February 18, 2025
Re: Ruling Request: General Provisions
Dear *****:
This will reply to your letter in which you seek reconsideration of the Department’s decision to decline a review of the application of correction submitted by ***** (the “Taxpayer”) because it was filed after the application deadline.
FACTS
An audit was conducted on the books and records of the Taxpayer for the period October 2019 through November 2022 resulting in an assessment. The Taxpayer filed an application for correction contesting the assessment. The Department found that the application was not filed until after the 90-day limitations period permitted by law and, therefore, could not consider the Taxpayer’s request. The Taxpayer seeks a reconsideration of the Department’s findings, asserting that the application was only one day late and the Virginia Taxpayer Bill of Rights permits an extension of the application for correction deadline if exceptional circumstances caused delays in responding to notices.
DETERMINATION
When a complete application for correction has not been submitted, the reconsideration provisions of Title 23 VAC 10-20-165 F would not apply to the Taxpayer’s request for a review the 90-day filing deadline. Regardless, in order to clarify Virginia’s statutory deadline for seeking administrative relief under Virginia Code § 58.1-1821, the Department has decided to treat this request as a request for ruling under Virginia Code § 58.1-203.
Virginia Code § 58.1-1821 states that “[a]ny person assessed with any tax administered by the Department of Taxation may, within ninety days from the date of such assessment, apply for relief to the Tax Commissioner.” Further, Title 23 of the Virginia Administrative Code (VAC) 10-20-165 B 1 b provides that “[t]he 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.” Based on the provisions of Virginia Code § 58.1-1821 and Title 23 VAC 10-20-165, the Taxpayer failed to file a complete appeal within 90 calendar days after the date of assessment.
The Taxpayer argues that the accountant responsible for filing the application experienced unforeseen personal difficulties that impacted their ability to meet deadlines. Based on these exceptional circumstances, the Taxpayer believes that the Department has the authority to extend the period under which an application for correction under Virginia Code § 58.1-1821 may be filed. The Taxpayer also offers that equitable tax administration supports reconsideration in cases where a delay does not seriously impede the process. Under this reasoning, the Taxpayer believes that missing the deadline by one day was a minimal impediment and occurred in a good faith effort to provide a complete and accurate response.
Virginia Code § 58.1-1845 sets out the Virginia Taxpayer Bill of Rights. One of the statutory rights granted to taxpayers permits them to seek review, either formally or informally, of any assessments for other adverse decisions resulting from examinations, audits, or collections processes. The statutory rights are expanded and explained in a publication of the same name issued by the Department and posted on its website. Contrary to the Taxpayer’s assertion, under the section titled “Appeal to the Tax Commissioner Under Va. Code § 58.1-1821,” the publication specifically provides that the Department will strictly enforce the 90-day limitation for filing an application for correction, regardless of actions by a taxpayer or practitioner including the filing of a request for an informal review or a statement of intent to file an application. In addition, the rigid enforcement of the 90-day deadline is addressed in 5 other sections of the Virginia Taxpayer Bill of Rights. See also Virginia Tax Bulletin (VTB) 03-8 (7/15/2003), Public Document (P.D.) 06-140 (11/29/2006), and Title 23 VAC 10-20-165 C.
With regard to administration, Article V, Section 9 of the Constitution of Virginia permits the General Assembly to statutorily prescribe the functions, powers, and duties of the administrative departments, divisions, and agencies of the Commonwealth, including the Department. Virginia Code § 58.1-202 sets forth the general powers and duties of Tax Commissioner. More specifically, Virginia Code § 58.1-202 1 charges the Department with supervising the administration of Virginia’s tax laws as they relate to taxpayers subject to Virginia tax and any assessments thereon, with an understanding that assessments should be equitable. Under this statute, the Department is limited to ensuring its assessments are equitably made under the statutory system established by the General Assembly. Virginia’s General Assembly has limited the period under which a taxpayer may file an application for correction under Virginia Code § 58.1-1821 to 90 days from the date of assessment.
The United States Supreme Court has been unwilling to soften the chosen words of the legislature even if “the words lead to a harsh outcome.” See Lamie v. U.S. Trustee, 540 U.S. 526, 538 (2004) (quoting United States v. Locke, 471 U.S. 84, 95 (1985)). “Filing deadlines, like statutes of limitations, necessarily operate harshly and arbitrarily with respect to individuals who fall just on the other side of them, but if the concept of a filing deadline is to have any content, the deadline must be enforced.” United States v. Locke, 471 U.S. 84 at 101. “Deadlines are inherently arbitrary; fixed dates, however, are often essential to accomplish necessary results. … Any less rigid standard would risk encouraging a lax attitude toward filing dates.” United States v. Boyle, 469 U.S. 241, 249, (1984). “If 1-day late filings are acceptable, 10-day late filings might be equally acceptable, and so on in a cascade of exceptions that would engulf the rule erected by the filing deadline; yet regardless of where the cutoff line is set, some individuals will always fall just on the other side of it.” Carlisle v. United States, 517 U.S. 416, 430 (1996) (quoting Locke, 471 U.S. at 95). Based on Virginia’s statute and regulations, the Taxpayer’s application fell on the other side of the cutoff line.
Further, an application for correction is not the only manner in which a taxpayer may dispute an assessment by the Department. Other methods for seeking to resolve a disputed assessment include filing an offer in compromise under Virginia Code § 58.1-105, filing a protective claim for refund under Virginia Code § 58.1-1824 upon payment of the full amount of the assessment, or filing suit in court under Virginia Code § 58.1-1825.
Because an application for correction was not timely filed, the Department is closing this case and the assessment remains outstanding. An updated bill, with interest accrued to date, will be mailed to the Taxpayer. No further interest will accrue provided the outstanding assessment is paid within 30 days from the date of the bill.
The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. The public document and tax bulletin 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 response, you may contact ***** in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at ***** or *****.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/5084.o