March 12, 2024
Re: § 58.1-1821 Application: Withholding Tax
Dear *****:
This will reply to your letter in which you seek reconsideration of the Department's determination letter, issued as Public Document (P.D) 23-50 (5/3/2023).
FACTS
In P.D. 23-50, the Department upheld withholding tax assessments issued to ***** (the “Taxpayer”) for the taxable periods October 2017 through September 2020. The Taxpayer seeks a reconsideration of that determination, contending that the Department’s determination was based on an inaccurate understanding of the facts and that a correct understanding would have resulted in a different determination.
DETERMINATION
Under Title 23 of the Virginia Administrative Code (VAC) 10-20-165 F, a taxpayer’s request for reconsideration must meet one of the four following requirements:
1. 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;
2. 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;
3. 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
4. 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.
The Taxpayer argues that the Department’s methodology for calculating the unpaid withholding tax was based on an inaccurate statement of the facts surrounding the Taxpayer’s business. The Taxpayer’s appeal and the subsequent request for reconsideration failed to make clear and cogent allegations regarding the correctness of the audit assessments. During a telephone conference in June 2023, the Taxpayer’s representative stated that they would submit supporting documentation within a few weeks. When no information was received, the Department sent follow-up requests in August 2023, and September 2023. To date, the Taxpayer has failed to provide the information. Because the Taxpayer has failed to submit evidence of the alleged misstatement of facts, the reconsideration request cannot be granted. Consequently, P.D. 23-50 constitutes the Department’s final determination in this matter.
Virginia Code § 58.1-205 provides that in any proceeding relating to the interpretation of the tax laws of Virginia, an “assessment of a tax by the Department shall be deemed prima facie correct.” As such, the burden of proof is on the Taxpayer to show the assessments were incorrect. Furthermore, Virginia Code § 58.1-1826 precludes a court from granting relief to taxpayers seeking correction of erroneous state tax assessments in cases in which the erroneous assessment is attributable to the taxpayers’ willful failure or refusal to provide the Department with necessary information as required by law.
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 section, regulation, and public document 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 (804) *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/4558.X