April 16, 2025
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you dispute the collectibility of the individual income tax assessments issued to ***** (the “Taxpayer”), for the taxable years ended December 31, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2008, 2010, and 2011.
FACTS
The Taxpayer failed to file Virginia individual income tax returns for the taxable years at issue. As a result, the Department issued assessments. The Department has collected some of the balance due. The Taxpayer filed an application for correction asserting that the assessments are no longer collectible because the seven-year statute of limitations has expired.
DETERMINATION
Although Virginia Code § 58.1-1802.1 currently limits the Department’s collection actions to seven years from the date of assessment, even if collection action has been initiated within the seven-year period, the statute of limitations has been amended several times due to legislative action. The current statute of limitations applies only to assessments made on or after July 1, 2016. See Virginia Code § 58.1-1802.1 A. Because the assessments at issue were made prior to that date, the statute as currently enacted does not apply to the Taxpayer’s assessments.
Until 1990, Virginia law provided no limitation on the Department’s ability to collect assessments. In 1990, legislation was passed that required the Department to institute collection action within 20 years from the date of the assessment. This period of limitations was reduced from 20 years to 10 years from the date of assessment in 2010 and from 10 years to seven years in 2012.
For assessments made prior to the 2016 amendments, it is the Department’s longstanding policy that, as long as any collection action was initiated or made before the end of the period of limitations, collection can continue until the assessment is satisfied. A collection effort with regard to a taxpayer commences when the Department levies an assessment and encompasses all means of collecting taxes enumerated under Virginia statutes. In general, some form of collection action is usually taken early within the limitations period. As such, if the Department instituted a collection action within 20 years of the assessments issued for the 1998 through 2006 taxable years, within 10 years for the assessment issued for the 2008 taxable year, and within seven years for the assessments issued for the 2010 and 2011 taxable years, the assessments remained eligible for collection. See Public Document (P.D.) 14-177 (10/14/2014) and P.D. 23-27 (3/15/2023).
The Taxpayer states that he did not receive any collection notices until May 2023. According to the Department’s records, however, from May 2004 through June 2023, the Department issued various consolidated bill notices, bank liens, and Treasury Offset Program (TOP) notifications concerning the assessments at issue, all of which the Department considers collection actions. These actions were taken within the respective statute of limitations for the assessments at issue. As such, the Department considers the assessments to remain collectible, and the Taxpayer’s request for relief cannot be granted.
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 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,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/5004.Q