November 14, 2025
Re: § 58.1-1821 Appeal: Retail Sales and Use Tax
Dear ***** :
This will respond to your letter in which you seek correction of the retail sales and use tax assessment issued to ***** (the “Taxpayer”) resulting from an audit for the period August 2017 through July 2023.
FACTS
A first generation audit was conducted on the books and records of the Taxpayer, a commercial bakery, for the period at issue. The audit concluded that certain purchases were either of parts and equipment not used in the manufacturing process, they lacked invoices, or were of materials not used in exempt activities and therefore listed those purchases as exceptions. The Taxpayer filed an application for correction contending that the audit was inconsistent with the treatment of the purchases and erroneously disallowed items purchased for quality control testing, sanitizing, and cleaning.
ANALYSIS
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 requirements 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.”
The audit assessment was issued on March 3, 2025. The Taxpayer submitted a notice of intent to file an application on May 2, 2025 indicating that it was aware of the 90-day limitation period and it intended to timely file its application for correction. The Taxpayer filed its application with the Department on June 10, 2025, after the 90-day statutory requirement had expired. Consequently, the Department is barred by the statute from considering the application.
DETERMINATION
In accordance with the facts available and the authorities cited, the Department is, therefore, closing this filing, and the assessment remains due and payable. 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 30 days from the date of the bill.
The Code of Virginia section and regulation cited are available online at law.lis.virginia.gov. 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,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/5242.B