When will Virginia grant reconsideration of a final determination -- and can I get it by arguing the Department reached the wrong result or by raising a new legal argument?

Plain-English summary

This determination explains when the Department will (and won't) reconsider a final determination — and it's a companion to the telecommunications-minimum-tax line of cases.

Background. In P.D. 24-120, the Department had upheld additional telecommunications minimum tax against an affiliated group for 2018–2020: even though certain pass-through entities were disregarded entities, they had to conform to the group's combined filing election, so each entity's minimum tax was compared to the group's combined income tax liability. The taxpayer asked the Department to reconsider, asserting the determination was wrong. The Commissioner declined and upheld the assessments.

The four reconsideration criteria. A taxpayer who disagrees with a final determination issued under Va. Code § 58.1-1822 may request reconsideration within 45 days, but the Department will grant it only if the request meets one of four specific criteria (23 VAC 10-20-165 F):

1. The facts the original determination rested on were misstated or inaccurate, and correcting them would change the result;
2. The law the determination rested on was changed by legislation, a court decision, or other authority effective for the periods at issue;
3. The policy the determination rested on was misapplied, and applying the correct policy would change the result; or
4. The taxpayer discovered new evidence that wasn't available at the time of the original appeal and that could produce a different result.

None were met — and a key clarification of criterion 3. The taxpayer's real complaint was that the Department reached the wrong result. The Commissioner explained that criterion 3 ("policy misapplied") means the Department applied the wrong law — not that the taxpayer disagrees with the outcome. There was no dispute that the correct statute — the telecommunications minimum tax under Va. Code § 58.1-400.1 — applied, and that's the law the Department applied in P.D. 24-120. If "misapplied policy" meant merely "I don't like the answer," the criteria would be meaningless, because every losing taxpayer could claim it.

New legal argument raised too late. For the first time on reconsideration, the taxpayer argued the telecom minimum tax violates the Dormant Commerce Clause of the U.S. Constitution. The Commissioner refused to reach it: legal arguments must be raised in the original application for correction, not after an adverse determination, so the process stays economical. And even if considered, the Department presumes statutes enacted by the General Assembly are constitutional.

Conference denied. A conference on a reconsideration request is discretionary (23 VAC 10-20-165 F 3). The taxpayer had already received a conference on the original appeal, and because no reconsideration criteria were met, the Department declined a second one.

Result. P.D. 24-120 stands as the Department's final determination; the assessments are upheld, with interest to date and 30 days to pay before more accrues.

What this means for you

Anyone thinking about reconsideration

Reconsideration is not a second appeal on the merits. To get it, fit your request into one of the four narrow criteria: misstated facts, changed law, the wrong law applied, or genuinely new evidence. "The Department got it wrong" — standing alone — is not a ground. And the clock is short: 45 days from the determination.

Raise every argument the first time

Save nothing for later. A new legal theory (constitutional or otherwise) introduced only after you lose generally won't be heard — the time to make your legal arguments is in your original application for correction. Front-load your strongest points.

On constitutional challenges at the agency level

The Department presumes Virginia statutes are constitutional and won't decline to enforce one on that basis. A Dormant Commerce Clause or similar constitutional challenge is realistically a matter for the courts, not agency reconsideration — plan your procedural strategy accordingly.

Common questions

Q: Can I get reconsideration just because I think the Department decided wrong?
A: No. Disagreeing with the result is not a ground. You must meet one of four criteria (23 VAC 10-20-165 F): misstated facts, a change in the law, the wrong law/policy applied, or new evidence unavailable earlier. "Policy misapplied" means the Department applied the wrong law — not that you dislike the outcome.

Q: I have a new legal argument. Can I raise it on reconsideration?
A: Generally no. Legal arguments must be raised in your original application for correction. A new argument (here, a Dormant Commerce Clause challenge) offered only after an adverse determination is too late — and the Department presumes statutes are constitutional in any event.

Q: How long do I have, and can I get a conference?
A: You must request reconsideration within 45 days of the determination. A conference is discretionary; the Department can decline one, especially where none of the reconsideration criteria are met.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-1822 — the Tax Commissioner's final determination on an application for correction
• Va. Code § 58.1-400.1 — telecommunications company minimum tax (the law applied in the underlying determination)
• Va. Code § 58.1-1821 — application to the Tax Commissioner for correction of an assessment
• 23 VAC 10-20-165 F — the four criteria for reconsideration and the 45-day deadline; F 3 — a conference is discretionary

Related authorities (described here, not linked): P.D. 24-120, the underlying determination on the affiliated group's telecommunications minimum tax; prior public documents on the narrow scope of reconsideration (P.D. 20-188, 23-83, 24-131); and P.D. 24-80 on the Department's presumption that statutes are constitutional. For the parallel pass-through minimum-tax analysis where the corporate owner filed separately (rather than combined), see P.D. 25-88.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-91

Original ruling text

June 25, 2025

Re: § 58.1-1821 Application: Corporate Income Tax

Dear *:

This will respond to your letter in which you seek reconsideration of the Department’s determination letter, issued as Public Document (P.D.) 24-120 (11/14/2024).

FACTS

In P.D. 24-120, the Department found that, even though certain pass-through entities (PTEs) were disregarded entities, they must conform to the election made by the * (the “Taxpayer”) affiliated group for purposes of determining their telecommunications company minimum tax. Thus, in calculating each PTE’s income tax as if it were a corporation, it would be treated as an affiliate in the combined group. Therefore, the PTEs’ separate minimum tax liabilities were properly compared to the group’s combined income tax liability and the additional minimum tax assessed for the 2018 through 2020 taxable years was upheld, subject to certain adjustments not relevant here. The Taxpayer seeks reconsideration of P.D. 24-120, asserting that the Department’s determination was incorrect.

DETERMINATION

Reconsideration

Title 23 of the Virginia Administrative Code (VAC) 10-20-165 F provides that a taxpayer who disagrees with the Department’s final determination issued pursuant to Virginia Code § 58.1-1822 may request a reconsideration of the determination. In order to grant a request for reconsideration, the Department must receive the request no later than 45 days after the date of the determination letter, and a taxpayer must meet one of four specific criteria set forth in that section:

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.

In this case, none of the reconsideration criteria have been satisfied. The Taxpayer should be aware that the Department interprets the third criterion to mean that the Department has not applied the correct law to the case. Here, there is no dispute that the statutory and regulatory provisions relating to the telecommunications minimum tax assessed by Virginia Code § 58.1-400.1 apply, and this was the law that the Department applied to the facts in P.D. 24-120. The Taxpayer simply believes that the Department reached the incorrect result. If the Department were to interpret the third criterion in that manner, there would be no reason to have criteria. Every taxpayer who asks for a reconsideration could simply say that the Department “misapplied” policy by not arriving at the result the taxpayer was seeking. See P.D. 20-188 (11/10/2020), P.D. 23-83 (7/13/2023), and P.D. 24-131 (12/13/2024).

In addition, the Taxpayer presented a new legal argument with its reconsideration request, asserting that the telecommunications company minimum tax violates the Dormant Commerce Clause of the United Sates Constitution. This argument was not raised in the first application for correction. The reconsideration criteria are in place to ensure an economical administrative adjudication process. The time for a taxpayer to raise legal arguments is when they first submit their application for correction to the Department, not after they receive an adverse determination. Even if the Department were to consider this argument, it is the Department’s policy to presume that all statutes enacted by the General Assembly and incorporated into the Code of Virginia are constitutional. See P.D. 24-80 (8/21/2024).

Conference

The Department acknowledges that the Taxpayer requested a conference with its reconsideration request. Title 23 VAC 10-20-165 F 3 provides that a conference to discuss issues raised in a request for reconsideration may be granted at the discretion of the Department. In this case, the Department granted a conference requested with the original application for correction, but determined not to grant an additional conference because, in the Department’s opinion, none of the reconsideration criteria have been met.

CONCLUSION

While the Department recognizes the Taxpayer’s disagreement with its determination in P.D. 24-120, the Taxpayer has not satisfied any of the four possible criteria for reconsideration. Consequently, P.D. 24-120 constitutes the Department’s final determination in this matter.

The assessments, therefore, are upheld. 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 sections and regulations cited are available online at law.lis.virginia.gov. The public documents cited are available at 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 and Legal Affairs, Tax Adjudication and Resolution Division, at or **.

Sincerely,

Kristin L. Collins

Deputy Tax Commissioner

Commonwealth of Virginia

AR/5100.X

Related Documents

20-188

23-83

24-80

24-120

24-131