Can I get a Virginia responsible-officer assessment reconsidered by changing my story about how much of the company I owned, or by asking the Department to waive interest that built up during my appeal?

Plain-English summary

A taxpayer had been assessed withholding and sales tax liabilities as the "responsible officer" of a corporation that failed to pay its own tax debts -- Virginia law lets the Department convert a delinquent business's tax liability to a responsible individual under certain circumstances. In an earlier determination, P.D. 21-154, the Department partly sided with the taxpayer, abating the converted assessments for one period but upholding them for March through November 2015, finding she was a responsible officer for that later period based in part on her own statement that she'd become the corporation's sole shareholder in March 2015. She timely asked the Department to reconsider that determination.

Reconsideration in Virginia requires meeting one of four specific grounds: misstated facts, a change in law, a misapplied policy, or genuinely new evidence unavailable at the time of the original appeal. Here, the taxpayer tried to argue the facts were wrong, claiming she never actually owned 100% of the corporation in 2015, but that directly contradicted her own prior statement in her original appeal letter, where she'd said she was the corporation's sole shareholder starting in March 2015. Since she offered no new evidence to support her changed story, just a bare assertion contradicting what she'd previously told the Department herself, the Department found this didn't satisfy the misstated-facts ground. She also repeated her earlier argument that she lacked the intent and authority needed to be a responsible officer, an argument the Department had already fully considered and rejected in P.D. 21-154, with no new law or facts offered to revisit it.

The taxpayer separately asked the Department to abate the interest that had accrued while her appeal was pending, given how long the review took. The Department explained that interest under Virginia law is mandatory, not a penalty, and represents a fee for the Commonwealth's use of money that was rightfully due -- it accrues regardless of how long an appeal takes, and the only way to stop it from accruing during a pending appeal is to pay the assessment in full up front. Interest can only be reduced if the underlying tax itself changes; since the tax assessment here was correct, there was no basis to abate any of the accrued interest.

The reconsideration request was denied, and the original determination in P.D. 21-154 stands as the Department's final word on the matter.

What this means for you

Anyone seeking reconsideration of a Virginia tax determination

Be consistent with the facts you've already told the Department. Trying to walk back or contradict a fact you personally stated in your own original appeal, without new supporting evidence, will not satisfy the "misstated facts" ground for reconsideration -- it will likely be seen as simply disagreeing with an unfavorable result.

Anyone whose appeal is taking a long time to resolve and worried about accruing interest

Interest continues to accrue on any outstanding balance while your appeal is pending, and Virginia law treats that interest as mandatory, not something the Department can waive out of sympathy for appeal delays. If you want to stop the accrual, you need to pay the assessment in full while your appeal proceeds; if you win, the payment gets adjusted accordingly.

Individuals designated as a "responsible officer" for a delinquent business's tax debts

Once the Department has fully analyzed your intent-and-authority arguments in an original determination, simply repeating those same arguments in a reconsideration request, without new law or new facts, will not reopen the analysis.

Common questions

Q: Can I get reconsideration by disputing a fact I previously told the Department myself?
A: Not without new supporting evidence -- contradicting your own prior statement, without more, doesn't establish that the original determination misstated the facts; it looks instead like simply disagreeing with the outcome.

Q: Does interest stop accruing on a Virginia tax assessment while my appeal is being decided?
A: No -- interest continues to accrue on any unpaid balance during the Department's review of an appeal; the only way to avoid it is to pay the assessment in full while the appeal is pending.

Q: Can the Department waive interest just because an appeal took a long time to resolve?
A: No -- interest is mandatory under Va. Code § 58.1-1812 and represents a fee for the use of money properly owed, not a penalty; it can only be reduced if the underlying tax liability itself is adjusted.

Citations and references

• 23 VAC 10-20-165 F (four grounds for requesting reconsideration)
• Va. Code § 58.1-1825 (judicial appeal statute of limitations; final determination)
• Va. Code § 58.1-1812 (mandatory interest on tax assessments)
• P.D. 21-154 (12/14/2021) (the original determination sought to be reconsidered)

Subject

Administration : Appeal - Reconsideration Requirements; Assessments - Interest Converted Assessment : Responsible Officer

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 22-162

Original ruling text

December 30, 2022

Re: Request for Reconsideration: Retail Sales and Use Tax

Dear *:

This will respond to your letter submitted on behalf of * (the “Taxpayer”) in which you seek correction of the withholding tax and retail sales and use tax assessments converted to the Taxpayer as a responsible officer of *** (the “Corporation”) for the periods March 2015 through November 2015. I apologize for the delay in responding to your request.

FACTS

The Corporation was issued assessments for various withholding and retail sales and use tax liabilities, penalties, and interest for the period July 2013 through November 2015. When the Corporation failed to satisfy the assessment, the delinquent assessments were converted to the Taxpayer as a responsible officer. The Taxpayer appealed the converted assessments, alleging that she was not a responsible officer because she lacked the requisite intent and authority necessary to convert the assessments. The Department responded in Public Document (P.D.) 21-154 (12/14/2021), abating the converted assessments for the period July 2013 through February 2015 and upholding the assessments for the periods March 2015 through November 2015. The Taxpayer timely requested reconsideration of the Department’s determination in P.D. 21-154.

DETERMINATION

Title 23 of the Virginia Administrative Code (VAC) 10-20-165 F allows a taxpayer who disagrees with the Department’s final determination issued pursuant to an administrative appeal to request reconsideration. A request for reconsideration must demonstrate one of the following:

a. The facts upon which the original determination is based are misstated by the Tax Commissioner or are inaccurate, and the determination would have a different result based on a correction of the Tax Commissioner’s misstatement of the facts presented or a clarification of the original facts presented in the taxpayer’s administrative appeal;

b. The law upon which the original determination is based has been changed by legislation, court decision, or other authority effective for the tax period(s) at issue;

c. The policy upon which the original determination is based is misapplied, and the determination would have a different result based on the application of the proper policy; or

d. The taxpayer has discovered additional evidence or documentation that was not available to the taxpayer at the time the original administrative appeal was filed with the department, and the additional evidence or documentation could produce a result different from the original determination.

In this case, it appears the Taxpayer is asserting that the facts relied upon by the Department are incorrect. Specifically, the Taxpayer states, “([d]espite the Department’s assertion to the contrary) [i]n 2015, [the Taxpayer] never owned 100% of [the Corporation].” However, the Taxpayer’s appeal letter stated that she was the sole shareholder of the Corporation beginning in March 2015. Because the Taxpayer’s request for reconsideration contradicts her previously provided facts and is unsupported by any additional evidence, the Department cannot find that the facts upon with the original determination was based are misstated or inaccurate.

The Taxpayer also continues to assert that she was not a responsible corporate officer because she lacked the requisite intent and authority necessary to convert the assessments. The Department already analyzed these arguments in P.D. 21-154. The Taxpayer has not asserted any change in law or facts that would alter the Department’s analysis. While the Department recognizes that the Taxpayer continues to disagree with the assessment, this represents the Department’s final determination on the matter for purposes of the period of limitations under Virginia Code § 58.1-1825.

Finally, the Taxpayer requests that the Department abate the interest accrued during the Department’s review of her appeal. The Department sent a letter acknowledging receipt of the Taxpayer’s appeal and explaining that interest continues to accrue on any outstanding balance during the Department’s review of the Taxpayer’s case. To avoid the accrual of interest, the Taxpayer was required to make full payment of the assessment. The application of interest is mandatory under Virginia Code § 58.1-1812, and it cannot be waived unless the associated tax is adjusted. Interest is not assessed as a penalty, but represents a fee for the use of money that was properly due to the Commonwealth. As such, the Department finds no basis for abating any portion of the assessed interest.

Accordingly, the assessment is upheld. The Taxpayer will receive an updated bill shortly with accrued interest to date. Full payment should be made within 60 days of the date on the bill to avoid the accrual of additional interest and possible collection action.

The Code of Virginia section, regulation, and public document cited are available online at www.tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at , or via email at **.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/4062-C

Related Documents

21-154