I asked the Department to reconsider its ruling upholding my withholding tax assessments, saying the facts were wrong -- but I never actually sent the documentation to prove it. Can I still get reconsideration?

Plain-English summary

A taxpayer asked the Department to reconsider its earlier ruling, P.D. 23-50, which had upheld withholding tax assessments for the periods October 2017 through September 2020. The reconsideration request argued that the Department's methodology for calculating the unpaid withholding tax rested on an inaccurate understanding of the taxpayer's business.

The reconsideration standard, and why it wasn't met. Under 23 VAC 10-20-165 F, a reconsideration request must satisfy one of four specific grounds -- here, the taxpayer invoked the "misstated facts" ground, which requires showing the original determination would come out differently once the facts are corrected. But an assertion that the facts were wrong isn't itself proof that they were wrong. The taxpayer's representative told the Department during a June 2023 phone call that supporting documentation would be submitted within a few weeks. It never arrived -- not after that call, and not after two follow-up requests from the Department in August and September 2023. Without any actual evidence of the claimed factual error, the Department had nothing to reconsider.

Reinforced by two general rules. A Virginia tax assessment is presumed correct (Va. Code § 58.1-205), so the burden is on the taxpayer to affirmatively prove an error -- silence or an unsupported assertion doesn't carry that burden. And separately, Virginia law (Va. Code § 58.1-1826) bars courts from granting relief from an erroneous assessment where the error is attributable to the taxpayer's own willful failure to provide requested information.

Outcome. Because the taxpayer never submitted the promised documentation, the Department denied reconsideration, and P.D. 23-50 remained the Department's final determination on the withholding tax assessments.

What this means for you

Anyone requesting reconsideration of a Virginia tax determination

Simply asserting that the Department got the facts wrong doesn't satisfy the "misstated facts" ground for reconsideration -- you need to actually submit the documentation or evidence proving the correct facts, and follow through on any commitment to provide it.

Taxpayers who tell the Department documentation is "coming soon"

Follow through promptly. Here, a promise made in a June phone call to send documentation "within a few weeks" went unfulfilled even after two written follow-up requests over the following months -- and that delay was fatal to the reconsideration request.

Common questions

Q: I think the Department's prior ruling on my case was based on wrong facts -- how do I get it reconsidered?
A: You need to actually submit documentation or evidence supporting the corrected facts, not just assert that the original facts were wrong. Reconsideration under 23 VAC 10-20-165 F requires meeting one of four specific grounds, and unsupported assertions won't satisfy any of them.

Q: What happens if I promise to send supporting documents but don't follow through?
A: Your reconsideration request will likely be denied, and the original determination becomes final -- as happened here after the taxpayer's representative promised documentation in a phone call but never delivered it, even after follow-up requests.

Q: Does the Department bear any burden to prove its assessment is correct?
A: No -- a Virginia assessment is presumed correct, and the burden is on the taxpayer to prove otherwise.

Citations and references

Statutes and regulations:

• 23 VAC 10-20-165 F -- grounds for requesting reconsideration of a Department determination
• Va. Code § 58.1-205 -- Department assessment deemed prima facie correct
• Va. Code § 58.1-1826 -- no judicial relief where an erroneous assessment is attributable to the taxpayer's willful failure to provide required information

Prior rulings referenced (described here, not linked): P.D. 23-50 (5/3/2023) -- the original determination upheld on reconsideration; P.D. 12-143, P.D. 13-168, P.D. 14-136, P.D. 15-85, P.D. 17-106, P.D. 20-188, and P.D. 22-162 -- cited by the Department as prior authority (not otherwise described in this letter).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 24-14

Original ruling text

March 12, 2024

Re: § 58.1-1821 Application: Withholding Tax

Dear *:

This will reply to your letter in which you seek reconsideration of the Department's determination letter, issued as Public Document (P.D) 23-50 (5/3/2023).

FACTS

In P.D. 23-50, the Department upheld withholding tax assessments issued to * (the “Taxpayer”) for the taxable periods October 2017 through September 2020. The Taxpayer seeks a reconsideration of that determination, contending that the Department’s determination was based on an inaccurate understanding of the facts and that a correct understanding would have resulted in a different determination.

DETERMINATION

Under Title 23 of the Virginia Administrative Code (VAC) 10-20-165 F, a taxpayer’s request for reconsideration must meet one of the four following requirements:

1. 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;

2. 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;

3. 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

4. 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.

The Taxpayer argues that the Department’s methodology for calculating the unpaid withholding tax was based on an inaccurate statement of the facts surrounding the Taxpayer’s business. The Taxpayer’s appeal and the subsequent request for reconsideration failed to make clear and cogent allegations regarding the correctness of the audit assessments. During a telephone conference in June 2023, the Taxpayer’s representative stated that they would submit supporting documentation within a few weeks. When no information was received, the Department sent follow-up requests in August 2023, and September 2023. To date, the Taxpayer has failed to provide the information. Because the Taxpayer has failed to submit evidence of the alleged misstatement of facts, the reconsideration request cannot be granted. Consequently, P.D. 23-50 constitutes the Department’s final determination in this matter.

Virginia Code § 58.1-205 provides that in any proceeding relating to the interpretation of the tax laws of Virginia, an “assessment of a tax by the Department shall be deemed prima facie correct.” As such, the burden of proof is on the Taxpayer to show the assessments were incorrect. Furthermore, Virginia Code § 58.1-1826 precludes a court from granting relief to taxpayers seeking correction of erroneous state tax assessments in cases in which the erroneous assessment is attributable to the taxpayers’ willful failure or refusal to provide the Department with necessary information as required by law.

The Taxpayer will receive updated bills that will include accrued interest to date. The Taxpayer should remit the balances due within 30 days of the bill dates to avoid the accrual of additional interest and possible collection actions.

The Code of Virginia section , regulation, and public document cited are 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 determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at (804) ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/4558.X

Related Documents

12-143

13-168

14-136

15-85

17-106

20-188

22-162

23-50