Administrative Code

Virginia Administrative Code
2/4/2023

Chapter 20. General Provisions Applicable to All Taxes Administered by the Department of Taxation

23VAC10-20-10. Secrecy of information; penalty.

A. Generally. Except in accordance with proper judicial order or as otherwise provided by law, it shall be unlawful for the Tax Commissioner or any agent, clerk, commissioner of the revenue, treasurer, or any other state or local tax or revenue officer, employee, or any former officer or employee of any of the aforementioned offices to divulge any information acquired by him or her in respect to the transactions, property, income, or business of any person, firm, or corporation while in the performance of his or her public duties. Such prohibition extends to, but is not limited to, any copy of a federal return or federal return information required by Virginia law to be attached to or included in the Virginia return. Any person violating the provisions of this section shall be guilty of a Class 2 misdemeanor.

B. Exceptions.

1. The prohibition does not extend to any matter required by law to be entered on any public assessment roll or book.

2. The prohibition does not extend to any act performed or words spoken or published in the line of duty under the law. This includes communications required in the performance of duty to any person or persons authorized to receive such information.

3. The prohibition does not extend to inquiries and investigations to obtain information as to the process of real estate assessments by a duly constituted committee of the General Assembly, or when such inquiry or investigation is relevant to its study, provided that any such information obtained shall be privileged.

4. The prohibition does not extend to the sales price, date of construction, physical dimensions or characteristics of real property, or to any information required for building permits.

5. The prohibition does not extend to the publication of statistics so classified as to prevent the identification of particular reports or returns.

6. The prohibition does not extend to the publication of delinquent lists showing names of taxpayers who failed to timely pay their taxes, together with any relevant information which in the opinion of the Department of Taxation may assist in the collection of such delinquent taxes.

7. The prohibition does not extend to a local tax official for disclosing whether or not a person, firm or corporation is licensed to do business in that locality.

8. The Tax Commissioner is authorized to divulge or cause to be divulged tax information to any Commissioner of the Revenue, Director of Finance or other similar collector of county, city or town taxes who, for the performance of his or her official duties, requests the same in writing setting forth the reasons for the request.

9. The Tax Commissioner is authorized to enter into written agreements with duly constituted tax officials of other states and the United States for the inspection of tax returns, the making of audits, and the exchange of information relating to any tax administered by the Department of Taxation.

10. The Tax Commissioner is authorized to supply the State Department of Social Services with all information on hand relative to the location, income and property of responsible persons who have abandoned or deserted, or are failing to support, children and their caretakers receiving public assistance and in the prosecution of welfare fraud.

11. The Tax Commissioner is authorized to exchange information with claimant agencies participating in the Set-off Debt Collection program under Va. Code § 58.1-533.

12. The Tax Commissioner is authorized to comply with a subpoena or other judicial order requiring production of confidential tax returns under Va. Code § 58.1-109.

C. Other disclosures. Confidential tax information may be given to the following persons:

1. Individual taxpayers. Return information may be given to the individual taxpayer, a third person in the presence of the taxpayer, or to the spouse of the taxpayer if the return information relates to a joint or combined return with such spouse.

2. Corporate taxpayers. Return information may be given to:

a. the president of the corporation,

b. an officer or employee of the corporation who is authorized to sign tax returns for the corporations upon presentation of satisfactory evidence of such authorization,

c. any person designated by the Board of Directors of the corporation to receive confidential tax information upon presentation of a certified extract from the minutes of the corporation indicating such authorization,

d. any person presenting a properly executed power of attorney.

3. Tax practitioners. An accountant, attorney, return preparer or other tax practitioner may not receive confidential tax information unless the taxpayer is present or has authorized disclosure to the tax practitioner in writing.

4. Partnership. Confidential tax information may be given to any person who was a member of the partnership during any part of the period covered by the return.

5. Estates and trusts. Confidential tax information may be given to the executor, administrator or trustee of the estate or trust. An heir at law or beneficiary under the will or trust agreement may be given confidential tax information if the heir or beneficiary has a financial interest which will be affected by the information.

D. Procedure. The department prefers that requests for disclosure of confidential tax information be made in writing and may refuse to make any disclosure until a written request is received. Copies of returns and other documents may only be requested in writing. Other information, such as account status, will be given to those who request it in person or over the telephone only after establishing their identity and right to receive the information. The Department may refuse to provide confidential tax information over the telephone or in person and instead mail the requested information to the taxpayer at the address shown on the return.

E. Written authorization and powers of attorney.

1. Any written authorization to disclose confidential tax information to a third party must contain the following:

a. Taxpayer's name and address,

b. Taxpayer's social security or other I.D. number,

c. Third party's name,

d. Tax type, taxable period and return involved,

e. Sufficient facts to enable the department to determine the nature and extent of the disclosure authorized.

f. Taxpayer's signature and date signed.

2. Any ambiguity in the authorization will be resolved against disclosure. However, where there is a direct relationship between information authorized to be disclosed and other information the department may disclose such other information. For example, if the department has received authorization to disclose information from an income tax return which claims a net operating loss deduction, the return for the year of the loss would be considered directly related to the return which claims a net operating loss deduction and may be disclosed if sufficient justification is shown.

3. The department and the Internal Revenue Service have both provided Power of Attorney forms for the convenience of taxpayers. An IRS power of attorney form authorizing disclosure of federal income or estate tax information will also authorize disclosure of the corresponding Virginia income or estate tax information.

4. A taxpayer may grant power of attorney to a person for reasons unrelated to tax returns, for example, to close a real estate transaction or handle financial matters while the taxpayer is traveling. Such a power of attorney will not be accepted by the department unless it clearly authorizes the disclosure of confidential tax information.

Statutory Authority

§§ 58.1-3 and 58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-3, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia.

23VAC10-20-20. Filing of tax returns and payment of taxes which fall due on Saturday, Sunday or legal holiday.

A. Definitions. The following words and terms when used in this section shall have the following meanings unless the context clearly indicates otherwise:

"Legal holiday" means any day designated as such by § 2.2-3300 of the Code of Virginia.

"Business day" means any Monday, Tuesday, Wednesday, Thursday, or Friday that is not a legal holiday.

B. Generally. When the last day prescribed by law for filing a return or paying a tax falls on a Saturday, Sunday or legal holiday, then the return may be filed or the payment may be made without penalty or interest on the next succeeding business day. If an extension has been obtained, and the last day of the extension falls on a Saturday, Sunday or legal holiday the return may be filed or the payment may be made without penalty on the next succeeding business day.

Statutory Authority

§58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-8, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; amended, Virginia Register Volume 25, Issue 11, eff. March 4, 2009.

23VAC10-20-30. Filing of tax returns or payment of taxes by mail.

A. Generally.

1. When remittance of a tax return or a tax payment is made by mail, receipt of the return or payment by the person with whom the return is required to be filed or the payment is required to be made shall constitute timely filing or payment, provided that (a) the tax return or tax payment is received in a sealed envelope with sufficient postage; and (b) the envelope bears a postmark on or before midnight of the day the return is required to be filed or the payment be made without penalty or interest.

2. Returns mailed with insufficient postage shall not be deemed filed until actually received or remailed with adequate postage.

B. Definitions.

1. Person. The term "person" includes, but is not limited to, a Commissioner of the Revenue, a Director of Finance or the Department of Taxation.

2. Postmark. A "postmark" means the United States Post Office cancellation mark stamped upon the envelope. A mark made by a postage meter under control of a person other than the U.S. Post Office is not a postmark.

C. Example. Taxpayer X is required to file a sales tax return on February 20, which falls on a Saturday. Monday, February 22, is a legal holiday (Washington's birthday). The Department of Taxation receives the return on Friday, February 26 in a sealed envelope bearing a postmark of February 23 (Tuesday). No interest or penalties for late filing or late payment will be assessed.

Statutory Authority

§§ 58.1-9 and 58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-9, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia.

23VAC10-20-40. (Repealed.)

Historical Notes

Derived from VR630-1-10 or VR630-1-12, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; repealed, Virginia Register Volume 23, Issue 8, eff. March 10, 2007.

23VAC10-20-60. Rate of interest.

A. In general.

1. Unless otherwise specifically provided, interest on omitted taxes, taxes paid after the date prescribed for payment, assessments and refunds shall be computed at a rate equal to the rate of interest established pursuant to § 6621 of the Internal Revenue Code of 1954, as amended.

2. Separate computations shall be made for each period during which the interest rate differs from the current rate by multiplying the deficiency or overpayment outstanding during each period by the rate of interest applicable to that period.

3. The Internal Revenue Code requires that interest accruing after December 31, 1982 be compounded daily. Although Virginia uses the nominal interest rate established pursuant to IRC § 6621, Virginia applies simple interest computations without compounding.

4. The rates of interest applicable to deficiencies and overpayments under this section and prior law are as follows:

Prior to July 1, 1976

6%

July 1, 1976 through January 31, 1978

7%

February 1, 1980 through January 31, 1980

6%

February 1, 1980 through January 31, 1982

12%

February 1, 1982 through December 31, 1982

20%

January 1, 1983 through June 30, 1983

16%

July 1, 1983 through December 31, 1984

11%

5. Interest is computed by excluding the due date and including the date of payment in the number of days. For example, interest on $100 tax due June 20, 1983 and paid July 10, 1983 would be computed as follows:

June 21 through June 30 = 10 days at 16%

10

x 0.16 = 0.004383

365

July 1 through July 10 = 10 days at 11%

10

x 0.11 = 0.003013

365

Total Interest Factor 0.007396 x $100 = $0.74 interest

Note that June 20, the due date, is not counted, and that July 10 and all intervening days are counted.

B. § 6621. The text of IRC § 6621 as amended through December 31, 1983 is set forth below:

IRC Section 6621. Determination of rate of interest.

a. In general. The annual rate established under this section shall be such adjusted rate as is established by the Secretary under subsection (b).

b. Adjustment of interest rate.

1. Establishment of adjusted rate. If the adjusted prime rate charged by banks (rounded to the nearest full percent)

(A) during the 6-month period ending on September 30 of any calendar year, or

(B) during the 6-month period ending on March 31 of any calendar year, differs from the interest rate in effect under this section on either such date, respectively, then the Secretary shall establish, within 15 days after the close of the applicable 6-month period, an adjusted rate of interest equal to such adjusted prime rate.

2. Effective date of adjustment. Any adjusted rate of interest established under paragraph (1) shall become effective:

(A) on January 1 of the succeeding year in the case of an adjustment attributable to paragraph (1)(A), and

(B) on July 1 of the same year in the case of an adjustment attributable to paragraph (1)(B).

c. Definition of prime rate. For purposes of subsection (b), the term "adjusted prime rate charged by banks" means the average predominant prime rate quoted by commercial banks to large businesses, as determined by the Board of Governors of the Federal Reserve System.

Statutory Authority

§§ 58.1-15 and 58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-15, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia.

23VAC10-20-70. (Repealed.)

Historical Notes

Derived from VR630-1-16, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; repealed, Virginia Register Volume 23, Issue 8, eff. March 10, 2007.

23VAC10-20-80. Waiver of time limitation on assessment of taxes.

A. Assessments. The Tax Commissioner and a taxpayer may agree to extend the period for assessing a tax prescribed by §§ 58.1-104 (period of limitations in general), 58.1-312 (relating to income tax only), 58.1-634 (relating to retail sales and use tax only) and 58.1-1812 (assessment of omitted taxes) of the Code of Virginia. Such agreements shall be in writing, on forms prescribed by the Tax Commissioner, and shall extend the period for assessing a tax for all issues relevant to the tax and taxable period for which the agreement is executed.

B. Refunds. Any such agreement will also extend the period for filing an amended return claiming a refund. See 23VAC10-20-190 for information regarding protective claims.

Statutory Authority

§58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-101, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; amended, Virginia Register Volume 25, Issue 11, eff. March 4, 2009.

23VAC10-20-90. Retention of records by taxpayer.

A. Generally. Every taxpayer must retain suitable records and documents substantiating all information contained on any return for any tax administered by the department. Such records and documents shall be preserved for a period of three years from the required date for filing a return to which such records or documents pertain. If an extension of the date for filing a return has been granted such records and documents shall be preserved for a period of three years from the extended date.

B. Net operating loss deductions. When an income tax return contains a net operating loss deduction, the records and documents pertinent to such return shall include:

1. The return for the year of the loss with supporting records and documents, and

2. The returns for all years to which any portion of the loss has been or could have been carried under federal law together with the supporting records and documents for such returns.

Statutory Authority

§58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-102, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; amended, Virginia Register Volume 25, Issue 11, eff. March 4, 2009.

23VAC10-20-100. (Repealed.)

Historical Notes

Derived from VR630-1-104, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; repealed, Virginia Register Volume 23, Issue 8, eff. March 10, 2007.

23VAC10-20-110. Offers in compromise.

A. Generally.

1. The Tax Commissioner has the authority to accept an offer in compromise of a penalty, or to abate a penalty in its entirety, if he determines that such action is justified. An offer in compromise is considered accepted only when the taxpayer is notified in writing by the Tax Commissioner.

2. The Tax Commissioner has the authority to accept an offer in compromise of taxes if he determines that the assessment is based upon a doubtful and disputed claim or that the tax liability is of doubtful collectibility.

B. Form of submission. An offer in compromise shall be submitted in the form of a letter addressed to the Tax Commissioner. See the department's website, www.tax.virginia.gov, for contact information and the mailing address for the commissioner. The letter should state that it is an offer in compromise and identify the taxpayer, type of tax involved, taxable period, date and amount of the assessment and contain a complete statement of the reasons for acceptance of the offer. A check payable to the Department of Taxation in the amount of the offer may be attached to the letter in addition to any supporting documents. In the case of an offer in compromise based upon doubtful collectibility, the taxpayer shall submit signed financial statements in sufficient detail to indicate the financial condition of the taxpayer.

C. The Department of Taxation may deposit any payments submitted with offers in compromise into the state treasury unless the taxpayer specifically and clearly directs otherwise.

Statutory Authority

§ 58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-105, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; amended, Virginia Register Volume 25, Issue 11, eff. March 4, 2009.

23VAC10-20-120. (Repealed.)

Historical Notes

Derived from VR630-1-1804, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; repealed, Virginia Register Volume 23, Issue 8, eff. March 10, 2007.

23VAC10-20-130. Memorandum of lien for collection of taxes.

A. The Tax Commissioner may file a memorandum of lien in the circuit court clerk's office of the county or city in which the taxpayer's place of business is located, or in which the taxpayer resides, if:

1. An assessment of any tax, fees, penalty or interest remains unpaid 30 days after the assessment; or

2. There has been an immediate assessment of income or sales tax where collection would be jeopardized by delay pursuant to § 58.1-313 (relating to income tax) or 58.1-631 (relating to sales tax) of the Code of Virginia.

B. No memorandum of lien shall be filed unless the taxpayer is first given 10 or more days' prior notice of intent to file a lien. Notice shall be given to the taxpayer at his last known address. For purposes of this section, "last known address" refers to the address shown on the most recent return filed by or on behalf of the taxpayer or the address provided in correspondence by or on behalf of the taxpayer indicating that it is a change of the taxpayer's address.

C. If the taxpayer has no place of business or residence within Virginia, such memorandum may be filed in the clerk's office of the circuit court of the City of Richmond. A copy of such memorandum may also be filed in the circuit court clerk's office of all counties in which the taxpayer owns real estate.

D. The recordation of a memorandum of lien shall not prevent a taxpayer from seeking refund or exoneration under § 58.1-1821 (application to Tax Commissioner), 58.1-1823 (amended return claiming a refund), 58.1-1824 (protective claim) or 58.1-1825 (application to Court) of the Code of Virginia.

E. A taxpayer may appeal to the Tax Commissioner after a memorandum of lien has been filed under this section if the taxpayer alleges an error in the filing of the lien. The Tax Commissioner shall make a determination of such an appeal within 14 days. If the Tax Commissioner determines that the filing was erroneous, he shall issue a certificate of release of the lien within seven days after such determination is made.

Statutory Authority

§ 58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-1805, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; amended, Virginia Register Volume 25, Issue 11, eff. March 4, 2009.

23VAC10-20-140. Padlocking premises; definitions.

The following words and terms, when used in 23VAC10-20-140 through 23VAC10-20-145, shall have the following meanings unless the context clearly indicates otherwise:

"Business enterprise" means the location at which a person is engaged in an activity requiring the registration, collection, withholding, or payment of a tax administered by the Department of Taxation.

"Delinquent tax" means any amount of tax, penalty or interest, assessed by the Department of Taxation, which is not paid in full within 30 days after the date of assessment. No tax is considered delinquent while the Department of Taxation is considering a timely filed application for correction under § 58.1-1821 of the Code of Virginia.

"Department" means the Department of Taxation.

"Padlock" means any act of physical restraint which makes the location of a business enterprise inaccessible to any person other than a person given permission to enter such premises by the Tax Commissioner.

"Tax Commissioner" means the chief executive officer of the Department of Taxation or his delegate.

Statutory Authority

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

Historical Notes

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

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.

23VAC10-20-142. Notice of intent to padlock a business enterprise.

A. Notice. If under the provisions of 23VAC10-20-141, the Tax Commissioner makes the determination that padlocking is an appropriate method of collecting delinquent taxes, the taxpayer must be so notified. Padlocking may not occur unless the following requirements are met:

1. A notice of the department's intention to padlock is mailed to the last known address of the taxpayer or personnally delivered to the taxpayer not less than 10 days prior to the date padlocking occurs.

2. Such notice shall set out the amounts of delinquent taxes, the periods for which such taxes are delinquent, the types of taxes that are delinquent, and the date such taxes were first assessed by the Department of Taxation.

3. The notice shall contain a brief statement explaining what action the Department of Taxation intends to take if the delinquent taxes are not paid or satisfactory arrangement is not made to pay such taxes and a brief statement explaining the taxpayer's administrative remedies.

4. The notice shall inform the taxpayer of the date, time and location of the administrative hearing to be held at which the taxpayer may show cause why the business enterprise should not be padlocked. Failure to appear at the administrative hearing will be deemed a waiver of the hearing.

5. The notice shall inform the taxpayer that an allegation that the assessment is erroneous will not be considered at the hearing. If the taxpayer desires to make such an allegation it shall be in the form of an application for correction of an erroneous assessment pursuant to § 58.1-1821 of the Code of Virginia. The application shall fully set forth the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention. (See subsection C.)

6. The notice shall give the taxpayer a telephone number that he can call to get more information regarding the Department of Taxation's intent to padlock the business enterprise.

B. Complementary actions. The department's notice may be issued at the same time as a notice to revoke a dealer's registration certificate under § 58.1-613 of the Code of Virginia. The show cause hearing under subdivision A 4 may be held in conjunction with a hearing required under § 58.1-613 of the Code of Virginia for the revocation of a sales tax certificate of registration.

C. Application for correction. The taxpayer may file an application for correction of an erroneous assessment pursuant to § 58.1-1821 of the Code of Virginia if he has reason to believe that the assessment is erroneous. However, if a taxpayer files an application after the department has issued a notice of intent to padlock the business enterprise, it is presumed that one of the taxpayer's reasons for filing the application is to prejudice or to render wholly or partially ineffectual proceedings to collect the delinquent tax. In this case, the department may determine that it is in the best interest of the Commonwealth to continue efforts to collect the delinquent tax during the time that it is considering the application for correction, unless the taxpayer posts a bond in an amount and with security satisfactory to the Tax Commissioner.

Statutory Authority

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

Historical Notes

Derived from VR630-01-1805.1 § 3, eff. April 1, 1990.

23VAC10-20-143. Procedure for padlocking a business enterprise.

A. Order to padlock and notice of distraint. If the Tax Commissioner determines that it is in the best interest of the Commonwealth to cause a business enterprise to cease operations by padlocking, he shall issue an order requiring that such action be done. In issuing an order to padlock and notice of distraint, the Tax Commissioner shall certify:

1. He has determined that padlocking is an appropriate method of collecting delinquent taxes; and

2. There has been compliance by the Department of Taxation with the notice requirements found in 23VAC10-20-142.

B. Delivery of order and notice. The Tax Commissioner or his delegate shall personally deliver the order to padlock and the notice of distraint to the business enterprise. The order and notice will be delivered during the normal business hours of the business enterprise. If the owner of the business enterprise is present, the order and notice shall be presented to the owner. In the absence of the owner, the order and notice shall be presented to the person having responsibility for the operation of the business enterprise. If no such person is present, the order and notice shall be posted. In all cases, the order and notice shall also be mailed to the last known address of the taxpayer.

C. Employees' and customers' personal effects. After delivering or posting the order to padlock and notice, employees and customers of the business enterprise shall be allowed to gather their personal belongings and to leave the premises.

D. All entrances to the business enterprise shall be adequately secured in order to ensure that no individual may enter the business enterprise to remove inventory, merchandise or other property. After all individuals have left the business premises, steps shall be taken to protect the inventory and other property of the business enterprise.

E. Notices of distraint. A copy of the order to padlock and the notice of distraint shall be posted at each entrance of the business enterprise that is padlocked. The notice shall contain the name of the Tax Commissioner's designated agent or agents, street address and telephone number where any person may call concerning the distraint. The notice shall contain a statement that it is a Class 1 misdemeanor for anyone to enter the premises without prior approval of the Tax Commissioner or his designee.

Statutory Authority

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

Historical Notes

Derived from VR630-01-1805.1 § 4, eff. April 1, 1990.

23VAC10-20-144. Padlocking premises; remedies.

A. Removal of padlocks. If the taxpayer takes any one of the following actions, the Department of Taxation must cease the distraint and remove the notices and any other devises preventing entry to the business enterprise.

1. Full payment of all assessed taxes. Upon receipt of payment in full in cash or its equivalent for the amount of delinquent taxes specified in the notice to the taxpayer, plus any taxes, penalties and interest assessed after the date of the notice, and after the taxpayer has filed returns for all periods for which returns were delinquent and all taxes then due, the Department of Taxation shall cease the distraint and remove the padlocks.

2. Satisfactory payment arrangement. The Tax Commissioner may enter into a good faith agreement with the taxpayer that provides for the full payment of all delinquent taxes specified in the notice to the taxpayer. The agreement may provide for periodic payments to be made at specific dates. Upon agreement on a satisfactory payment arrangement the Department of Taxation shall cease the distraint and remove the padlocks.

3. Posting of bond. The taxpayer may file an application to the Tax Commissioner for correction of an assessment if he has reason to believe that the assessment is erroneous. However, if a taxpayer files an application after padlocking has occurred, the Department of Taxation will not cease the distraint and remove the padlocks during the time that it is considering the application for correction until the taxpayer has posted a bond in an amount and with security satisfactory to the Tax Commissioner.

B. Levy and sale. If the taxpayer fails to take any of the actions specified in subsection A within three business days after the padlocking of the business enterprise, collection may be enforced as provided in Article 19 (§ 8.01-196 et seq.) of Chapter 3 of Title 8.01 of the Code of Virginia. The Tax Commissioner may cause a writ of fieri facias to be issued or may direct the sheriff to sell property pursuant to a previous writ of fieri facias. As provided in § 8.01-201 of the Code of Virginia, such a writ shall require the sheriff to levy upon the "goods, chattels, and real estate" of the taxpayer.

C. Leased premises. If the business enterprise is located in leased premises and the taxpayer has not taken any of the actions specified in subsection A within three business days after padlocking, then the Department of Taxation may cause a writ of fieri facias to be issued and served as soon as practicable after expiration of the three-day period, if it has not already done so. The sheriff shall be directed to remove the property of the business enterprise from the leased premises for storage pending sale. Notwithstanding the preceding sentence, the Department of Taxation may make arrangements with the sheriff and the owner of the leased premises to store the property of the business enterprise at the leased premises for such time as may be deemed expedient.

Statutory Authority

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

Historical Notes

Derived from VR630-01-1805.1 § 5, eff. April 1, 1990.

23VAC10-20-145. Padlocked premises; penalty.

It is a Class 1 misdemeanor for any person to enter the padlocked premises without prior approval of the Tax Commissioner. For purposes of this provision:

1. Persons who enter the premises under emergency conditions to protect life or property shall be deemed to have the prior permission of the Tax Commissioner for such entry.

2. The owner of the premises, or an employee or agent of the owner who enters the premises for purposes of routine maintenance shall be deemed to have the prior permission of the Tax Commissioner for such entry.

3. Any person who desires to remove his personal property from the premises shall contact the designated agent of the Tax Commissioner to establish his ownership of the property and to obtain permission to remove it.

If the property has been repaired by the business enterprise, or other charges are owed to the business enterprise by the owner of the property, the Tax Commissioner may require payment to the Department of Taxation for such charges prior to permitting the removal of such property. Prior to permitting the removal of such property, the Tax Commissioner may require a lien holder to establish the priority and amount of his lien to establish the fair market value of the property, and to pay an amount representing the excess of the fair market value of the property over the amount secured by the lien on the property. Any payments received shall be applied first to the expenses of levy and sale, if any, then to the delinquent tax.

4. Under no circumstances will any person be deemed to have permission to enter the premises if:

a. The purpose of the entry is to operate the business enterprise, or

b. The purpose of the entry is to remove, conceal or destroy any property on the premises (unless subdivision 1 applies).

Statutory Authority

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

Historical Notes

Derived from VR630-01-1805.1 § 6, eff. April 1, 1990.

23VAC10-20-150. (Repealed.)

Historical Notes

Derived from VR630-1-1812, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; repealed, Virginia Register Volume 23, Issue 8, eff. March 10, 2007.

23VAC10-20-155. Administrative rulings.

A. Generally. Any person may request a written ruling from the Tax Commissioner when there is a question about the application of a tax to a specific situation. Any person requesting such a ruling must provide the commissioner with all facts relevant to the situation and may argue for the interpretation of the law most favorable to him. All rulings shall be issued on the basis of the facts presented. Any misrepresentation or change in the factual situations as presented in the ruling request shall invalidate any ruling rendered.

B. Effect of rulings. A written ruling becomes invalid when changed by an amendment to the law, a court decision, or a regulation issued by the commissioner. However, any person who acts on a written ruling that is later revoked, set aside, or superseded by the courts or the commissioner will have acted in good faith during the period in which such ruling is in effect.

C. Publication of rulings. Pursuant to § 58.1-204 of the Code of Virginia, the commissioner may publish any ruling deemed to be of interest to taxpayers and/or practitioners. Confidential information contained in published rulings shall be deleted.

For other administrative remedies, see 23VAC10-20-160. For the administrative appeals process, see 23VAC10-20-165.

Statutory Authority

§ 58.1-203 of the Code of Virginia.Historical Notes

Historical Notes

Derived from Virginia Register Volume 24, Issue 26, eff. October 1, 2008.

23VAC10-20-160. Assessments and administrative remedies.

A. Types of remedies. Article 2 (§ 58.1-1820 et seq.) of Chapter 18 of Title 58.1 of the Code of Virginia provides several administrative and judicial remedies for taxpayers who believe an assessment to be erroneous. In addition, § 58.1-105 of the Code of Virginia authorizes the Tax Commissioner to accept an offer in compromise in certain circumstances. The various remedies available for taxes administered by the department may be summarized as follows:

1. Offer in compromise under § 58.1-105 of the Code of Virginia, which may be used to waive or compromise a penalty for good cause or to compromise a tax based on a doubtful or disputed claim or a liability of doubtful collectibility.

2. Application for correction of an erroneous assessment under § 58.1-1821 of the Code of Virginia before payment of the assessment, which may be used to protest any or all issues connected with an assessment. See 23VAC10-20-165 for the full explanation of the administrative appeals process.

3. Amended return claiming a refund under § 58.1-1823 of the Code of Virginia, which may be used to amend a return based upon new or newly discovered facts such as errors discovered in the original return or a change in federal taxable income.

4. Protective claim under § 58.1-1824 of the Code of Virginia after payment of the assessment, which may be used to protest any or all issues connected with an assessment and, in certain circumstances, may extend the time in which taxpayer may apply to a court. See 23VAC10-20-190 for more information on protective claims.

5. If the above administrative remedies are not satisfactory to the taxpayer, an application to a court may be made under § 58.1-1825 of the Code of Virginia.

B. Exhaustion of administrative remedies. Although not required by law, taxpayers are encouraged to exhaust their administrative remedies before resorting to litigation. Administrative reviews remain confidential pursuant to §§ 58.1-3 and 58.1-204 of the Code of Virginia. Even if a dispute cannot be resolved administratively, the issues in dispute may be significantly narrowed allowing expeditious court review.

C. Person assessed. Any person assessed with any tax, as such term is defined in § 58.1-1820(1) of the Code of Virginia, may file an application for correction or a protective claim.

D. Assessments.

1. When referring to taxes administered by the department, the terms "assess" and "assessment" mean the act of determining that a tax (or additional tax) is due and the amount of such tax. An assessment may be made by the department or by the taxpayer (self-assessment).

2. When an assessment is made by the department, a written notice of the assessment must be delivered to the taxpayer by an employee of the department or mailed to the taxpayer at his last known address. The date that such notice is mailed or delivered is the date of the assessment for the purpose of any limitations on the time in which administrative and judicial remedies are available and for any other administrative purposes.

3. The written notice of an assessment made by the department is made on a form clearly labeled "Notice of Assessment" that sets forth the date of the assessment, amount of assessment, the tax type, taxable period and taxpayer. Subsequent statements that merely report payments and additional accrued interest are not assessments or notices of another assessment. An assessment may be preceded by correspondence proposing adjustments to a filed return based on an audit or other information received by the department. Such correspondence is not an assessment but is intended to provide taxpayers an opportunity to correct any errors before an assessment is made.

4. A self-assessment is usually made when the taxpayer files a return. If an annual, quarterly or monthly return is not required to be filed for a tax then the self-assessment is usually made when the tax is paid. The date of assessment is the date of filing or payment except that:

a. A return filed or tax paid before the last day prescribed by law for the filing or payment thereof, including extensions granted pursuant to law, shall be deemed to be filed or paid on such last day.

b. After the department has mailed or delivered a notice of assessment a return filed or tax paid shall be deemed filed or paid pursuant to the notice. Such filing or payment is not a self assessment. The date of assessment shall be the date the notice of assessment was mailed or delivered, not the date the return was filed or the tax paid.

c. In certain circumstances the date a return or payment is mailed will be deemed the date of filing or payment. See § 58.1-9 of the Code of Virginia.

5. A jeopardy assessment under § 58.1-313 or 58.1-631 of the Code of Virginia occurs when the Tax Commissioner finds that collection of income, sales or use taxes will be jeopardized by delay, terminates the current taxable period and assesses tax, penalty and interest. A jeopardy assessment is an assessment for purposes of administrative remedies and a taxpayer may protest either the finding of jeopardy or the amount of liability, or both.

6. The date of an assessment is not affected if the amount of the assessment is later corrected, whether the correction is the result of an application under § 58.1-1821 or 58.1-1824 of the Code of Virginia or made on the department's own initiative after receiving additional information. The department will not correct an assessment by increasing the amount of liability (except for additional accrued interest). If the department determines that the proper tax is greater than the amount previously assessed and paid, the department will make a second assessment unless the period for assessing additional tax has expired. The second assessment may be for the total amount due (in which case the first assessment will be abated) or for only that portion of the tax due that has not yet been assessed, whichever is appropriate in the opinion of the department.

7. Amended returns claiming refunds under § 58.1-1823 of the Code of Virginia are not assessments or self-assessments. However, for the purpose of allowing a taxpayer to pursue administrative and judicial remedies, the denial or failure to act upon a refund claim is deemed to be an assessment, but only as to matters first raised in the amended return claiming a refund. A matter shall not be considered first raised in an amended return claiming a refund if it was previously the subject of an audit or an application under § 58.1-1821, 58.1-1824 or 58.1-1825 of the Code of Virginia. The date of such deemed assessment shall be the date of an order of the department denying the refund claim or three months from the date the amended return was filed with the department, whichever is earlier.

Statutory Authority

§ 58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-1820, eff. January 1, 1985, with retroactive effect according to §58.1-203 of the Code of Virginia; amended, Virginia Register Volume 25, Issue 8, eff. March 8, 2009.

23VAC10-20-165. Administrative appeals.

A. Definitions. The following words and terms when used in this section shall have the following meanings unless the context clearly indicates otherwise:

"Administrative appeal" means an application for correction of an assessment filed with the Tax Commissioner pursuant to § 58.1-1821 of the Code of Virginia.

"Assessment" means a determination of the amount of tax, including additional or omitted tax, that is due. An assessment includes a written assessment made pursuant to a notice by the department or a self-assessment made by a taxpayer upon the filing of a return or otherwise not pursuant to notice. A return filed or tax paid before the last day prescribed by law for the filing or payment thereof shall be deemed to be filed or paid on the last day specified for the filing of a return or the payment of tax, as the case may be. The denial of a refund claim is deemed to be an assessment, and a taxpayer may file an administrative appeal in response to the denial of a refund claim.

"Collection action" means the use of any means permitted by law, direct or indirect, by the department, or collection agencies authorized by the department, to obtain payment on an assessment.

"Complete appeal" means 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.

"Date of assessment" means, for purposes of filing an administrative appeal, the date stated on the notice of assessment. In the case of a denial of a refund claim, the date of assessment is the date of the department's correspondence informing the taxpayer that the refund claim is denied. If the department fails to act within three months on an amended return claiming a refund, the date of assessment is the day following the expiration of the three-month period for the purpose of permitting the taxpayer to pursue an administrative appeal under § 58.1-1821 of the Code of Virginia.

"Department" means the Virginia Department of Taxation and its employees.

"Determination" means the Tax Commissioner's written final determination issued pursuant to § 58.1-1822 of the Code of Virginia to a taxpayer's administrative appeal. A determination also includes the Tax Commissioner's written response to a request for reconsideration pursuant to subsection F of this section, except as provided in subdivision F 5 of this section.

"Notice of assessment" means the department's official form labeled "Notice of Assessment" that contains written information that sets out the date of the assessment, amount of assessment, the tax type, taxable period, account number, bill number and name of the taxpayer. A subsequent statement of balance due the department does not constitute a new notice of assessment. Such subsequent statements include reports of payments applied to assessments, updated bills reflecting additional accrued interest, or other changes to an assessment. A notice of assessment may be preceded by correspondence proposing adjustments to a filed return based on an audit or other information received by the department. Such correspondence is not a notice of assessment but is intended to provide taxpayers an opportunity to correct any errors before an assessment is made.

"Notice of intent to appeal" means a taxpayer's written statement filed with the department that informs the department of a taxpayer's intent to file an administrative appeal of an assessment to the Tax Commissioner.

"Tax Commissioner" means the chief executive officer of the Department of Taxation.

"Taxpayer" means a person, corporation, partnership, limited liability company, organization, trust or estate or other entity subject to the taxes administered by the Department of Taxation.

B. Administrative appeal process.

1. Taxpayer appeal rights.

a. Section 58.1-1821 of the Code of Virginia gives a taxpayer the right to an administrative appeal of an assessment issued by the Department of Taxation, if the taxpayer believes that the department has incorrectly assessed tax, penalty or interest. The administrative appeal must include all elements listed in subsection D of this section.

b. The department strictly enforces the 90-day limitations period for filing a timely administrative appeal. A taxpayer must file a complete appeal within 90 calendar days after the date of assessment. See subsection C of this section for computing the 90-day limitations period.

c. A taxpayer is not required to pay the portion of an assessment that is the subject of an administrative appeal until the Tax Commissioner has issued a determination that requires such payment unless the Tax Commissioner determines collection is in jeopardy.

d. An administrative appeal may be filed with the department by hand delivery, email, common carrier, delivery service, United States mail, facsimile transmission or by any other means that ensures the filing of a complete appeal to the department within the 90-day limitations period.

e. The department will determine the manner best suited to resolve an appeal, which may include submission of additional documents and memoranda, further audit, holding a conference with the taxpayer or the taking of testimony.

f. An administrative appeal of an assessment filed pursuant to § 58.1-1821 of the Code of Virginia is not subject to the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).

g. An application under § 58.1-1821 of the Code of Virginia does not extend the period in which a taxpayer may apply to a court under § 58.1-1825 of the Code of Virginia. See 23VAC10-20-190 C.

2. Collection action.

a. Upon receipt of a complete appeal or a notice of intent to appeal within the 90-day limitations period, the department will suspend collection action on the contested assessment unless the Tax Commissioner determines collection of the assessment is in jeopardy.

b. When a notice of intent to appeal is filed and a complete appeal is not filed within the 90-day limitations period, the suspension of collection will be released, and collection action will resume.

c. After the Tax Commissioner has made a determination on the application, the assessment, as it may have been modified by such determination, shall become immediately collectible with accrued interest.

3. Accrual of interest.

a. While the taxpayer's administrative appeal is pending, interest will accrue on any outstanding balance pursuant to § 58.1-1812 of the Code of Virginia. To avoid the accrual of additional interest, the taxpayer may choose to make full payment of the assessment. Payment of any disputed tax, penalty, or interest shall not be construed to mean that the taxpayer is in agreement with the assessment.

b. If the taxpayer decides to make full payment and the final determination results in a refund, the taxpayer will be paid interest on the overpayment of the erroneously assessed tax pursuant to § 58.1-1833 of the Code of Virginia.

4. Acknowledgement letter.

a. The taxpayer will receive an acknowledgement letter from the department once the administrative appeal or a notice of intent to appeal has been received. The acknowledgement letter sent by the department after an appeal is filed will provide the taxpayer with the name and phone number of the analyst assigned to review the appeal.

b. The acknowledgement letter serves only to indicate receipt of the taxpayer's administrative appeal by the department. It does not acknowledge whether the administrative appeal is complete or whether the appeal was timely filed.

c. If it is determined that the taxpayer has not filed a complete appeal, the analyst assigned to the appeal will notify the taxpayer in separate correspondence.

5. Power of attorney.

a. An administrative appeal filed on behalf of a taxpayer by an attorney, accountant, tax preparer, or other representative of the taxpayer should be accompanied by a properly executed power of attorney. The power of attorney must be signed and dated by both the taxpayer and the taxpayer's representative(s).

b. A power of attorney must be filed if the taxpayer will be represented in a taxpayer conference with the department by an attorney, accountant, tax preparer, or other representative, and a power of attorney has not been previously filed with the department with regard to the administrative appeal.

c. Form PAR 101, Power of Attorney and Declaration of Representative can be found on the department's website. Form PAR 101 or any other power of attorney form that includes the same information will be accepted by the department.

d. Failure to provide a power of attorney within the 90-day limitations period does not preclude consideration of the administrative appeal; however, it may delay the issuance of the final determination.

6. Tax Commissioner's determination. The Tax Commissioner will issue a determination letter in response to the taxpayer's administrative appeal. The determination will be based on the issues raised in the taxpayer's administrative appeal.

C. Time for filing an administrative appeal. Section 58.1-1821 of the Code of Virginia provides that a taxpayer assessed with any tax administered by the department may, within 90 calendar days after the date of such assessment, file an administrative appeal with the Tax Commissioner.

1. The 90-day limitations period begins on the calendar day after the date of assessment and continues for 90 consecutive calendar days (including weekends and holidays).

2. Regardless of the delivery method used, if the 90th calendar day after the date of assessment is a Saturday, Sunday, federal holiday or Virginia state holiday, the administrative appeal will be considered timely if filed on the Commonwealth's next business day.

3. An administrative appeal that is delivered to the department using the United States mail must be postmarked or have a metered date that is on or before the 90th calendar day after the date of assessment to be considered timely filed. The department will use the United States mail postmark in cases where there is both a postmark date and a metered date on the administrative appeal. In the case of metered mail not bearing a United States mail postmark, an appeal or a request for redetermination will be deemed to be filed untimely if:

a. The metered date is missing from the metered imprint and the item is received by the department more than three business days after the last day for filing the appeal or a request for redetermination; or

b. The metered date is present bearing a timely date for the filing, but the filing is received by the department more than 10 business days after the last day for filing, in which case it is presumed that the metered date does not accurately reflect the date on which the filing was deposited with the United States Postal Service.

4. An administrative appeal that is delivered to the department by hand, by common carrier or delivery service, facsimile transmission, electronic mail (email) or any means of delivery other than by United States mail, must be dated and received on or before the 90th calendar day after the date of assessment to be considered timely filed, except as noted below.

a. An administrative appeal delivered by hand will be date-stamped by an employee of the department on the day received. This date will be the filing date for purposes of determining if the administrative appeal is filed within the 90-day limitations period.

b. The date of receipt by the carrier or delivery service shown on the shipping or address label or elsewhere on the envelope or package delivered to the department by common carrier or delivery service will be the filing date of the administrative appeal for purposes of determining if the administrative appeal is filed within the 90-day limitations period.

c. The most recent date printed on a facsimile transmission or shown on an email transmission will be the filing date of the administrative appeal for purposes of determining if the administrative appeal is filed within the 90-day limitations period unless, for whatever reason, that date is patently inconsistent with the date actually received by the department.

d. An administrative appeal received by the department via hand delivery, in an envelope or package, by facsimile transmission, by email, or by any other means of delivery bearing no legible date will be considered filed on the date of actual receipt by the department.

5. Examples of the 90-day limitations period for administrative appeals.

Example 1. The department issues Taxpayer A a notice of assessment with an assessment date of February 28, 2006. Taxpayer A files an administrative appeal with the Tax Commissioner by United States mail. The 90-day limitations period to file an administrative appeal starts on March 1, 2006, the first calendar day after the date of assessment. The 90th day after the date of assessment falls on May 29, 2006, which is a state holiday. Taxpayer A's administrative appeal will be considered timely filed if postmarked on or before May 30, 2006, the next business day following a state holiday.

Example 2. The department issues Taxpayer B a notice of assessment with an assessment date of March 13, 2006. The 90-day limitations period to file an administrative appeal starts on March 14, 2006. The 90th day after the date of assessment falls on June 11, 2006, which is a Sunday. Taxpayer B's administrative appeal will be considered timely filed if it is emailed to the department on or before June 12, 2006.

Example 3. The department issues Taxpayer C a notice of assessment with an assessment date of May 2, 2006. The department later sends Taxpayer C a statement dated June 5, 2006, showing that the original assessment remains outstanding and that additional interest has accrued on the assessment. The 90-day limitations period to file an administrative appeal begins on May 3, 2006, the first calendar day after the date of assessment. The 90th day after the date of assessment falls on August 1, 2006, which is a regular business day. Taxpayer C's administrative appeal will be considered timely filed if the envelope is postmarked or dated by a delivery service on or before August 1, 2006. The 90-day limitations period is not extended by the department's issuance of the statement dated June 5, 2006, to Taxpayer C.

D. Complete administrative appeal.

1. In order to be complete, an administrative appeal shall contain the following:

a. Identification of the taxpayer (to include mailing address, federal tax identification number or social security number);

b. Type of tax;

c. Taxable period;

d. Date of assessment (if paid, include date of payment);

e. Remedy sought;

f. A statement signed by the taxpayer or duly appointed or authorized agent or attorney setting forth each alleged error in the assessment, the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention; and

g. Controlling legal authority (statutes, regulations, rulings of the Tax Commissioner, court decisions, etc.) upon which the taxpayer's position is based.

2. Administrative appeal form.

a. The department has available an administrative appeal form that can be used to file an administrative appeal with the Tax Commissioner. While use of this form is not mandatory, the information required on the form must be included in the administrative appeal.

b. The form can be found in the appendix of the Taxpayer Bill of Rights on the department's website at www.tax.virginia.gov.

3. Supporting documentation.

a. The taxpayer should include with the administrative appeal all the essential documentation that supports its contentions.

(1) When a dealer is applying for a refund of sales tax, the dealer shall attach a list of the purchasers from whom the tax was collected and to whom the refund and interest, if allowed, will be paid.

(2) When a consumer is applying for a refund of sales or use tax assessed against a dealer or contractor, the consumer shall identify the dealer or contractor, explain the circumstances surrounding the payment by the consumer and explain why the claim for refund could not, or would not, be made by the dealer or contractor.

(3) If the supporting documentation cannot be provided at the time of filing the administrative appeal, the taxpayer should state the reasons why.

b. The department may allow the taxpayer up to 60 additional days from the date the department acknowledges receipt of the administrative appeal to submit the necessary documents. It will be within the department's discretion to allow any additional time beyond the 60 additional days.

c. In some instances, the taxpayer may be permitted to submit a sample of the supporting documents. The taxpayer must agree to make the remainder of the documents available for review by the department.

d. During the course of the administrative appeal process, the department may request additional information from the taxpayer to facilitate rendering a determination of the taxpayer's administrative appeal.

4. Incomplete appeal/notice of intent to appeal.

a. An incomplete appeal or notice of intent to appeal does not satisfy or extend the 90-day limitations period. Informal contact made by a taxpayer with the department after an assessment has been issued does not constitute a complete appeal or a notice of intent to file an administrative appeal.

b. Examples of informal contact include a phone call to an auditor or other department personnel or a meeting with department personnel to discuss the assessment.

5. Examples.

a. Complete administrative appeal.

Example 1. An administrative appeal is filed within the 90-day limitations period and includes the relevant facts, the basis for the appeal and the legal authority that support the taxpayer's position. A sample of the documentation that supports the taxpayer's position is also included. The taxpayer notes that the remainder of the documentation is available for review.

b. Incomplete administrative appeals.

Example 2. The taxpayer's representative files a notice of intent letter with the department within the 90-day limitations period, indicating that it will supplement the letter of intent with the complete grounds for appeal and documentation. The 90-day limitations period expires before the department receives the supplement.

Example 3. A taxpayer submits a written request for a conference to discuss an assessment. This action, by itself, does not constitute a complete appeal.

E. Appeal conference. Any taxpayer assessed with any tax administered by the department as stated in Title 58.1 of the Code of Virginia, and any person assessed a penalty pursuant to § 58.1-1813 of the Code of Virginia, and who has filed a complete appeal is entitled to a conference, if requested, prior to the Tax Commissioner issuing a determination.

1. Purpose of conference.

a. The appeal conference is an informal means by which a taxpayer can present legal arguments and factual documentation to the department concerning the protested issue(s) in its administrative appeal.

b. A conference to resolve an administrative appeal is not subject to the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).

2. Taxes discussed in the conference.

a. Any tax administered and assessed by the department as stated in Title 58.1 of the Code of Virginia may be discussed in the conference.

b. The taxes in Subtitle II (§ 58.1-2020 et seq.) of Title 58.1 of the Code of Virginia are administered by other state agencies. Administrative issues related to these taxes should be resolved through the appropriate agency.

3. Requesting a conference.

a. A taxpayer may request a conference at the time a complete appeal is filed with the Tax Commissioner. The conference request must be related to an audit assessment being addressed in the appeal.

b. A taxpayer may also request a conference separately while the administrative appeal is pending. The taxpayer may mail, fax, telephone or email a request for a conference to the department using the contact information located on the administrative appeals form found in the appendix of the Taxpayer's Bill of Rights on the department's website at www.tax.virginia.gov.

4. Granting a conference.

a. A taxpayer will be granted a conference provided a complete appeal has been filed within the 90-day limitations period.

b. The department will not grant a conference for an administrative appeal deemed frivolous or for cases in which a taxpayer requests a conference for the purpose of delaying collection action on a valid assessment.

5. Scheduling a conference. Every attempt will be made to schedule a date and time that is mutually convenient for both the taxpayer and the department. The department will notify the taxpayer by a confirmation letter of the date and time for the conference.

6. Location of conference.

a. A conference will normally be held in the department's main office in Richmond, Virginia. As a convenience for taxpayers, a conference may be held by telephone.

b. A conference may also be held, upon request and at the department's discretion, at other locations. A taxpayer should provide the department sufficient information to support requests for conferences at other sites.

7. Conference attendees.

a. The conference will be conducted by the Tax Commissioner or a designee(s) of the Tax Commissioner. The analyst assigned to the taxpayer's administrative appeal will also attend the conference.

b. The taxpayer and the taxpayer's representative(s) may attend the conference. The taxpayer is not required to attend. See subdivision B 5 of this section for information regarding a power of attorney.

8. Documentation.

a. The taxpayer should be prepared to submit documentation that supports or validates the issues raised in the administrative appeal, as appropriate.

b. A sample of documentation is acceptable, provided the taxpayer agrees to give the department access to the remainder of the documentation for review.

9. After the conference.

a. The Tax Commissioner or his designee will not issue a determination at the conference. The information and supporting documentation presented will be considered as part of the administrative appeal.

b. The Tax Commissioner will issue a determination to the taxpayer's administrative appeal after careful consideration of all information provided, applicable statutes and regulations.

F. Request for reconsideration. A taxpayer who disagrees with the Tax Commissioner's final determination issued pursuant to § 58.1-1822 of the Code of Virginia may request a reconsideration of the determination.

1. Requirements. In order for the Tax Commissioner to grant a request for reconsideration, the request must be received by the department not later than 45 days after the final determination and the taxpayer must demonstrate one of the following:

a. The facts upon which the original determination is based are misstated by the Tax Commissioner or are inaccurate, and the determination would have a different result based on a correction of the Tax Commissioner's misstatement of the facts presented or a clarification of the original facts presented in the taxpayer's administrative appeal;

b. The law upon which the original determination is based has been changed by legislation, court decision or other authority effective for the tax period(s) at issue;

c. The policy upon which the original determination is based is misapplied, and the determination would have a different result based on the application of the proper policy; or

d. The taxpayer has discovered additional evidence or documentation that was not available to the taxpayer at the time the original administrative appeal was filed with the department, and the additional evidence or documentation could produce a result different from the original determination.

In addition, a taxpayer's request for reconsideration must include the information required for a complete appeal. The taxpayer's request should also include the appropriate documentation (if applicable) to support the taxpayer's position. A sample of the documentation is acceptable, provided the taxpayer agrees to give the department access to the remainder of the documentation for review. Documentation provided with the original administrative appeal does not need to be resubmitted.

If at least one of the four requirements listed above is satisfied, and the request for reconsideration includes the information required for a complete appeal, the Tax Commissioner will grant a taxpayer's request for reconsideration.

2. Collection action.

a. Collection action will be suspended on the portion of the assessment related to the contested issues while the request for reconsideration is pending with the department.

b. Collection action will not be suspended on any portion of the contested assessment if the request for reconsideration fails to satisfy the requirements in subsection A of this section. For example, a notice of intent to file a request for reconsideration or a request for a conference without any other information does not meet the requirements specified in subdivision 1 of this subsection and is not sufficient to suspend collection action.

c. Collection action will not be suspended on the assessed amount attributable to any uncontested issues.

3. Conference.

a. A conference to discuss the issues raised in the request for reconsideration may be granted at the discretion of the department. In the event a conference is granted, it will be scheduled at a date and time that is mutually convenient for both the taxpayer and the department.

b. If appropriate and agreed to by both the taxpayer and the department, the conference may be held by telephone.

4. Denial of request for reconsideration. A request for reconsideration will not be granted if the Tax Commissioner determines the request is:

a. Frivolous or intended to delay collection action on an assessment ruled to be proper in a determination issued pursuant to § 58.1-1822 of the Code of Virginia.

(1) A request for reconsideration will be deemed frivolous if it is based on arguments that are not grounded in law or fact.

(2) A request for reconsideration will be deemed as intending to delay collection action if it repeats the same information contained in the taxpayer's original administrative appeal letter and offers no new information or new legal arguments.

b. Received by the department more than 45 days after the final determination.

5. The Tax Commissioner's written response denying a request for reconsideration based on a finding that (i) the request fails to meet the requirements in subdivision 1 of this subsection or (ii) one of the conditions specified in subsection D of this section exists is not a final determination pursuant to § 58.1-1822 of the Code of Virginia for purposes of filing an application for correction with the circuit court pursuant to § 58.1-1825 of the Code of Virginia.

G. The appropriate contact and mailing information related to the content of this section can be found on the department's website at www.tax.virginia.gov.

H. See 23VAC10-20-160 A for the types of administrative remedies. See 23VAC10-20-160 B for information about the exhaustion of administrative remedies.

Statutory Authority

§ 58.1-203 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 25, Issue 8, eff. March 8, 2009.

23VAC10-20-170. (Repealed.)

Historical Notes

Derived from VR630-1-1821, eff. January 1, 1985, with retroactive effect according to §58.1-203 of the Code of Virginia; repealed, Virginia Register Volume 25, Issue 8, eff. March 8, 2009.

23VAC10-20-180. Amended returns.

A. Filing.

1. Amended returns claiming a refund of any tax administered by the Department of Taxation are governed by § 58.1-1823 of the Code of Virginia.

2. The amended return shall supply all the information required in an original return and, in addition, the taxpayer must attach a statement explaining the changes made and the reasons for the changes. If the refund claim is due to a change in federal taxable income or estate, the taxpayer must furnish a copy of the Revenue Agent's Report or other appropriate notice that the change has been accepted by the Internal Revenue Service.

a. When a dealer is applying for a refund of sales tax, the dealer shall attach a list of the purchasers from whom the tax was collected and to whom the refund and interest, if allowed, will be paid.

b. When a consumer is applying for a refund of sales or use tax assessed against a dealer or contractor, the consumer shall identify the dealer or contractor, explain the circumstances surrounding the payment by the consumer, and explain why the claim for refund could not or would not be made by the dealer or contractor.

3. See § 58.1-9 of the Code of Virginia for provisions relating to filing a return by mail.

B. Final determination. For the purposes of §§ 58.1-311 and 58.1-1823 of the Code of Virginia, any one of the following shall be deemed a final determination of a change in liability for the federal tax:

1. Payment or refund of any federal income or estate tax not the subject of any other final determination described in subdivision 2, 3, 4, or 5 of this subsection. The payment of a federal income or estate tax is a final determination for Virginia purposes even though a refund suit may be pending or contemplated that could result in another final determination.

2. The receipt of an assessment or other notice that the amount of deficiency or overassessment stated on federal Form 870 or similar form has been agreed to by the IRS.

3. The expiration of the 90-day time period (150-day period in the case of notice addressed to a person outside the states of the union and the District of Columbia) within which a petition for redetermination may be filed with the United States Tax Court with respect to a statutory notice of deficiency issued by the Internal Revenue Service, if a petition is not filed with that court within such time.

4. A closing agreement entered into with the Internal Revenue Service under § 7121 of the Internal Revenue Code (26 USC § 1 et seq.). The final determination shall occur when the taxpayer receives notice of the signing by the Commissioner of Internal Revenue.

5. A decision by the United States Tax Court, a United States district court, the U.S. Claims Court, a United States court of appeals, or the United States Supreme Court that has become final, or the date the court approves a voluntary agreement stipulating disposition of the case.

C. Assessment. The denial in whole or in part of a taxpayer's claim for refund, or the department's failure to act within three months, is treated as an assessment for the purpose of permitting a taxpayer to pursue other administrative and judicial remedies, but only as to matters first raised by the amended return. Therefore an amended return should not be filed if the claim for refund involves issues that were previously considered in the course of an audit, application for correction, or protective claim.

Statutory Authority

§ 58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-1823, eff. January 1, 1985, with retroactive effect according to §58.1-203 of the Code of Virginia; amended, Virginia Register Volume 25, Issue 8, eff. March 8, 2009; Volume 33, Issue 6, eff. February 1, 2017.

23VAC10-20-190. Protective claims (after payment).

A. Filing.

1. If all assessed taxes, penalties and accrued interest have been paid and taxpayer desires to preserve his judicial remedies he may file a protective claim with the Tax Commissioner within three years of the assessment.

2. There is no form for applications for protective claims. The department will accept any submission that sufficiently identifies the taxpayer, type of tax, taxable period, remedy sought, date of assessment and the date of payment, a statement signed by the taxpayer or duly appointed or authorized agent or attorney setting forth each alleged error in the assessment, the grounds upon which taxpayer relies, and all facts relevant to taxpayer's contention, and, if appropriate, should show that determination of the facts or law applicable to taxpayer depends upon the outcome of another case pending in the department or the courts. See the department's website at www.tax.virginia.gov for the appropriate contact and mailing information.

3. An application for a protective claim filed on behalf of a taxpayer by an attorney, accountant or tax preparer must be signed by the taxpayer or accompanied by a duly executed power of attorney in favor of such representative who signs the application or claim.

4. Taxpayer may submit a protective claim even if the merits have already been administratively considered under either § 58.1-1821 or 58.1-1823 of the Code of Virginia.

B. Issues held pending litigation. If the Tax Commissioner determines that the protective claim involves facts or law which depend upon resolution of a pending case, he may, in his discretion, hold that portion of the protective claim without decision until the pending case has been decided. Upon resolution of the pending case the Tax Commissioner will decide those issues held pending such resolution. The provisions of this subsection will be strictly limited to those issues which actually depend upon resolution of a pending case; all other issues will be decided on the merits. The Tax Commissioner may require additional information about the protective claim as limited to particular issues involved in a pending case. Taxpayer will be advised as to what portion, if any, of his protective claim is being held without decision pending resolution of another case.

C. Statute of limitations.

1. Taxpayer may apply to the court under § 58.1-1825 of the Code of Virginia within one year after decision on taxpayer''s protective claim, or three years from the assessment, whichever is later.

2. If an application for correction is pending under § 58.1-1821 of the Code of Virginia and taxpayer desires to extend his right to apply to a court under § 58.1-1825 of the Code of Virginia, taxpayer may pay all assessed taxes, penalties and accrued interest and, within three years of the assessment, reapply under this section. Such reapplication may simply refer to the pending § 58.1-1821 of the Code of Virginia application, state that the assessment has been paid and request consideration under § 58.1-1824 of the Code of Virginia.

Statutory Authority

§ 58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-1824, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; amended, Virginia Register Volume 25, Issue 8, eff. March 8, 2009.

23VAC10-20-200. Interest on overpayments or improper collection.

A. Generally. Interest will be allowed and paid upon the overpayment of any tax administered by the department, the refund of which is either permitted or required under Article 2 (§ 58.1-1820 et seq.) of Chapter 18 of Title 58.1 of the Code of Virginia, at a rate equal to the rate of interest established pursuant to § 58.1-15 of the Code of Virginia. Such interest will accrue from a date 60 days after the date of the payment of the tax, except as set forth below, to a date determined by the Department of Taxation, which will not be more than 30 days prior to the date of the refund check.

B. Income tax. Refunds appearing on the face of an income tax return will accrue interest from a date 60 days after the due date for filing the return or the date on which such return was filed, whichever is later. Refunds resulting from payments of estimated tax or withholding tax can only be claimed on the face of the income tax return to which such payments apply.

C. Erroneous assessment.

1. Refunds pursuant to an erroneous assessment accrue interest from the date the assessment was paid.

2. If the assessment is a self assessment paid upon filing a return, the date the assessment is paid is the date the return is filed and the tax paid or the last day prescribed by law for filing the return, whichever is later.

3. If the assessment is a written assessment made pursuant to notice by the department, the date the assessment is paid is the date the department receives payment.

4. A refund is the result of an erroneous assessment if the refund is pursuant to an application for correction of an erroneous assessment or improper collection under § 58.1-1821 of the Code of Virginia, an amended return under § 58.1-1823 of the Code of Virginia, a protective claim under § 58.1-1824 of the Code of Virginia or an application to a court for correction of an erroneous assessment or improper collection under § 58.1-1825 of the Code of Virginia.

D. Sales tax. No interest will be paid on sales taxes refunded to a dealer unless the dealer agrees to pass such interest on to the purchaser. See 23VAC10-20-180 A 2 for more information.

E. Net operating loss. Any overpayment of tax resulting from the carryback of a net operating loss or net capital loss will be deemed to have been made on the day on which the return for the year in which the loss occurred was filed, or the last day prescribed by law for such filing, whichever is later.

Statutory Authority

§ 58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-1833, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia; amended, Virginia Register Volume 25, Issue 11, eff. March 4, 2009.

FORMS (23VAC10-20).

Power of Attorney and Declaration of Representation, PAR 101 (rev. 6/06).

Offer in Compromise Business Request for Settlement, OIC-Bus (eff. 11/08).

Offer in Compromise Individual Request for Settlement, Form 21 OIC-Ind (eff. 11/08).

Administrative Appeal Pursuant to Virginia Code § 58.1-1821.

Website addresses provided in the Virginia Administrative Code to documents incorporated by reference are for the reader's convenience only, may not necessarily be active or current, and should not be relied upon. To ensure the information incorporated by reference is accurate, the reader is encouraged to use the source document described in the regulation.

As a service to the public, the Virginia Administrative Code is provided online by the Virginia General Assembly. We are unable to answer legal questions or respond to requests for legal advice, including application of law to specific fact. To understand and protect your legal rights, you should consult an attorney.