Rulings of the Tax Commissioner

December 30, 2022

Re:    Request for Reconsideration: Retail Sales and Use Tax

Dear *****:

This will respond to your letter submitted on behalf of ***** (the “Taxpayer”) in which you seek correction of the withholding tax and retail sales and use tax assessments converted to the Taxpayer as a responsible officer of ***** (the “Corporation”) for the periods March 2015 through November 2015. I apologize for the delay in responding to your request.

FACTS

The Corporation was issued assessments for various withholding and retail sales and use tax liabilities, penalties, and interest for the period July 2013 through November 2015. When the Corporation failed to satisfy the assessment, the delinquent assessments were converted to the Taxpayer as a responsible officer. The Taxpayer appealed the converted assessments, alleging that she was not a responsible officer because she lacked the requisite intent and authority necessary to convert the assessments. The Department responded in Public Document (P.D.) 21-154 (12/14/2021), abating the converted assessments for the period July 2013 through February 2015 and upholding the assessments for the periods March 2015 through November 2015. The Taxpayer timely requested reconsideration of the Department’s determination in P.D. 21-154. 

DETERMINATION

Title 23 of the Virginia Administrative Code (VAC) 10-20-165 F allows a taxpayer who disagrees with the Department’s final determination issued pursuant to an administrative appeal to request reconsideration. A request for reconsideration must demonstrate one of the following:

a.    The facts upon which the original determination is based are misstated by the Tax Commissioner or are inaccurate, and the determination would have a different result based on a correction of the Tax Commissioner’s misstatement of the facts presented or a clarification of the original facts presented in the taxpayer’s administrative appeal;
b.    The law upon which the original determination is based has been changed by legislation, court decision, or other authority effective for the tax period(s) at issue; 
c.    The policy upon which the original determination is based is misapplied, and the determination would have a different result based on the application of the proper policy; or
d.    The taxpayer has discovered additional evidence or documentation that was not available to the taxpayer at the time the original administrative appeal was filed with the department, and the additional evidence or documentation could produce a result different from the original determination.

In this case, it appears the Taxpayer is asserting that the facts relied upon by the Department are incorrect. Specifically, the Taxpayer states, “([d]espite the Department’s assertion to the contrary) [i]n 2015, [the Taxpayer] never owned 100% of [the Corporation].” However, the Taxpayer’s appeal letter stated that she was the sole shareholder of the Corporation beginning in March 2015. Because the Taxpayer’s request for reconsideration contradicts her previously provided facts and is unsupported by any additional evidence, the Department cannot find that the facts upon with the original determination was based are misstated or inaccurate. 

The Taxpayer also continues to assert that she was not a responsible corporate officer because she lacked the requisite intent and authority necessary to convert the assessments. The Department already analyzed these arguments in P.D. 21-154. The Taxpayer has not asserted any change in law or facts that would alter the Department’s analysis. While the Department recognizes that the Taxpayer continues to disagree with the assessment, this represents the Department’s final determination on the matter for purposes of the period of limitations under Virginia Code § 58.1-1825. 

Finally, the Taxpayer requests that the Department abate the interest accrued during the Department’s review of her appeal. The Department sent a letter acknowledging receipt of the Taxpayer’s appeal and explaining that interest continues to accrue on any outstanding balance during the Department’s review of the Taxpayer’s case. To avoid the accrual of interest, the Taxpayer was required to make full payment of the assessment. The application of interest is mandatory under Virginia Code § 58.1-1812, and it cannot be waived unless the associated tax is adjusted. Interest is not assessed as a penalty, but represents a fee for the use of money that was properly due to the Commonwealth. As such, the Department finds no basis for abating any portion of the assessed interest.  

Accordingly, the assessment is upheld. The Taxpayer will receive an updated bill shortly with accrued interest to date. Full payment should be made within 60 days of the date on the bill to avoid the accrual of additional interest and possible collection action.

The Code of Virginia section, regulation, and public document cited are available online at www.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, Appeals and Rulings, at *****, or via email at *****.

Sincerely,

Craig M. Burns
Tax Commissioner

AR/4062-C