February 16, 2021
Re: § 58.1-1821: Retail Sales and Use Tax
Dear *****:
This is in response to your letter in which you seek clarification of the retail sales and use tax assessment issued to ***** (the "Taxpayer"), for the period of February 2016 through June 2019.
FACTS
The Taxpayer operates a nail salon which offers services such as manicures, pedicures, and massages. The Taxpayer also makes retail sales. The Department’s audit disclosed that the Taxpayer made untaxed purchases. The Taxpayer seeks clarification of the results of the audit based on documentation provided to the auditor. The Taxpayer includes the previously reviewed documentation with its appeals correspondence.
DETERMINATION
Appeal Not Timely Filed
Virginia Code § 58.1-1821 states that "[a]ny person assessed with any tax administered by the Department of Taxation may, within ninety days from the date of such assessment, apply for relief to the Tax Commissioner." Title 23 of the Virginia Administrative Code (VAC) 10-20-165 interprets Virginia Code § 58.1-1821 and sets out guidelines for the filing of administrative appeals. Subsection D 4 of this regulation states: "An incomplete appeal or notice of intent to appeal does not satisfy or extend the 90-day limitation period."
Pursuant to Virginia Code § 58.1-1821 and Title 23 VAC 10-20-165, the Taxpayer was required to file a complete administrative appeal no later than December 30, 2019. The Taxpayer's correspondence to the Department via facsimile was sent on May 18, 2020 and, therefore, is not a timely appeal filed with the Department. Accordingly, the Taxpayer is barred from filing an application for correction of the assessments.
In addition, the Taxpayer requests a conference to discuss the audit results. It is my understanding that the auditor gave the Taxpayer multiple deadlines to respond to documentation requests. During a final documentation review, the Taxpayer did not produce any documentation to warrant revision of the assessment. For example, the auditor notes that most of the invoices submitted by the Taxpayer were not in the same sample year as the transactions listed on the exceptions list. Other invoices submitted to the auditor contained taxable items upon which no tax was paid on the invoice. The auditor explained to the Taxpayer that any additional documentation would have to be reviewed during an appeal due to the sufficient amount of time allowed for documentation review during the audit. It is my understanding that the auditor sent an audit closure letter dated October 1, 2019 that included information regarding the Taxpayer’s liability, appeal requirements, and a field audit report. The Taxpayer has not submitted a timely or complete appeal with alleged errors. The Taxpayer also has not provided any new documentation for review. Accordingly, the Taxpayer’s request for a conference cannot be granted.
Based on this determination, the assessment is correct. An updated bill, with interest accrued to date, will be mailed shortly to the Taxpayer. No further interest will accrue provided the outstanding assessment is paid within 60 days from the date of this letter.
The Code of Virginia section and regulation cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department’s web site. If you have any questions about this response, you may contact ***** in the Department’s Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/3425.G