TAX BULLETIN
July 15, 2003
APPEALS OF STATE TAX ASSESSMENTS
RECENT CHANGES TO ADMINISTRATIVE AND
CIRCUIT COURT APPEALS PROCEDURES
This bulletin is intended to notify taxpayers and tax practitioners that: (1) legislation enacted in the 2003 General Assembly session removes the requirement that taxpayers pay state tax assessments prior to appealing them to the circuit court; (2) the Department of Taxation (“TAX”) will strictly enforce the ninety-day statutory deadline for taxpayers to file administrative appeals of state taxes; and (3) TAX has developed a form to assist taxpayers and tax practitioners with the filing of administrative appeals.
Circuit Court Appeals
Effective July 1, 2003, legislation enacted in the 2003 General Assembly Session (House Bill 2538) eliminates the requirement of Code of Virginia § 58.1-1825 that taxpayers pay state tax assessments before appealing them to the circuit court. The legislation provides, however, that the court may require the taxpayer to pay the assessment before proceeding with the appeal if the court is satisfied that:
- TAX is likely to prevail on the merits of the case;
- The application is not well grounded in fact;
- The application is not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law;
- The application is interposed for an improper purpose, such as to harass, to cause unnecessary delay in the collection of the revenue, or to create needless cost to the Commonwealth from the litigation; or
- The application is otherwise frivolous.
In lieu of paying the tax, the taxpayer may post a bond or offer an irrevocable letter of credit within 60 days of the court's ruling. The bond or letter of credit must be in the amount of the assessment increased by twice the interest rate for tax underpayments in effect at the time the application is filed.
Additionally, the legislation safeguards the Tax Commissioner’s ability to collect an assessment if he determines that collection is in jeopardy.
Deadline to File Administrative Appeals of State Tax Assessments
Effective for assessments made on or after August 15, 2003, TAX will strictly enforce the current requirement in Code of Virginia § 58.1-1821 that taxpayers file administrative appeals with the Tax Commissioner within ninety days from the date of assessment. TAX has had a policy of accepting administrative appeals at any time within the three-year statute of limitations for pursuing a judicial remedy.
Taxpayers and tax practitioners are cautioned that they must file a complete appeal within the ninety-day statutory deadline. Filing of an incomplete appeal or a notice of intent to appeal does not satisfy or extend this deadline.
Appeals Form
Taxpayers currently make their administrative appeals by writing a letter to the Tax Commissioner with the information specified in Virginia Regulation 23 VAC 10-20-160 (C). In order to expedite the administrative appeals process and to assist taxpayers in preparing their appeals, TAX now provides an appeals form. Although this form is not mandatory, TAX strongly recommends its use. Taxpayers and tax practitioners who choose not to use this form must include the same information in their administrative appeal filing or the document will not be accepted for filing. Any incomplete written appeal, whether by form or by letter, that TAX returns to the taxpayer or practitioner will not qualify as a timely filing for purposes of the ninety-day statutory deadline. A copy of this form is attached and can also be found on our website at http://www:/policylibrary.tax.virginia.gov.
Appeals of Local Taxes
The changes described in this bulletin apply solely to appeals of state taxes that are administered by TAX. The administrative appeals processes through TAX for local taxes are not affected by these changes and continue to be governed by Code of Virginia §§ 58.1-3703.1 and 58.1-3983.1.
Other Considerations
If you have any additional questions, please contact us at (804) 367-8031 for individual income tax questions or (804) 367-8037 for business tax questions, or visit our website at http://www.tax.state.va.us.
Administrative Appeal Pursuant to Va. Code § 58.1-1821
Name of Taxpayer:______________________________________________________________
Mailing Address: ______________________________________________________________
Telephone: _______________ Fax Number: ________________E-mail address: _____________
Information Relating to Administrative Appeal
___ Individual Income Tax ___________________________
___ Corporate Income Tax ___________________________
___ Retail Sales and Use Tax ___________________________
___ Other (please specify) _______________________________
Virginia Dept. of Taxation Account No.: __________________FEIN or SSN: _______________
Date(s) of Assessment(s) Bill Number(s)
________________________ _____________________
________________________ _____________________
________________________ _____________________
Issue(s): State in as few words as possible the issue(s) you are contesting:
____________________________________________________________________________________________________________________________________________________________
Controlling Legal Authority (please cite specific relevant authorities):
Va. Code: __________________________________________________________
Regulations (Virginia Administrative Code): ________________________________
______________________________________________________________________
Prior Rulings of the Tax Commissioner (Public Documents): __________________
______________________________________________________________________
Other: ________________________________________________________________
On attached sheets, please fully describe the issue(s) contested. Please note that this appeal will be decided based on the facts before the Department of Taxation. If additional information is needed or requested, it must be furnished within the prescribed time period or the case will be decided based on the available facts.
Submitted by:* _______________________________ *A Power of Attorney must be provided authorizing representation of the Taxpayer
Address: ____________________________________________________________________
Telephone: _______________ Fax Number: _______________ E-mail address: _________________