23 Va. Admin. Code § 10-20-160 - Assessments and administrative remedies
A. Types of remedies. Article 2 (§
58.1-1820 et seq.) of Chapter 18 of Title 58.1 of the Code of Virginia provides
several administrative and judicial remedies for taxpayers who believe an
assessment to be erroneous. In addition, § 58.1-105 of the Code of
Virginia authorizes the Tax Commissioner to accept an offer in compromise in
certain circumstances. The various remedies available for taxes administered by
the department may be summarized as follows:
1. Offer in compromise under § 58.1-105
of the Code of Virginia, which may be used to waive or compromise a penalty for
good cause or to compromise a tax based on a doubtful or disputed claim or a
liability of doubtful collectibility.
2. Application for correction of an erroneous
assessment under § 58.1-1821 of the Code of Virginia before payment of the
assessment, which may be used to protest any or all issues connected with an
assessment. See
23VAC10-20-165 for the full
explanation of the administrative appeals process.
3. Amended return claiming a refund under
§ 58.1-1823 of the Code of Virginia, which may be used to amend a return
based upon new or newly discovered facts such as errors discovered in the
original return or a change in federal taxable income.
4. Protective claim under § 58.1-1824 of
the Code of Virginia after payment of the assessment, which may be used to
protest any or all issues connected with an assessment and, in certain
circumstances, may extend the time in which taxpayer may apply to a court. See
23VAC10-20-190 for more
information on protective claims.
5. If the above administrative remedies are
not satisfactory to the taxpayer, an application to a court may be made under
§ 58.1-1825 of the Code of Virginia.
B. Exhaustion of administrative remedies.
Although not required by law, taxpayers are encouraged to exhaust their
administrative remedies before resorting to litigation. Administrative reviews
remain confidential pursuant to §§ 58.1-3 and 58.1-204 of the Code of
Virginia. Even if a dispute cannot be resolved administratively, the issues in
dispute may be significantly narrowed allowing expeditious court
review.
C. Person assessed. Any
person assessed with any tax, as such term is defined in § 58.1-1820(1) of
the Code of Virginia, may file an application for correction or a protective
claim.
D. Assessments.
1. When referring to taxes administered by
the department, the terms "assess" and "assessment" mean the act of determining
that a tax (or additional tax) is due and the amount of such tax. An assessment
may be made by the department or by the taxpayer (self-assessment).
2. When an assessment is made by the
department, a written notice of the assessment must be delivered to the
taxpayer by an employee of the department or mailed to the taxpayer at his last
known address. The date that such notice is mailed or delivered is the date of
the assessment for the purpose of any limitations on the time in which
administrative and judicial remedies are available and for any other
administrative purposes.
3. The
written notice of an assessment made by the department is made on a form
clearly labeled "Notice of Assessment" that sets forth the date of the
assessment, amount of assessment, the tax type, taxable period and taxpayer.
Subsequent statements that merely report payments and additional accrued
interest are not assessments or notices of another assessment. An assessment
may be preceded by correspondence proposing adjustments to a filed return based
on an audit or other information received by the department. Such
correspondence is not an assessment but is intended to provide taxpayers an
opportunity to correct any errors before an assessment is made.
4. A self-assessment is usually made when the
taxpayer files a return. If an annual, quarterly or monthly return is not
required to be filed for a tax then the self-assessment is usually made when
the tax is paid. The date of assessment is the date of filing or payment except
that:
a. A return filed or tax paid before the
last day prescribed by law for the filing or payment thereof, including
extensions granted pursuant to law, shall be deemed to be filed or paid on such
last day.
b. After the department
has mailed or delivered a notice of assessment a return filed or tax paid shall
be deemed filed or paid pursuant to the notice. Such filing or payment is not a
self assessment. The date of assessment shall be the date the notice of
assessment was mailed or delivered, not the date the return was filed or the
tax paid.
c. In certain
circumstances the date a return or payment is mailed will be deemed the date of
filing or payment. See § 58.1-9 of the Code of Virginia.
5. A jeopardy assessment under
§ 58.1-313 or 58.1-631 of the Code of Virginia occurs when the Tax
Commissioner finds that collection of income, sales or use taxes will be
jeopardized by delay, terminates the current taxable period and assesses tax,
penalty and interest. A jeopardy assessment is an assessment for purposes of
administrative remedies and a taxpayer may protest either the finding of
jeopardy or the amount of liability, or both.
6. The date of an assessment is not affected
if the amount of the assessment is later corrected, whether the correction is
the result of an application under § 58.1-1821 or 58.1-1824 of the Code of
Virginia or made on the department's own initiative after receiving additional
information. The department will not correct an assessment by increasing the
amount of liability (except for additional accrued interest). If the department
determines that the proper tax is greater than the amount previously assessed
and paid, the department will make a second assessment unless the period for
assessing additional tax has expired. The second assessment may be for the
total amount due (in which case the first assessment will be abated) or for
only that portion of the tax due that has not yet been assessed, whichever is
appropriate in the opinion of the department.
7. Amended returns claiming refunds under
§ 58.1-1823 of the Code of Virginia are not assessments or
self-assessments. However, for the purpose of allowing a taxpayer to pursue
administrative and judicial remedies, the denial or failure to act upon a
refund claim is deemed to be an assessment, but only as to matters first raised
in the amended return claiming a refund. A matter shall not be considered first
raised in an amended return claiming a refund if it was previously the subject
of an audit or an application under § 58.1-1821, 58.1-1824 or 58.1-1825 of
the Code of Virginia. The date of such deemed assessment shall be the date of
an order of the department denying the refund claim or three months from the
date the amended return was filed with the department, whichever is
earlier.
Notes
Statutory Authority
§ 58.1-203 of the Code of Virginia.
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