17-98 | Virginia Tax

Tax Type

General Provisions

Description

GUIDELINES FOR RETAIL SALES AND USE TAX REFUND CLAIM PROCEDURES

Topic

Guidelines

Date Issued

06-12-2017

GUIDELINES FOR RETAIL SALES AND USE TAX
REFUND CLAIM PROCEDURES
June 12, 2017

Beginning July 1, 2016, legislation enacted in the 2016 General Assembly Session, House Bill 398 and Senate Bill 444 (2016 Acts of Assembly, Chapters 484 and 303), prohibit a purchaser from receiving interest on a refund claim for erroneously paid Retail Sales and Use Tax for any period prior to the date the purchaser submits a complete refund claim to the Department of Taxation (“the Department”) in situations where, at the time of purchase, the purchaser held a valid exemption certificate issued to the purchaser by the Department but failed to present it to the dealer.

These Guidelines are intended to clarify the new legislation and to outline procedures for purchasers and dealers to request refunds from the Department in appropriate situations.

These Guidelines are exempt from the provisions of the Administrative Process Act (Va. Code § 2.2-4000 et seq.). Unless noted otherwise below, the General Provisions Applicable to All Taxes Administered by the Department of Taxation Regulations (23 Virginia Administrative Code (VAC) 10-20-10 et seq.) and the Retail Sales and Use Tax Regulations (23 VAC 10-210-10 et seq.) continue to apply. To the extent that the legislative change regarding the interest on certain refund claims conflicts with these regulations, the legislation supersedes the regulations, and these Guidelines, developed pursuant to the legislation, should be followed. As necessary, additional guidelines will be published and posted on the Department’s web site, www.tax.virginia.gov and appropriate changes to the regulations will be promulgated.

Exemptions from the Retail Sales and Use Tax

All sales or leases are subject to the tax until the contrary is established. The burden of proving that a sale, distribution, lease, or storage of tangible personal property is not taxable is upon the dealer unless he takes from the purchaser a certificate to the effect that the property is exempt. A completed and valid exemption certificate will relieve the dealer of liability for the payment or collection of the tax, except upon notice that the certificate is no longer acceptable. The certificate must be signed by and bear the name and address of the purchaser; indicate the number of the certificate of registration, if any, issued to the taxpayer; indicate the general character of the tangible personal property sold, distributed, leased, or stored, or to be sold, distributed, leased, or stored under a blanket exemption certificate; and must be substantially in such form as prescribed by the Department. (Source: Va. Code § 58.1-623)

The majority of Virginia Retail Sales and Use Tax exemption certificates are “self-executed” or “self-issued” by the taxpayer. Currently, the Department only issues exemption certificates to taxpayers who are engaged in specific types of businesses such as (1) data centers and their tenants under Va. Code § 58.1-609.3(18); (2) pollution control equipment and facilities under Va. Code § 58.1-609.3(9); (3) real property contractors allowed to purchase tangible personal property exempt of the tax in limited circumstances; and (4) (effective January 1, 2018) resellers of stamped cigarettes under Va. Code § 58.1-623.2. The Department also issues exemption certificates to organizations meeting the requirements for the non-profit entity exemption under Va. Code § 58.1-609.11. To obtain an exemption certificate issued by the Department, the taxpayer must apply in writing to the Department and demonstrate that it meets the statutory requirements for exemption.

For any exemption from the tax, the courts apply the rule of strict construction against the exemption. That is, statutory tax exemptions are strictly construed against the taxpayer, with doubts resolved against the exemptions. (See, e.g., Department of Taxation v. Wellmore Coal Company, 228 Va. 149; 320 S.E.2d 509 (1984); Dep’t of Taxation v. Progressive Community Club, Inc., 215 Va. 732 (1975); and Commonwealth of Virginia v. Research Analysis Corporation, 214 Va. 161, 198 S.E.2d 622 (1973))

Any dealer collecting the sales or use tax on an exempt or non-taxable transaction must remit the erroneously or illegally collected tax to the Tax Commissioner unless the tax has been refunded to the customer or credited to his account. (Source: Va. Code § 58.1-625(C))

Refunds

Refunds By Dealers

Dealers must refund sales or use tax erroneously collected on transactions exempt or not subject to the tax directly to the customer when requested to do so by the customer, except in certain very limited situations: (1) the dealer believes the transaction was properly subject to the tax; (2) the dealer is no longer in business; or (3) refunding the tax would cause an undue financial hardship to the dealer because the amount of the refund exceeds twice his average Virginia Retail Sales and Use Tax monthly liability.

Dealers are entitled to recover the amount of sales tax refunded or credited to a customer that was previously reported and remitted to the Department on their Retail Sales and Use Tax Return or their Out-of-State Dealer's Use Tax Return for the month in which the refund or credit is made. The dealer should report the item’s sales price on the exempt sales line on the applicable return. The dealer’s sales tax liability for the month is thus reduced by the sales tax amount refunded. Dealers are required to maintain supporting documentation regarding refunds and credits to customers along with the return worksheet in their records. (Source: Va. Code § 58.1-633)

Likewise, dealers and others registered for use tax who have erroneously remitted use tax to the Department on their purchases may recover the tax paid on their return for the for the month in which the correction is made. They should reduce their taxable purchases by the item’s cost price in order to recover the amount of use tax that was previously remitted to the Department in error.

In the event that a dealer cannot recover the amount of tax paid to the Department on their return for the month in which the error is recognized or in the next succeeding period, they may file an amended return with the Department seeking a refund.

Example 1

Customer purchases an item from Dealer and pays sales tax of $5.00 on the transaction. A month later, stating that the transaction qualified for a sales tax exemption, Customer asks Dealer for a refund of the sales tax paid. Customer does not provide Dealer with an exemption certificate and Dealer believes that the transaction was taxable.

As Dealer believes that the transaction was subject to tax, Dealer must refuse to refund or credit Customer the sales tax paid on the transaction.

Example 2

Customer purchases an item from Dealer and pays sales tax of $5.00 on the transaction. A month later, Customer provides Dealer with a valid exemption certificate for the transaction and requests a refund of the sales tax paid.

Dealer must refund Customer the sales tax paid on the transaction and is entitled to recover the amount of the refund on his return for the month in which the refund was paid.

Example 3

Customer purchases an item from Dealer and pays sales tax of $50,000 on the transaction. Ten days later, and prior to Dealer remitting the sales tax to the Department, Customer provides Dealer with a valid exemption certificate for the transaction and requests a refund of the sales tax paid.

As the sales tax paid has not been remitted to the Department, Dealer cannot show an undue financial hardship that would prevent Dealer from refunding or crediting Customer the sales tax paid. Dealer must refund or credit Customer the sales tax paid on the transaction.

Example 4

Customer purchases an item from Dealer and pays sales tax of $50,000 on the transaction. A month later, Customer provides Dealer with a valid exemption certificate for the transaction and requests a refund of the sales tax paid. Dealer has an average monthly sales tax liability of $35,000.

As Dealer has sufficient sales to recover the sales tax refunded or credited to Customer on his sales tax return in two months, Dealer cannot show an undue financial hardship that would prevent Dealer from refunding or crediting Customer the sales tax paid. Dealer must refund or credit Customer the sales tax paid on the transaction.

Example 5

Customer purchases an item from Dealer and pays sales tax of $50,000 on the transaction. Two years later, Customer provides Dealer with a valid exemption certificate for the transaction and requests a refund of the sales tax paid. Dealer has an average monthly sales tax liability of $15,000. Dealer does not have enough cash on hand to refund the sales tax and Customer cannot use a credit to his account in such a large amount.

As the amount collected in error exceeds the Dealer’s average sales tax liability for two months, refunding or crediting the amount would cause an undue financial hardship on Dealer. Dealer may refuse to refund or credit Customer the sales tax paid on the transaction and should advise Customer to seek a refund from the Department of Taxation, as discussed below. Dealer must explain his reason for refusing to make the refund or credit on the Vendor Certification Form he must complete concerning the error.

Refunds by the Department of Taxation

In cases where the dealer is unable to provide a refund or credit the customer’s account when requested, the customer may apply directly to the Department for a refund of the tax. Customers must make every effort, however, to receive a refund or credit for the tax directly from the dealer prior to requesting a refund from the Department. If a dealer filed a timely return and deducted dealer’s discount under Va. Code § 58.1-622 for the period for which the refund is claimed, the amount of refund will be reduced by the dealer’s discount taken by the dealer. The customer’s only recourse for recovering the amount of sales tax paid but not remitted to the Department by the dealer due to the dealer discount is from the dealer. The Department will not refund any amount of sales tax that was not remitted. (Source: 23 VAC 10-210-3040)

Refund Procedures

Procedures for Refunds from a Dealer

A dealer who accepts a returned item for a refund or credit of the sales price, must refund or credit the customer the amount of sales tax paid by the customer at the time of purchase. This includes any dealer discount that the dealer did not remit to the Department. The dealer should retain sufficient documentation from the customer to demonstrate that, at a minimum, the sales tax was paid on the item; the date the sales tax was paid on the item; and the sales tax was refunded or credited to the customer’s account. The dealer also must be able to document when the sales tax was remitted to the Department and to which locality the sales tax was allocated when recovering the amount of sales tax previously reported and remitted to the Department.

Example 6

Customer purchases an item from Dealer for a sales price of $100.00 on July 1, 2017 and pays $5.30 in sales tax for a total of $105.30. Dealer remits $5.25 in sales tax to the Department and keeps $0.05 as his dealer discount. Dealer has a 45-day return policy for a refund. Customer returns the item on August 1, 2017.

Dealer should refund Customer $105.30, the total amount paid by Customer for the item. Dealer should retain documentation to show that the sales tax of $5.30 was paid at the time of purchase, July 1, 2017, and that the sales tax was refunded to the customer. Dealer should reduce his sales tax liability on his next Retail sales tax return by $5.25, the amount of sales tax previously reported and remitted to the Department.

Similarly, if a purchaser did not present a valid Retail Sales and Use Tax exemption certificate at the time of purchase and paid sales tax on an item that qualified for exemption from the tax, the purchaser is entitled to a refund of the amount of sales tax paid upon presentation of the valid exemption certificate. Likewise, when refunding the sales tax to the customer, the dealer must include any discount that he did not remit to the Department. The dealer should retain the same documentation from the customer as required above for a returned item as well as a copy of the customer’s exemption certificate, at a minimum.

Example 7

Customer has a valid “self-issued” sales tax exemption certificate. Customer purchases an item qualifying for the exemption from Dealer for a sales price of $100.00 on July 1, 2017 but fails to present the exemption certificate. Dealer properly charges Customer sales tax of $5.30, for a total of $105.30. Dealer remits $5.25 in sales tax to the Department and keeps $0.05 as his dealer discount. Customer subsequently realizes that the purchased item qualified for an exemption. On August 1, 2017, Customer presents Dealer with the exemption certificate and requests a refund of the sales tax.

Dealer should refund Customer $5.30, the total sales tax paid by Customer for the item. Dealer should keep a copy of the exemption certificate as well as documentation to show that the sales tax of $5.30 was paid at the time of purchase, July 1, 2017, and that the sales tax was refunded to the customer. Dealer should reduce his sales tax liability on his next return by $5.25, the amount of sales tax previously reported and remitted to the Department.

Refund Procedures for Dealers and Other Businesses Registered with the Department

In the event that a dealer or any other person registered with the Department for the Retail Sales and Use Tax seeks to use their return to recover an amount of tax erroneously reported and remitted to the Department, he must complete a Vendor Certification Form, Refund Claimant Return, and Refund Request Spreadsheet and maintain these in his records to support any credit taken. The Refund Request Spreadsheet is considered part of the Refund Claimant Return. (See page A-4 in Appendix A for the Vendor Certification Form, pages A-1 and A-2 in Appendix A for the Refund Claimant Return, and page A-3 in Appendix A for the Refund Request Spreadsheet)

In the event that a dealer or other person registered with the Department cannot recover the amount of tax paid to the Department using his returns for the next two months, he must file an amended return with the Department seeking a refund. The refund request must be accompanied by a complete Refund Claimant Return, Refund Request Spreadsheet, and Vendor Certification Form. More information regarding amended returns can be found in regulation 23 VAC 10-20-180, Amended Returns Claiming a Refund.

Procedures for Customers to Seek Refunds from the Department

Any person who has paid sales tax on an exempt transaction upon which the dealer is unable to provide a refund or credit of the tax must adhere to the following process and file a complete Refund Claimant Return, along with a Refund Request Spreadsheet, with the Department in order to receive a refund of the tax remitted to the Department by the dealer. The Refund Request Spreadsheet is considered part of the Refund Claimant Return. (See pages A-1 and A-2 in Appendix A for the Refund Claimant Return and page A-3 in Appendix A for the Refund Request Spreadsheet)

The purchaser should provide a copy to the dealer, who should ensure that all of the information in the spreadsheet is accurate.

At a minimum, the Refund Claimant Return must provide:

Purchaser’s full legal name and business/trade name;
Purchaser’s federal employer identification number or social security number;
Purchaser’s contact information, if an individual, or that of a responsible officer;
Proof of Exemption;
Reason given by dealer for not allowing the exemption;
Amount of refund requested;
Date of purchase(s);
Declaration that the tax has not been refunded or credited to the purchaser by the Department or the dealer and that the purchaser will immediately send any duplicate refund to the Department; and
Authorization for the Department to communicate with and to receive and inspect records from any dealer regarding the claim for refund.

Additionally, the purchaser must submit a Refund Request Spreadsheet (Excel spreadsheets are preferred). The Refund Request Spreadsheet is considered part of the Refund Claimant Return. The Refund Request Spreadsheet must list, at a minimum, for each transaction:

Dealer’s name;
Invoice number;
Invoice date;
Tax paid on invoice items for which refund is requested;
Date tax was remitted to the Department – this information should be provided by the dealer on the Vendor Certification Form (See “Vendor Certification Form” below for more information) ;
Locality allocated the local option tax for each transaction on the invoice – this information should be provided by the dealer on the Vendor Certification Form (See “Vendor Certification Form” below for more information) ;
Brief description of the items purchased; and
Explanation of why the items qualified for exemption.

The purchaser also must submit copies of all invoices and other documentation demonstrating that the transactions qualify for an exemption, embedded into the spreadsheet by line item. Examples of documentation the purchaser should provide include, but are not limited to, exemption certificates, contracts, purchase orders, credit memos, and agreements.

Documentation provided by the purchaser must establish the validity of the claim and is subject to verification by audit of the purchaser’s accounting books and records for the period involved. The purchaser also should have cancelled checks available to document proof of payment upon request.

Additional information may be requested by the Department as needed, including, but not limited to system access, contracts, and any information deemed necessary to validate refund payments. The Refund Claimant Return and a template of the Refund Request Spreadsheet are available on the Department’s website, www.tax.virginia.gov.

Vendor Certification Form

The Refund Claimant Return must also be accompanied by a Vendor Certification Form completed by each dealer from whom the purchaser requested a refund of tax paid on exempt transactions and such vendor is unable or unwilling to issue a refund. A Vendor Certification Form does not need to be provided for any dealer who is no longer in business. In this situation, the purchaser should provide a statement that the business is closed. (See page A-4 in Appendix A for the initial Vendor Certification Form) The dealer, if an individual, or a responsible officer for the dealer must complete the Vendor Certification Form and provide:

Dealer’s full legal name;
Dealer’s business/trade name;
Dealer’s sales and use tax registration number;
Responsible officer’s name and contact information;
Customer’s exemption certificate; and
Reason for not refunding or crediting the tax to the purchaser.

The responsible officer must certify that the Refund Claimant Return correctly lists:

Items that were sold by the dealer to the purchaser;
Date of sale;
Amount of tax charged to the purchaser;
Date the tax was remitted to the Department; and
Locality allocated the local option tax for each transaction.

The responsible officer must also certify that:

The dealer has not refunded or credited the tax to the purchaser; and
The dealer has not and will not request a refund of the tax or take a credit for such tax.

The Vendor Certification Form is available on the Department’s website, www.tax.virginia.gov.

Filing Procedures

The Department requests that purchasers send Refund Claimant Returns, Refund Request Spreadsheets, and Vendor Certification Forms to the Department by e-mail or by physical mail on an electronic medium such as a DVD, CD, or Flash Drive. Refund claims should be sent to:

Refund Coordinator
Virginia Department of Taxation
Post Office Box 5771
Richmond, Virginia 23220-0771
refund.coordinator@tax.virginia.gov

Once the Department has received a Refund Claimant Return and supporting documentation, the Department will review them for completeness. A Refund Claimant Return is considered complete when all the appropriate documentation to substantiate the refund claim is received.

If the Refund Claimant Return is not complete, the Department will notify the purchaser that information is missing. The purchaser will then have 60 days to provide the Department with the missing information. All supporting documentation required for the processing of the refund claim must be provided upon request within 60 days. If the taxpayer does not provide the requested information within the required time period or the Refund Claimant Return is not complete, the refund claim will be decided on the information submitted.

Refund Claim Outcome Form

The Department will issue the purchaser a Refund Claim Outcome Form with the amount of the refund approved or denied by the Department. The denial of a refund claim will be deemed an assessment, and a taxpayer may file an administrative appeal if the taxpayer does not agree with the denial of a portion or all of a refund claim. (See “Appeal Rights” below for more information) (See page A-5 in Appendix A for the initial Refund Claim Outcome Form)

Statute of Limitations

Complete requests for refunds of erroneously or illegally collected and remitted taxes must be filed within three years from the last day prescribed by law for the timely filing of the original return to be within the statute of limitations mandated by Va. Code § 58.1-1823. Refund requests filed after the statute of limitations has expired will be denied. Generally, the tax must be remitted to the Department by dealers when filing their return on or before the 20^th day of the month following the reporting period of the dealer. This applies regardless of whether the refund is issued by the dealer or by the Department.

For purposes of satisfying the three-year statute of limitations, an incomplete Refund Claimant Return is not sufficient. If a refund claim is denied and a taxpayer files a new Refund Claimant Return for the same transaction, the date of the request for purposes of the statute of limitations will be the date the Department receives the new Refund Claimant Return, not the date of the first refund claim that was denied.

Example 8

Purchaser erroneously pays sales tax on an exempt transaction on August 1, 2014 to Dealer who files and remits the tax on a monthly basis. Dealer subsequently goes out of business. On January 1, 2017, Purchaser files an incomplete Refund Claimant Return with no copy of the invoice for the transaction or any other documentation. The Department notifies Purchaser that the Refund Claimant Return is incomplete and that he has 60 days to provide a copy of the invoice. Purchaser provides the additional information on February 1, 2017.

As Dealer filed and remitted the tax on a monthly basis, Purchaser must file a complete Refund Claimant Return within three years from September 20, 2014, to be within the statute of limitations. The incomplete Refund Claimant Return filed on January 1, 2017 is not sufficient to satisfy or extend the limitations period. As the date of the complete Refund Claimant Return, February 1, 2017, is within the three years from the last day of prescribed for timely filing the original return, the Refund Claimant Return is timely filed as of February 1, 2017.

Example 9

Purchaser erroneously pays sales tax on an exempt transaction on August 1, 2014 to Dealer who files and remits the tax on a monthly basis. Dealer subsequently goes out of business. Purchaser files an incomplete Refund Claimant Return, with no copy of the invoice for the transaction or any other documentation, on May 1, 2017. The Department notifies Purchaser that the Refund Claimant Return is incomplete and that he has 60 days to provide a copy of the invoice. Purchaser does not provide any additional information and the refund claim is denied. Purchaser subsequently files a complete Refund Claimant Return for the same transaction on September 21, 2017.

As Dealer filed and remitted the tax on a monthly basis, Taxpayer must file a complete Refund Claimant Return within three years from September 20, 2014, to be within the statute of limitations. As the date of the complete Refund Claimant Return, September 21, 2017, is more than three years from the last day prescribed for timely filing the original return, the limitations period has run and the refund claim will be denied. The incomplete Refund Claimant Return filed on May 1, 2017, is not sufficient to satisfy or extend the limitations period.

Interest

Generally

Interest is required to be paid upon the overpayment, or any moneys improperly collected, of any tax administered by the Department at a rate equal to the rate of interest established pursuant to Va. Code § 58.1-15. The rate of interest on refunds is the "Overpayment Rate" established pursuant to § 6621(a)(2) of the Internal Revenue Code, plus two percent. Interest accrues from a date 60 days after the date of the payment of the tax, or 60 days after the last day prescribed by law for such payment, whichever is later, on such overpayments of tax. (Source: Va. Code § 58.1-1833; 23 VAC 10-20-200)

Dealers are not required to pay interest on refunds to their customers. The Department will not pay interest on sales tax refunded to a dealer unless the interest is passed on to the purchaser. The Department is required to pay interest to purchasers that apply directly to the Department for refunds. (Source: Va. Code § 58.1-1833; 23 VAC 10-20-200)

Example 10

Purchaser holds a “self-issued” exemption certificate and erroneously pays sales tax on an exempt transaction on January 1, 2016 to Dealer. Purchaser presents the valid exemption certificate to Dealer and requests a refund of the sales tax on July 1, 2016.

Dealer refunds the sales tax to Purchaser, but does not refund interest. Dealer reduces his sales tax liability on his next return by the amount of the refunded sales tax. Dealer may not reduce his sales tax liability for interest on the sales tax as interest was not paid to Purchaser.

Example 11

Dealer refunds the sales tax to Purchaser and pays interest to Purchaser at the “Overpayment Rate” plus two percent, accruing from 60 days after the payment of the tax, February 29, 2016. Dealer reduces his sales tax liability on his next Retail Sales and Use Tax Return by the amount of refunded sales tax and the interest on his next sales tax return.

Example 12

Purchaser holds a “self-issued” exemption certificate and erroneously pays sales tax on an exempt transaction on August 1, 2014 to Dealer. Dealer subsequently goes out of business. Purchaser files a complete Refund Claimant Return with the Department on January 1, 2017.

Purchaser would receive a refund of the sales tax paid on the exempt transaction and interest on the tax accruing from 60 days after the date of the payment of the tax, September 29, 2014.

Interest on Refunds from Department-Issued Exemption Certificates

During the 2016 Session, the General Assembly enacted House Bill 398 (2016 Acts of Assembly, Chapter 484) and Senate Bill 444 (2016 Acts of Assembly, Chapter 303), which prohibit a purchaser from receiving interest on a refund claim for erroneously paid Retail Sales and Use Tax for any period prior to the date the purchaser submits a complete refund claim to the Department in situations where the purchaser held a valid exemption certificate issued by the Department at the time of purchase but failed to present it to the dealer. The prohibition does not apply to “self-executed” or “self-issued” exemption certificates that purchasers download from the Department’s website and complete and sign.

Example 13

Purchaser would receive a refund of the sales tax paid on the exempt transaction and interest on the tax accruing from the date Taxpayer submitted a complete refund claim to the Department, January 1, 2017.

Example 14

Purchaser holds an exemption certificate issued by the Department and erroneously pays sales tax on an exempt transaction on August 1, 2014 to Dealer because he failed to present the exemption certificate to Dealer. Dealer subsequently goes out of business. Purchaser files an incomplete Refund Claimant Return with the Department with no copy of the invoice for the transaction or any other documentation on January 1, 2017. The Department notifies Purchaser that the Refund Claimant Return is incomplete and that he has 60 days to provide a copy of the invoice. Purchaser provides the additional information on February 1, 2017.

Purchaser would receive a refund of the sales tax paid on the exempt transaction and interest on the tax accruing from the date Purchaser submitted a complete refund claim to the Department, February 1, 2017.

Penalties

The Refund Claimant Return, along with the accompanying documents, is a return for purposes of the Retail Sales and Use Tax and subject to all applicable penalties:

Any person who willfully signs a return which he does not believe to be true and correct as to every material matter is guilty of a Class 1 misdemeanor. (Source: Va. Code § 58.1-11)

An exemption certificate holder may be assessed a penalty of up to $1,000 for the misuse of the exemption certificate by the holder or by any other person who, with the consent or knowledge of such holder, has misused the certificate. The penalty shall be assessed and collected as a part of the tax. (Source: Va. Code § 58.1-623.1)

In the case of a false or fraudulent return where willful intent exists to defraud the Commonwealth of any Retail Sales and Use Tax, a specific penalty of fifty percent of the amount of the proper tax shall be assessed. (Source: Va. Code § 58.1-635)

The penalty for making a false or fraudulent return with intent to evade the Retail Sales and Use Tax, making a false or fraudulent claim for refund, or giving or knowingly receiving a false or fraudulent exemption certificate is a Class 1 misdemeanor. (Source: Va. Code § 58.1-636)

Appeal Rights

Virginia Code § 58.1-1821 gives a taxpayer the right to an administrative appeal of an assessment issued by the Department, if the taxpayer believes that the department has incorrectly assessed tax, penalty or interest. The denial of a refund claim is deemed to be an assessment, and a taxpayer may file an administrative appeal if the taxpayer does not agree with the denial of a portion or all of a refund claim.

The Department strictly enforces the 90-day limitations period for filing a timely administrative appeal. A taxpayer must file a complete appeal within 90 calendar days after the date of assessment. For purposes of appealing a refund claim, the date of assessment would be the date of the Refund Claim Outcome Form. More information regarding Administrative Appeals can be found in regulation 23 VAC 10-20-165, Administrative Appeals.

Example 15

Purchaser files a Refund Claimant Return on January 1, 2017, for sales tax paid on a transaction he claims was exempt. The Department subsequently determines that transaction was taxable and denies the refund claim by issuing a Refund Claim Outcome Form dated March 1, 2017.

Purchaser has a right to an administrative appeal of the denial of the refund claim. In order for the appeal to be considered timely, Purchaser must file a complete appeal regarding the denial of the refund within 90 days from the date of the Refund Claim Outcome Form (May 30, 2017).

Power of Attorney

In order for the Department to discuss confidential tax matters relating to the refund claim with an alternate party, a completed Form PAR 101 must accompany the Refund Claimant Return. The official and preferred Power of Attorney Form of the Department is Form PAR 101, which can be found on the Department’s website, www.tax.virginia.gov. Virginia Code § 58.1-1834 requires the Department to provide a copy of any written correspondence, documentation or any other written materials that relate to a tax matter for which a taxpayer has filed a Power of Attorney Form to the person named to act under that express authority.

Additional Information

These Guidelines are available on-line in the Laws, Rules & Decisions section of the Department's website, located at www.tax.virginia.gov/content/welcome-laws-rules-decisions. For additional information, please contact the Department at (804) 367-8037 or visit www.tax.virginia.gov.

Approved:

__________________________

Craig M. Burns
Tax Commissioner

Rulings of the Tax Commissioner