What happens when a taxpayer supplies, on appeal, the audit documentation it could not produce during the audit itself?

Plain-English summary

This is a short, procedural determination. The taxpayer's entire appeal came down to documentation it had not been able to provide during the audit review. On appeal, the taxpayer produced that documentation.

Rather than rule on the merits, the Department did the sensible thing: it referred the documentation to the field audit staff to review and make any warranted adjustments, and closed the appeal at this stage. The Commissioner made clear this closure does not cut off the taxpayer's rights -- once the auditor finishes and issues any audit revision, if issues remain the taxpayer may file a new appeal within 90 days of that revision under Va. Code Sec. 58.1-1821 and 23 VAC 10-20-165.

What this means for you

Provide your documentation during the audit if you can

The cleanest path is to give the auditor your records while the audit is open. Documentation that surfaces only on appeal typically gets sent back to the audit staff for review rather than decided by the Commissioner.

An appeal closure for review is not a dead end

If your appeal is closed so the auditor can review new documentation, watch for the audit revision -- your 90-day clock to appeal again runs from that revision, not from the original assessment.

Common questions

Did I lose by having my appeal closed? No. The Department sent your documentation to the audit staff to adjust the audit as appropriate; you keep the right to appeal again within 90 days of the resulting revision.

When does my new 90-day appeal window start? From the date of the audit revision the auditor issues after reviewing your documentation (Va. Code Sec. 58.1-1821; 23 VAC 10-20-165).

Citations and references

• Va. Code Sec. 58.1-1821 -- application to the Tax Commissioner; a complete appeal must be filed within 90 days of an assessment (or revision).
• 23 VAC 10-20-165 -- administrative appeal and reconsideration procedures.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 20-66

Original ruling text

April 28, 2020

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

Dear *:

The Department previously acknowledged receipt of your appeal submitted on behalf of * (the “Taxpayer”). The main contention in the appeal regarded documentation the Taxpayer was not able to provide during the audit review.

The Taxpayer has provided this documentation upon appeal that 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/2235L