February 3, 2015
Re: § 58.1-1821 Application: Converted Assessment
Dear *****:
This is in response to your letter in which you seek the correction of retail sales and use tax assessments converted to ***** (the "Taxpayer"), as a responsible officer under Va. Code § 58.1-1813.
FACTS
The Department issued sales and use tax assessments in 2003 and 2004 to a business, and converted the bills to the Taxpayer as a responsible officer in 2004. The Department made an attempt to collect the converted bills in 2014. The Taxpayer appeals contending that the Department is outside the limitations period allowed to collect assessments.
DETERMINATION
Virginia Code § 58.1-1802.1 A provides in pertinent part:
Where the assessment of any tax imposed by this subtitle has been made within the period of limitation properly applicable thereto, such tax may be collected by levy, by a proceeding in court, or by any other means available to the Tax Commissioner under the laws of the Commonwealth, but only if such collection effort is made or instituted within seven years from the date of the assessment of such tax.
The Taxpayer argues that the statutory limitation period for collecting state tax is seven years. As such, because the assessments were issued and converted in 2003 and 2004, the Taxpayer asserts that the Department is prohibited from any collection action in 2014.
Although Va. Code § 58.1-1802.1 currently limits the Department's collection actions to seven years from the date of assessment, the statute of limitations has been amended two times due to legislative action. Between July 1, 2010 and July 1, 2012 the statute of limitations was ten years. Prior to July 1, 2010, the statute of limitations was twenty years. As such, because the limitations period was twenty years at the time of the assessment and conversion of the bills at issue, the Department was well within the limitations period for collection.
A collection effort with regard to a taxpayer commences when it 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 on within the limitations period. It has been the Department's policy that so long as the any collection action is initiated or made before the end of the period of limitations, collection may continue until the assessment is satisfied. See Public Document (P.D.) 14-177 (10/14/2014).
Accordingly, the Taxpayer's request for the abatement of the converted retail sales and use tax assessments is denied.
The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department's web site. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1-5838538997.B