Did a timely notice of intent preserve a Virginia sales-tax appeal or avoid the 20% post-amnesty penalty when no complete appeal followed?

Subject

A complete administrative appeal not timely filed.

Plain-English summary

Virginia barred the appeal because the taxpayer filed only a notice of intent, not a complete appeal, within 90 days. The Department issued the assessment on July 13, 2010. The taxpayer sent a notice of intent on September 21, but the October 11 deadline passed without a filing that fully stated the grounds and relevant facts.

The cited statute and regulation expressly said that an incomplete appeal or notice of intent did not satisfy or extend the 90-day period. The taxpayer was therefore barred from seeking correction from the Tax Commissioner.

Virginia also upheld a 20% post-amnesty penalty. The ruling said the penalty had been added after the assessment was not paid within 30 days. A first-audit exception required all four guideline conditions, including timely payment of uncontested liability and proper treatment of contested liability. Because no complete appeal established a contested amount and payment came 56 days after assessment, the remaining penalty was due.

What this means for you

• A notice that you plan to appeal is not the same as a complete Virginia tax appeal.
• File the grounds, relevant facts, and requested relief within the 90-day period.
• Missing the appeal deadline can also affect whether an amount is treated as contested under related penalty rules.
• Historical tax-amnesty penalty conditions were cumulative; satisfying only some conditions was not enough.

Common questions

Was the September notice timely?

It arrived within 90 days, but it did not preserve the appeal because it was only a notice of intent.

Why did the first-audit exception not remove the penalty?

The taxpayer did not meet all four conditions: no complete appeal established a contested liability, and the unpaid amount was not paid within 30 days.

Citations and references

• Va. Code § 58.1-1821.
• 23 VAC 10-20-165(D)(4)(a).
• Va. Code §§ 58.1-1840.1(F)(1) and 58.1-1825.
• Virginia Tax Amnesty Guidelines, P.D. 09-140.
• P.D. 06-140.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 11-21

Original ruling text

February 18, 2011

Re: § 58.1-1821 Application: Retail Sales and Use Tax

Dear *:

This will reply to your letter notifying the Department of your intent to protest a retail sales and use tax assessment issued to * (the "Taxpayer") for the period June 2006 through May 2009.

Timely Filing of Appeal

The Department audited the Taxpayer and issued an assessment dated July 13, 2010. The Taxpayer filed a notice of intent to appeal the assessment on September 21, 2010. Virginia Code § 58.1-1821 states, "Any person assessed with any tax administered by the Department of Taxation may, within ninety days from the date of such assessment, apply for relief to the Tax Commissioner. Such application shall be in the form prescribed by the Department and shall fully set forth the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention."

Pursuant to Va. Code § 58.1-1821 and Title 23 of the Virginia Administrative Code 10-20-165, a complete appeal must be filed with the Tax Commissioner within ninety days from the date of assessment. Subsection D 4 a of the regulation states, "[a]n incomplete appeal or notice of intent to appeal does not satisfy or extend the 90-day limitations period." Based on the provisions of Va. Code § 58.1-1821 and P.D. 06-140, the Taxpayer was required to file a complete administrative appeal by October 11, 2010. As of the date of this letter, a complete appeal detailing the grounds upon which the Taxpayer relies and all relevant facts has not been received by the Department. The Taxpayer is now barred from filing an application for correction of the subject assessment.

Post-Amnesty Penalty

In accordance with Va. Code § 58.1-1840.1 F 1 and section VI of the Virginia Tax Amnesty Guidelines [P.D. 09-140 (9/28/09)], a 20% post-amnesty penalty was added to the assessment on August 23, 2010 for non-payment of the assessment within the 30-day period allowed for payment of the assessment. On September 7, 2010, the Taxpayer made a payment of * which was 56 days after the assessment date. The amnesty penalty assessed was , and the Department's records indicate that this amount remains outstanding on bill **.

Pursuant to subsection VI (6) of the amended Virginia Tax Amnesty Guidelines, no post-amnesty penalty applies to:

Any assessment generated from a field audit of a business for an amnesty eligible period, provided that the audit is TAX's first audit of the taxpayer, no penalty has been applied to the tax deficiency, any uncontested liability is paid within 30 days from the date of assessment, and payment for any contested liability remaining upon resolution of an appeal under Va. Code §§ 58.1-1821 or 58.1-1825 is paid within 30 days from the date of the Tax Commissioner's or the court's final determination.

The Taxpayer must meet all four conditions to avoid the post-amnesty penalty or to have it waived after it is imposed. This audit was the Department's first audit of the Taxpayer for sales and use tax purposes. No penalty was initially assessed in the audit. The Taxpayer filed an intent to contest the tax assessment but a complete appeal was not filed within the 90-day statutory time period. By not filing the appeal, the Taxpayer never established that it was contesting all or a portion of the liability at issue. Thus, the uncontested tax was not paid within 30 days of the date of assessment and the post­ amnesty penalty of * is dues and payable. An updated bill will be issued to the Taxpayer and should be paid within 30 days.

The Code of Virginia sections and public documents cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions regarding this response, you may contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Linda D. Foster

Deputy Tax Commissioner

AR/1-4562868261.S