Can I re-appeal a Virginia sales tax audit if I already had a chance to submit documentation and missed the deadline?

Plain-English summary

The taxpayer operates a wedding and lifestyle photography business. A Department audit found untaxed sales and untaxed purchases, and the taxpayer argued its gross sales were overstated. The problem was timing: the taxpayer had already appealed this same audit in 2016. In response, a Department letter dated February 23, 2017 gave the taxpayer 30 days to submit documentation supporting the overstated-sales claim, expressly warning that if nothing came in, the assessment would be treated as valid as issued.

The taxpayer did not provide the documentation within that window, so the assessment was never adjusted and updated bills were issued. Because the taxpayer had its chance and let the deadline lapse, the Commissioner held that the current appeal is barred from further review, and closed the matter.

What this means for you

Deadlines in a Virginia audit appeal are real. When the Department gives you a set number of days to produce documentation and warns that the assessment will otherwise stand, that window is your opportunity — missing it makes the assessment final, and you generally cannot revive the same dispute by filing a second appeal later. If you disagree with an audit, assemble and submit your records the first time, within the stated deadline.

Common questions

Q: I missed the documentation deadline on my first appeal. Can I try again?
A: Generally no. Here the taxpayer let a 30-day deadline pass, the assessment became final, and a later appeal on the same issue was barred from further review.

Q: Why was the assessment treated as valid?
A: The Department's prior letter conditioned any adjustment on receiving documentation within 30 days and warned the assessment would otherwise stand; the taxpayer submitted nothing, so that condition was never met.

Citations and references

• Va. Code § 58.1-1821 — application to the Tax Commissioner for correction of an assessment

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 20-125

Original ruling text

July 14, 2020

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

Dear *:

This is in response to your letter submitted on behalf of * (the “Taxpayer”), in which you seek correction of the retail sales and use tax assessments issued for the period May 2012 through February 2016.

The Taxpayer operates as a wedding and lifestyle full service photography business. The Department’s audit of the Taxpayer’s records disclosed untaxed sales and untaxed purchases. The Taxpayer disagrees with the audit results, contending gross sales are overstated. The Taxpayer requests the Department review the records the Taxpayer provides and revise the audit assessments.

The Taxpayer appealed this matter previously in 2016. In the Department’s response to the Taxpayer, in a letter dated February 23, 2017, the Taxpayer was allowed 30 days from the date of the letter to provide documentation supporting the Taxpayer’s contention that gross sales were overstated. The letter explained that if the documentation was not submitted in the 30-day time frame, the assessment would be considered valid as issued. The Taxpayer did not provide the documentation to the auditor and, therefore, the assessment was not adjusted and updated bills were mailed to the Taxpayer. Based on the conditions set forth in the Department’s prior response and the Taxpayer’s failure to provide the documentation within the required time frame, the current appeal is barred from further review. Accordingly, this appeal matter is closed.

If you have any questions about this response, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/3326L