ZIP]

Re Block

Re: Request for Informal Review of Proposed Audit Adjustments
Taxpayer: [TAXPAYER LEGAL NAME]
FEIN / Va. Tax Account: [______________]
Tax Type(s): [Retail Sales & Use / Corporate Income / Individual Income / Withholding / Other]
Period(s) at Issue: [MM/YYYY] – [MM/YYYY]
Auditor: [____________]
Audit Report Date: [__/__/____]

Body

Dear [Supervisor Name]:

This letter requests an informal review of the proposed audit adjustments described in the [Audit Report / Notice of Proposed Adjustments] dated [__/__/____] before the Department issues a Notice of Assessment. Taxpayer believes that the proposed adjustments contain material legal and factual errors that can be resolved at the audit level.

1. Authority. Taxpayer requests review under the informal pre-assessment process described in the Virginia Taxpayer Bill of Rights and Virginia Tax's published "Administrative Appeals" guidance.

2. Representative. [REPRESENTATIVE NAME, FIRM, ADDRESS, TELEPHONE, EMAIL] is authorized to act on Taxpayer's behalf. A duly executed Form PAR 101 (Power of Attorney and Declaration of Representative) is enclosed.

3. Summary of disputed items. The principal disputed items are summarized in the schedule attached as Exhibit A and include:

4. Documents. Taxpayer is providing supplemental records and analysis (Exhibits B–__) that were not previously available or not addressed in the audit workpapers.

5. Conference. Taxpayer requests a [telephone / video / in-person] conference with the auditor and audit supervisor at the earliest mutually convenient date. Taxpayer reserves all rights to file a formal administrative appeal under Va. Code § 58.1-1821 within 90 days of any Notice of Assessment that issues.

Thank you for your consideration.

Respectfully,

________________________________
[NAME], [TITLE]
[For:] [TAXPAYER LEGAL NAME]

Part B — Formal § 58.1-1821 Administrative Appeal to the Tax Commissioner

I. Caption

COMMONWEALTH OF VIRGINIA
DEPARTMENT OF TAXATION
OFFICE OF THE TAX COMMISSIONER

APPLICATION FOR CORRECTION OF ASSESSMENT
(Va. Code Ann. § 58.1-1821; 23 VAC 10-20-165)

II. Identifying Information (23 VAC 10-20-165(D))

1. Taxpayer name and mailing address: [____________]
2. Telephone / Email: [(___) ___-____] / [____________]
3. FEIN / SSN / Va. Tax Account Number: [____________]
4. Tax type(s) and taxable period(s): [____________]
5. Assessment(s) protested: Bill No. [______]; Notice of Assessment date [__/__/____]; copy attached as Exhibit 1
6. Total amount of assessment: $[______] (tax $[____] + penalty $[____] + interest $[____])
7. Amount contested: $[______]; Amount uncontested: $[______]
8. Representative: [NAME, FIRM, ADDRESS, PHONE, EMAIL, VA BAR NO.]; Form PAR 101 attached as Exhibit 2

III. Timeliness

The Notice of Assessment was issued on [__/__/____]. This complete administrative appeal is filed on [__/__/____], within the 90 calendar days prescribed by Va. Code § 58.1-1821 and 23 VAC 10-20-165(B)(1)(b). Taxpayer acknowledges that the 90-day limitations period is strictly enforced and that incomplete filings will not be deemed timely.

IV. Notice of Intent to Appeal (if previously filed)

A Notice of Intent to Appeal was filed with the Department on [__/__/____] and Taxpayer relies on the resulting suspension of collection action under Va. Code § 58.1-1821, ¶ 2.

V. Statement of Facts

1. Taxpayer is a [VA / foreign] [entity type] with principal place of business at [____].
2. Taxpayer's business activities during the audit period consisted of [____].
3. Virginia Tax conducted an audit of Taxpayer's [TAX TYPE] returns for [PERIODS], concluding on [__/__/____].
4. The Department issued a Notice of Assessment on [__/__/____] reflecting adjustments for [SUMMARIZE].
5. The adjustments giving rise to the disputed liability are detailed in Exhibit 3 (audit workpapers).

VI. Grounds Upon Which Taxpayer Relies (Va. Code § 58.1-1821; 23 VAC 10-20-165(D)(7))

☐ Ground 1 — Erroneous application of statute / regulation. [Explain specifically — e.g., the Department misapplied the manufacturing exemption under Va. Code § 58.1-609.3(2); cite Public Documents / Rulings of Tax Commissioner].

☐ Ground 2 — Subtraction / deduction / credit improperly disallowed. [Explain].

☐ Ground 3 — Apportionment / nexus error. Receipts were improperly sourced to Virginia under Va. Code § 58.1-416 / § 58.1-422 because [____]. Wayfair nexus is/is not satisfied because [____].

☐ Ground 4 — Statute of limitations. Portions of the assessment are barred under Va. Code § 58.1-104.

☐ Ground 5 — Sampling / projection. The audit sample is not representative of the population because [____] and produces a distortive projection.

☐ Ground 6 — Penalty abatement. Penalties should be abated under Va. Code § 58.1-105 / § 58.1-635 because Taxpayer acted with reasonable cause and good faith, in reliance on [____].

☐ Ground 7 — Constitutional. The assessment violates the [Commerce Clause / Due Process Clause / Internet Tax Freedom Act] as applied to Taxpayer's facts.

VII. Facts and Documentary Support for Each Ground (23 VAC 10-20-165(D)(8))

Ground 1: Facts: [____]. Documents: Exhibits [__]–[__]. Supporting authority: [Va. Code §§ ____; PD __-__; Rulings of the Tax Commissioner].

Ground 2: [____].

[Repeat for each ground.]

VIII. Request for Conference / Oral Hearing

Taxpayer [requests / does not request] an oral conference with Appeals and Rulings staff prior to the issuance of the Tax Commissioner's Final Determination under Va. Code § 58.1-1822. If granted, Taxpayer requests that the conference be conducted by [telephone / video / in person].

IX. Reservation of Rights

Taxpayer reserves all rights to:

1. Request reconsideration of any Final Determination under 23 VAC 10-20-165(F);
2. File a protective claim for refund under Va. Code § 58.1-1824;
3. File an application to a Virginia Circuit Court under Va. Code § 58.1-1825 within the applicable statutory period; and
4. Post a bond under Va. Code § 58.1-1828 in lieu of payment for purposes of judicial review.

X. Relief Requested

WHEREFORE, Taxpayer respectfully requests that the Tax Commissioner:

(a) Abate the contested portion of the assessment in the amount of $[______];
(b) Abate associated penalties and interest;
(c) Refund any contested amounts previously paid, with statutory interest under Va. Code § 58.1-1833; and
(d) Grant such other and further relief as may be just and proper.

XI. Certification

I certify under penalty of perjury under the laws of the Commonwealth of Virginia that the statements made in this Application are true and correct to the best of my knowledge and belief, and that the documents attached are genuine.

Dated: [__/__/____]

________________________________
[NAME], [TITLE]
[For:] [TAXPAYER LEGAL NAME]

XII. Filing Instructions

Mail (preferred):
Virginia Department of Taxation
Office of Tax Policy — Appeals & Rulings
P.O. Box 27203
Richmond, VA 23218-7203

Fax: 804-786-4204
Online: Secure submission portal at https://www.tax.virginia.gov/administrative-appeals

XIII. Exhibit List

Part C — Appeal Cover Letter to Circuit Court (Va. Code § 58.1-1825)

Sender Letterhead

[LAW FIRM NAME]
[Street Address]
[City], Virginia [ZIP]
Telephone: [(___) ___-____]
Email: [______________________]
VA Bar No.: [____________]

Date: [__/__/____]

VIA HAND DELIVERY AND CERTIFIED MAIL

Clerk of the Circuit Court of [CITY / COUNTY]
[Courthouse Address]

Re Block

Re: [TAXPAYER] v. Department of Taxation of the Commonwealth of Virginia
Application for Relief under Va. Code § 58.1-1825
Final Determination of Tax Commissioner dated: [__/__/____]
Amount in Controversy: $[__________]

Body

Dear Clerk:

Enclosed for filing in the Circuit Court of [CITY/COUNTY] are the following:

1. Application for Relief under Va. Code § 58.1-1825 (Complaint) challenging the Tax Commissioner's Final Determination dated [__/__/____].
2. Cover Sheet and Civil Filing Fee of $[______].
3. Proof of Payment of the contested assessment in the amount of $[______] (Check No. ____ dated [__/__/____]) OR Bond under Va. Code § 58.1-1828 in the penal sum of $[______] (Bond Number [______], Surety: [_______], filed [__/__/____]).
4. Certification of Service confirming service on the Office of the Attorney General of Virginia and the Tax Commissioner pursuant to Va. Code § 8.01-301.

Timeliness. The Tax Commissioner's Final Determination issued on [__/__/____]. The original assessment date was [__/__/____]. This Application is filed within (i) one year of the Final Determination and/or (ii) three years of the assessment, whichever is later, as required by Va. Code § 58.1-1825(A).

Jurisdictional prerequisites. Taxpayer has [paid the contested amount / posted bond under Va. Code § 58.1-1828], and venue is proper in this Court under Va. Code § 58.1-1825(A) because [Taxpayer resides in / Taxpayer's principal place of business is located in / the corporation has its registered office in] [CITY/COUNTY].

Burden of proof. Taxpayer acknowledges that the party challenging the Tax Commissioner's determination bears the burden of proof under 23 VAC 10-20-180 and that the assessment is prima facie correct under Va. Code § 58.1-205, but the record evidence and the legal arguments set forth in the Application establish that the contested assessment is erroneous.

Respectfully submitted,

________________________________
[ATTORNEY NAME], Esq.
VA Bar No. [__________]
Counsel for Applicant [TAXPAYER]

cc: Office of the Attorney General of Virginia — Tax Division
Virginia Department of Taxation — Office of the Tax Commissioner

Part D — Pre-Filing Checklist

Calendaring

☐ Date of Notice of Assessment: [__/__/____]
☐ Day 30 milestone (internal review): [__/__/____]
☐ Day 60 milestone (records complete): [__/__/____]
☐ Day 90 § 58.1-1821 appeal deadline (HARD): [__/__/____]
☐ Notice of Intent to Appeal filed (optional): [__/__/____]
☐ Tax Commissioner Final Determination received: [__/__/____]
☐ One-year § 58.1-1825 judicial deadline: [__/__/____]
☐ Three-year-from-assessment alternative deadline: [__/__/____]

Appeal Package — 23 VAC 10-20-165(D) Required Elements

☐ Taxpayer identification (name, address, FEIN/SSN)
☐ Representative info + Form PAR 101
☐ Tax type and taxable period(s)
☐ Copy of Notice of Assessment / Bill
☐ Amount contested vs. uncontested
☐ Grounds for appeal (specific statutory and regulatory citations)
☐ Facts and documentary support for each ground
☐ Signature / verification
☐ Filed within 90 days
☐ Submission complete (no return-for-additional-information risk)

Substantive Review

☐ Reviewed audit workpapers and Information Document Requests
☐ Confirmed SOL: 3 years general; 6 years for 25% omitted income; unlimited for fraud
☐ Identified exemption certificates / direct-pay permits
☐ Confirmed nexus analysis (post-Wayfair; Va. Code § 58.1-612)
☐ Reviewed apportionment / sourcing (Va. Code §§ 58.1-416, 58.1-422, 58.1-422.1)
☐ Identified Public Documents and Rulings of the Tax Commissioner
☐ Reviewed prior PDs for similar fact patterns
☐ Considered reasonable-cause penalty abatement (Va. Code § 58.1-105)
☐ Considered Offer in Compromise (Va. Code § 58.1-105)

Collection / Payment

☐ Decision on Notice of Intent to Appeal (auto-suspends collection)
☐ Interest accrual confirmed (continues during appeal)
☐ For judicial appeal: decision on payment vs. bond under § 58.1-1828
☐ Protective claim for refund under § 58.1-1824 considered if 90 days will expire

Service / Filing

☐ Administrative appeal mailed (certified return-receipt) or faxed to 804-786-4204
☐ Online submission completed (if using Va. Tax portal)
☐ Service on Tax Commissioner confirmed
☐ For judicial appeal: service on Attorney General — Tax Division per Va. Code § 8.01-301
☐ Filing fee paid

Sources and References

• Virginia Tax — Administrative Appeals: https://www.tax.virginia.gov/administrative-appeals
• Va. Code Ann. § 58.1-1821: https://law.lis.virginia.gov/vacode/title58.1/chapter18/section58.1-1821/
• Va. Code Ann. § 58.1-1822: https://law.lis.virginia.gov/vacode/title58.1/chapter18/section58.1-1822/
• Va. Code Ann. § 58.1-1825: https://law.lis.virginia.gov/vacode/title58.1/chapter18/section58.1-1825/
• Va. Code Ann. § 58.1-1828 (bond): https://law.lis.virginia.gov/vacode/title58.1/chapter18/section58.1-1828/
• 23 VAC 10-20-165 (administrative appeals): https://law.lis.virginia.gov/admincode/title23/agency10/chapter20/section165/
• 23 VAC 10-20-160 (assessments and remedies): https://law.lis.virginia.gov/admincode/title23/agency10/chapter20/section160/
• Virginia Tax Appeals Form: https://www.tax.virginia.gov/sites/default/files/inline-files/AppealsForm.pdf
• Form PAR 101 (Power of Attorney): https://www.tax.virginia.gov/forms (search "PAR 101")
• Virginia Taxpayer Bill of Rights: https://www.tax.virginia.gov/taxpayer-rights
• Rulings of the Tax Commissioner (searchable database): https://www.tax.virginia.gov/laws-rules-decisions