What happens when a Virginia sales-tax taxpayer first provides supporting audit documentation during its administrative appeal?

Plain-English summary

The taxpayer's sales and use tax appeal centered on documents it had not been able to provide during the audit. Once the taxpayer supplied those documents on appeal, the Tax Commissioner did not decide the underlying tax issues immediately.

Instead, the Department closed the appeal and referred the material to field audit staff. The auditor was directed to review it and make any appropriate adjustments. If unresolved issues remained after the revised audit, the taxpayer could submit another appeal within 90 days of the audit revision under Va. Code § 58.1-1821 and 23 VAC 10-20-165.

What this means for you

New evidence may send the case back to the auditor

An administrative appeal is not necessarily the first place the Department will substantively evaluate documents that were missing during the audit. The Tax Commissioner may close the appeal so field staff can revise the audit first.

Watch for a new appeal deadline

If the revised audit still contains disputed items, the taxpayer must act within the new 90-day window measured from the audit revision.

Common questions

Did the Tax Commissioner rule that the taxpayer's documentation proved an exemption? No. The ruling only referred the documents to field audit staff for review and possible adjustment.

Was the taxpayer barred from appealing again? No. It could appeal within 90 days after the revised audit if issues remained.

Citations and references

• Va. Code § 58.1-1821 -- administrative appeal procedure and deadline.
• 23 VAC 10-20-165 -- Virginia administrative appeals regulation.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 20-51

Original ruling text

April 6, 2020

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

Dear *:

The Department previously acknowledged receipt of your appeal filed on behalf of * (the “Taxpayer”). The main contention in the appeal related to documentation the Taxpayer was not able to provide during the audit review. The Taxpayer has provided this documentation upon appeal.

The documentation will be referred to the appropriate field audit staff for review and to make adjustments, as appropriate. At this time the appeal is being closed. At the conclusion of the auditor’s review, should any issues remain, the Taxpayer may submit an appeal within 90 days of the audit revision in accordance with Virginia Code § 58.1-1821 and Title 23 of the Virginia Administrative Code 10-20-165.

If you have any questions regarding the review of documentation, you may contact the auditor. If you have any questions about the appeals process, please contact * in the Department’s Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/2169L