Must Virginia finish collecting an assessed tax within seven years, or only begin a collection effort within that period?

Subject

Timely collection action could continue beyond seven years

Plain-English summary

Virginia interpreted the seven-year limit as a deadline to make or institute a collection effort, not a deadline to finish collecting the debt. If collection action began within seven years after assessment, the Department's policy allowed collection to continue until the assessment was satisfied.

The statute covered levy, court proceedings, and other collection means available under Virginia law. The ruling said a collection effort begins when the Department levies an assessment and encompasses the statutory methods used to collect it.

What this means for you

• Do not assume a tax debt disappears merely because seven years have passed since assessment.
• The key question under this ruling was whether Virginia initiated a collection effort within the statutory period.
• The document stated Department policy in 2014; current statutes and the debt's actual collection history must be checked.

Citations and references

• Va. Code § 58.1-1802.1 A.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 14-177

Original ruling text

October 17, 2014

Re: Request for Ruling: Period of Limitations

Dear *:

This will reply to your letter in which you request a ruling concerning the period of limitations for collecting taxes. I apologize for the delay in responding to your request.

FACTS

Under Va. Code § 58.1-1802.1, the period of limitations for the Department to make or institute collection action by levy, proceeding in court, or any other means under Virginia law is seven years from the date of the assessment. You request a ruling as to the applicability of this statute.

RULING

Virginia Code § 58.1-1802.1 A provides in pertinent part:

Where the assessment of any tax imposed by this subtitle has been made within the period of limitation properly applicable thereto, such tax may be collected by levy, by a proceeding in court, or by any other means available to the Tax Commissioner under the laws of the Commonwealth, but only if such collection effort is made or instituted within seven years from the date of the assessment of such tax. [Emphasis added.]

A collection effort with regard to a taxpayer commences when it levies an assessment and encompasses all means of collecting taxes enumerated under Virginia statutes. In general, some form of collection action is usually taken early on within the seven year limitations period. It has been the Department's policy that so long as the any collection action is initiated or made before the end of the period of limitations, collection may continue until the assessment is satisfied.

The Code of Virginia section cited is available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department's web site. If you have any questions regarding this ruling, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns
Tax Commissioner

AR/1-5531200166.o