Administrative Code

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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 20. General Provisions Applicable to All Taxes Administered by the Department of Taxation

23VAC10-20-141. Determination of when padlocking is appropriate.

A. Required factors. Prior to ordering the padlocking of a business enterprise, the Tax Commissioner first shall make the determination that such action is the appropriate remedy to force the collection of delinquent taxes. The Tax Commissioner must find that the following conditions are satisfied:

1. Minimum amount of tax delinquency. The aggregate amount of delinquent taxes owned by the business enterprise or the owner of such business enterprise must exceed $100. The aggregate amount of delinquent taxes shall include the total amount of delinquent taxes, penalties and interest owed by the business enterprise or the owner of the business enterprise, attributable to the business operations of the business enterprise to be padlocked.

2. Other collections actions. Padlocking may occur only after the Department of Taxation has attempted other methods of collecting the delinquent taxes. At a minimum, the following shall have occurred:

a. An assessment shall have been issued and mailed or delivered in accordance with the provisions of § 58.1-1820 of the Code of Virginia; and

b. A memorandum of lien shall have been filed in accordance with the provisions of subsection A of § 58.1-1805 of the Code of Virginia.

B. Additional factors which may be considered. In addition to the requirements under subsection A of this section, the following factors may be considered by the Tax Commissioner in determining whether padlocking is appropriate:

1. The effectiveness of prior collection actions, i.e., written requests for payment, telephone contacts, personal contacts and prior judicial orders.

2. The taxpayer's history of chronic delinquency and other conduct tending to hinder or delay the timely collection of taxes administered by the Department of Taxation as a factor in the determination of whether padlocking is appropriate.

3. Whether padlocking is appropriate to complement other actions, e.g., revocation of a dealer's certificate of registration to collect sales tax.

4. The likelihood that continued operation of the business enterprise may increase the amount of sales or withholding tax, collected from others and held in trust for the Commonwealth, which has not been paid over to the Department of Taxation.

5. The likelihood that padlocking the business enterprise of a delinquent taxpayer will adversely affect the business operations of other taxpayers whose businesses may share the same physical business location as the delinquent taxpayer.

Statutory Authority

§§ 58.1-203 and 58.1-1805 of the Code of Virginia.

Historical Notes

Derived from VR630-01-1805.1 § 2, eff. April 1, 1990.

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