A. Definitions. The following words and terms when used in this section shall have the following meanings unless the context clearly indicates otherwise:

"Administrative appeal" or "appeal" meansmean an application for correction of an assessment filed with the Tax Commissioner pursuant to § 58.1-1821 of the Code of Virginia.

"Assessment" means a determination of the amount of tax, including additional or omitted tax, that is due. An assessment includes a written assessment made pursuant to a notice by the department or a self-assessment made by a taxpayer upon the filing of a return or otherwise not pursuant to notice. A return filed or tax paid before the last day prescribed by law for the filing or payment thereof shall beis deemed to be filed or paid on thethat last day specified for the filing of a return or the payment of tax, as the case may be. The denial of a refund claim is deemed to be an assessment, and a taxpayer may file an administrative appeal in response to the denial of a refund claim.

"Collection action" means the use of any lawful methodmeans permitted by law, direct or indirect, by the department, or collection agencies authorized by the department, to obtain payment on an assessment.

"Complete appeal" means an administrative appeal that contains thecontaining sufficient information listed, as prescribed in subsection D of this sectionsufficent to, so that the grounds upon which the taxpayer relies in contesting an assessment are fully set forth to allow the Tax Commissioner to make an informed final determination.

"Date of assessment" means, for purposes of filing an administrative appeal, the date shownstated on the notice of assessment. For In the case of a denial of a denied refund claim, it meansthe date of assessment is the date of the department's correspondence informing the taxpayer that the refund claim is denieddenial letter. If the department fails to act within three months on an amended return claiming a refund, the date of assessment is the day afterfollowing the expiration of the three-month period expiresfor the purpose of permitting the taxpayer to pursue an administrative appeal under § 58.1-1821 of the Code of Virginia.

"Department" means the Virginia Department of Taxation and its employees.

"Determination" means the Tax Commissioner's written final determination issued pursuant to § 58.1-1822 of the Code of Virginia to a taxpayer's administrative appeal. ItA determination also includes the Tax Commissioner's written response to a request for reconsideration underpursuant to subsection F of this section, except as provided in subdivision F 5 of this section.

"Notice of assessment" means the department's official form labeled "Notice of Assessment" that containsstates written information that sets out the date of the assessment, amount of assessment, the tax type, taxable period, account number, bill number and name of the taxpayer name. A subsequent statement Subsequent statements of balance due, reports of payments, or updated bills do the department does not constitute a new notice of assessment. CorrespondenceSuch subsequent statements include reports of payments applied to assessments, updated bills reflecting additional accrued interest, or other changes to an assessment. A notice of assessment may be preceded by correspondence proposing adjustments to a filed return based on an audit or other information received by the department. Such correspondence is not a notice of assessment andbut is intended to provide taxpayers an opportunity to correct any errors before an assessment is made.

"Notice of intent to appeal" means a taxpayer's written statement filed with the department notifyingthat informs the department of athe taxpayer's intent to file an administrative appeal of an assessment to the Tax Commissioner.

"Tax Commissioner" means the chief executive officer of the Department of Taxation.

"Taxpayer" means a person, corporation, partnership, limited liability company, organization, trust, or estate or other entity subject to the taxes administered by the Department of Taxation.

B. Administrative appeal process.

1. Taxpayer appeal rights.

a. Section 58.1-1821 of the Code of Virginia gives a taxpayer the right to file an administrative appeal of an assessment issued by the departmentDepartment of Taxation, if the taxpayer believes that the department has incorrectly assessed tax, penalty or interest was incorrectly assessed. The administrative appeal must include the informationall elements listed in subsection D of this section.

b. The department strictly enforces the 90-day limitations period set forth in §58.1-1821 of the Code of Virginia for filing a timely administrative appeal. A taxpayer must file a complete appeal within 90 calendar days after the date of assessment. See subsection C of this section for computing the 90-day limitations period.

c. A taxpayer is not required to pay the portion of an assessment that is the subject of an administrative appeal until the Tax Commissioner has issued a determination that requires such payment unless the Tax Commissioner determines collection is in jeopardy. Any payment a taxpayer makes prior to the issuance of the final determination is subject to the provisions of subdivision B 3.

d. An administrative appeal may be filed with the department by hand delivery, email, common carrier, delivery service, United States mail, facsimile transmissionfax or by any other meansmethod that deliversensures the filing of a complete appeal to the department within the 90-day limitations period.

e. The department will determine the manner best suited to resolve an appeal, which may include submission of additional documents and memoranda, further audit, holding a conference with the taxpayer or the taking of testimony. If the case is referred for further audit, the Department shall notify the taxpayer in writing that the appeal is being closed and that they have a right to file another appeal within 90 days of the date of the Department's written notification of the results of the audit or the revised notice of assessment, whichever is later.

f. An administrative appeal of an assessment filed pursuant to § 58.1-1821 of the Code of Virginia is not subject to the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).

g. An appealapplication under § 58.1-1821 of the Code of Virginia does not extend the period in which a taxpayer may apply to a court under § 58.1-1825 of the Code of Virginia. See 23VAC10-20-190 C.

2. Collection action.

a. If the department receivesUpon receipt of a complete appeal or a notice of intent to appeal within the 90-day limitations period, the department will suspend collection action on the contested assessment will be suspended unless the Tax Commissioner determinesfinds collection of the assessment is in jeopardy. If the department takes a collection action after the taxpayer has filed a complete appeal, within the 90-day limitations period, the department shall refund the amount so collected at the request of the taxpayer. Any amount for which the taxpayer does not request a refund will be considered a payment subject to the provisions of subdivision B 1 c.

b. IfWhen a notice of intent to appeal is filed andbut a complete appeal is not filed within the 90-day limitations period, the suspension of collection will be releasedend, and collection action will resume.

c. After the Tax Commissioner issueshas made a determination on the application, the assessment, as it may have been modified by such determination, shall become immediately collectible with accrued interest.

3. Accrual of interest.

a. Interest accruesWhile the taxpayer's administrative appeal is pending, interest will accrue on any outstanding balance while an appeal is pending pursuant to § 58.1-1812 of the Code of Virginia. To avoid the accrual of additional interest, theA taxpayer may pay thechoose to make full amount to stop further interest; payment does not waive the taxpayer's right to contestof the assessment. Payment of any disputed tax, penalty, or interest shall not be construed to mean that the taxpayer is in agreement with the assessment.

b. If the taxpayer decides to make full payment is made and the final determination results in a refund, is later ordered, the taxpayer will be paid interest on the overpayment will be paid of the erroneously assessed tax pursuant to § 58.1-1833 of the Code of Virginia.

4. Acknowledgement letter.

a. The departmenttaxpayer will receivesend an acknowledgement letter when it receives anfrom the department once the administrative appeal or a notice of intent to appeal. has been received. The acknowledgement letter sent by the department after an appeal is filed will identifyprovide the taxpayer with the name and phone numbercontact information of the analyst assigned to review the appeal and provide contact information.

b. The acknowledgement letter serves only to indicate confirms receipt only andof the taxpayer's administrative appeal by the department. It it does not determineacknowledge whether the administrative appeal is complete or whether the appeal was timely filed.

c. If the appealit is incompletedetermined that the taxpayer has not filed a complete appeal, the assigned analyst assigned to the appeal will notify the taxpayer in separate correspondence. If the taxpayer is unable to perfect the application within the 90-day limitations period, the appeal will not be considered to be timely filed.

5. Power of attorney.

a. An administrative appeal filed on behalf of a taxpayer by an attorney, accountant, tax preparer, or other a representative of the taxpayer should be accompanied by a properly executed power of attorney. The power of attorney must be signed and dated by both the taxpayer and the taxpayer's representative(s).

b. A power of attorney must be filed if the taxpayer will be represented in a taxpayer conference with the department by an attorney, accountant, tax preparer, or other representative, and a power of attorneyone has not been previously filed with the department with regarding to the administrative appeal.

c. Form PAR 101, Power of Attorney and Declaration of Representative can be foundis available on the department's website. Form PAR 101 or any other power of attorney form that includes the same information will be accepted by the department.

d. Failure to provide a power of attorney within the 90-day limitations period does not precludeprevent consideration of the administrative appeal; however, but it may delay the issuance of the final determination.

6. Tax Commissioner's determination. The Tax Commissioner will issue a determination letter in response to the taxpayer's administrative appeal. The determination will be based on the issues raised in the taxpayer's administrative appeal.

C. Time for filing an administrative appeal. Section 58.1-1821 of the Code of Virginia provides that a taxpayer assessed with any tax administered by the department may, within 90 calendar days after the date of such assessment, file an administrative appeal with the Tax Commissioner.

1. The 90-day limitations period begins on the calendar day after the date of assessment and continues for 90 consecutive calendar days (including weekends and holidays).

2. Regardless of the delivery method used, if If the 90th calendar day after the date of assessment is falls on a Saturday, Sunday, federal holiday or Virginia state holiday, the filingadministrative appeal will be is considered timely if filed on the Commonwealth's next business day.

3. An administrative appeal that is delivered to the department using theAppeals sent by United States mail must be postmarked or havebear a metered date that is on or before the 90th calendar day after the date of assessment to be considered timely filed. If The department will use the United States mail postmark in cases where there is both a postmark date and a metered date appear, the postmark controls.on the administrative appeal. In the case of meteredMetered mail not bearing a United States mailwithout postmark, an appeal or a request for redetermination will be deemed to be filed untimely if the:

a. The metered date is missing from the metered imprint and the item is received by the department more than three business days after the last day to file, or if the for filing the appeal or a request for redetermination; or

b. The metered date is present bearing a timely date for the filing, but the filing is received by the department more than 10 business days after the last day for filing, in which case it is presumed that the metered date does not accurately reflect the date on which the filing was deposited with the United States Postal Service.

4. Appeals sentAn administrative appeal that is delivered to the department by hand, by common carrier, or delivery service, facsimile transmissionfax, electronic mail (email) or any means of delivery other than by United States mail, must be dated and received on or before the 90th calendar day after the date of assessment to be considered timely filed, except: as noted below.

a. HandAn administrative appeal delivered appealsby hand will be date-stamped by ana department employee of the department on the day received.; that This date will beis the filing date for purposes of determining if the administrative appeal is filed within the 90-day limitations period.

b. For common carrier or delivery service, the carrier'sThe date of receipt by the carrier or delivery service shown on the shipping or address label or elsewhere on the envelope is the filing dateor package delivered to the department by common carrier or delivery service will be the filing date of the administrative appeal for purposes of determining if the administrative appeal is filed within the 90-day limitations period.

c. The most recent date printed on a facsimile transmission fax or shown on an email transmission will be the filing date of the administrative appeal for purposes of determining if the administrative appeal is filed within the 90-day limitations period unless, for whatever reason, that date is patentlyclearly inconsistent with the actual receipt datedate actually received by the department.

d. AppealsAn administrative appeal received by the department via hand delivery, in an envelope or package, by facsimile transmission, by email, or by any other means of delivery bearing no legible date will be considered filed on the date of actual receipt by the department.

5. Examples illustratingof the 90-day limitations period are provided for administrative appealsguidance.

Example 1. The department issues Taxpayer A a notice of assessment with an assessment date of February 28, 2006. Taxpayer A files an administrative appeal with the Tax Commissioner by United States mail. The 90-day limitations period to file an administrative appeal starts on March 1, 2006, the first calendar day after the date of assessment. The 90th day after the date of assessment falls on May 29, 2006, which is a state holiday. Taxpayer A's administrative appeal will be considered timely filed if postmarked on or before May 30, 2006, the next business day following a state holiday.

Example 2. The department issues Taxpayer B a notice of assessment with an assessment date of March 13, 2006. The 90-day limitations period to file an administrative appeal starts on March 14, 2006. The 90th day after the date of assessment falls on June 11, 2006, which is a Sunday. Taxpayer B's administrative appeal will be considered timely filed if it is emailed to the department on or before June 12, 2006.

Example 3. The department issues Taxpayer C a notice of assessment with an assessment date of May 2, 2006. The department later sends Taxpayer C a statement dated June 5, 2006, showing that the original assessment remains outstanding and that additional interest has accrued on the assessment. The 90-day limitations period to file an administrative appeal begins on May 3, 2006, the first calendar day after the date of assessment. The 90th day after the date of assessment falls on August 1, 2006, which is a regular business day. Taxpayer C's administrative appeal will be considered timely filed if the envelope is postmarked or dated by a delivery service on or before August 1, 2006. The 90-day limitations period is not extended by the department's issuance of the statement dated June 5, 2006, to Taxpayer C.

D. Complete administrative appeal.

1. In order to be complete, an administrative appeal shall contain the following:

a. Identification of the taxpayer (to includeincluding mailing address, and federal tax identification number or social security number);

b. Type of tax;

c. Taxable period;

d. Date of assessment (if paid, include date of payment);

e. Remedy sought;

f. A statement signed by the taxpayer or duly appointed or authorized agent or attorney setting forth each alleged error in the assessment, the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention; and

g. Controlling legal authority (statutes, regulations, rulings of the Tax Commissioner, court decisions, etc.) upon which the taxpayer's position is based.

2. Administrative appeal form.

a. The department has availableoffers an administrative appeal form that canmay be used to submit the information required in subdivision D 1. to file an administrative appeal with the Tax Commissioner. While use of this form is not mandatory, the information required on the form must be included in the administrative appeal.

b. The form can be foundis available in the appendix of the Taxpayer Bill of Rights on the department's website at www.tax.virginia.gov.

c. The department reserves the right to require taxpayers to submit administrative appeals using the department's form.

3. Supporting documentation.

a. The taxpayer should include with the administrative appeal all the essential documentation that supports its contentions.

(1) AWhen a dealer is applyingseeking for a refund of sales tax refund, the dealer shall attach a list of the purchasers from whom the tax was collected and to whom theany refund and interest, if allowed, will be paid.

(2) AWhen a consumer is applying forseeking a refund of sales or use tax assessed against a dealer or contractor, the consumer shall identify the dealer or contractor, explain the payment circumstances surrounding the payment by the consumer and explain why the dealer or contractorclaim for refund could not, or would not, be made by the dealer or contractor file the refund claim.

(3) If the supporting documentation cannot be provided withat the time of filing the administrative appeal, the taxpayer should state the reasonsexplain why.

b. The department may allow the taxpayer up to 60 additional days from the date of the acknowledgement letterthe department acknowledges receipt of the administrative appeal to submit requiredthe necessary documents. The department mayIt will be within the department's discretion to allow any additional time beyond the 60 additional days where appropriate.

c. The department may acceptIn some instances, the taxpayer may be permitted to submit a sample of the supporting documents if the. The taxpayer must agrees to make the remainder of the documents available for review by the department.

d. TheDuring the course of the administrative appeal process, the department may request additional information during the appeals processfrom the taxpayer to facilitate rendering a determination of the taxpayer's administrative appeal.

4. Incomplete appeal/notice of intent to appeal.

a. An incomplete appeal or notice of intent to appeal does not satisfy or extend the 90-day limitations period. Informal contacts such as phone calls or meetings docontact made by a taxpayer with the department after an assessment has been issued does not constitute a complete appeal or a notice of intent to file an administrative appeal.

b. Examples of informal contact include a phone call to an auditor or other department personnel or a meeting with department personnel to discuss the assessment.

5. Examples.

a. Complete administrative appeal.

Example 1. An administrative appeal is filed within the 90-day limitations period and includes the relevant facts, the basis for the appeal and the legal authority that support the taxpayer's position. A sample of the documentation that supports the taxpayer's position is also included. The taxpayer notes that the remainder of the documentation is available for review.

b. Incomplete administrative appeals.

Example 2. The taxpayer's representative files a notice of intent letter with the department within the 90-day limitations period, indicating that it will supplement the letter of intent with the complete grounds for appeal and documentation. The 90-day limitations period expires before the department receives the supplement.

Example 3. A taxpayer submits a written request for a conference to discuss an assessment. This action, by itself, does not constitute a complete appeal.

E. Appeal conference. Any taxpayer assessed with any tax administered by the department as stated in Title 58.1 of the Code of Virginia, and any person assessed a penalty pursuant to § 58.1-1813 of the Code of Virginia, and who has filed a complete appeal is entitled to a conference, if requested, prior to the Tax Commissioner issuing a determination.

1. Purpose of conference.

a. The appeal conference is an informal opportunity for themeans by which a taxpayer tocan present legal arguments and factual documentation to the department concerning the protested issue(s) in its administrative appeal.

b. TheA conference to resolve an administrative appeal is not subject to the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).

2. Taxes discussed in the conference.

a. Any tax administered and assessed by the department as stated in Title 58.1 of the Code of Virginia may be discussed in the conference.

b. The taxes in Subtitle II (§ 58.1-2020 et seq.) of Title 58.1 of the Code of Virginia are administered by other state agencies. Administrative issues related to these taxes should be resolved through the appropriate agency.

3. Requesting a conference.

a. A taxpayer may request a conference related to an audit assessment being addressed in the appeal at the time a complete appeal is filed with the Tax Commissioner. The conference request must be related to an audit assessment being addressed in the appeal.

b. A taxpayer may also request a conference separately while the administrative appeal is pending. The taxpayer may by mail, fax, telephone or email a request for a conference to the department using the contact information located on the administrative appeals form found in the appendix of the Taxpayer's Bill of Rights on the department's website at www.tax.virginia.gov.

4. Granting a conference.

a. A taxpayerconference will be granted ifa conference provided a complete appeal washas been timely filed within the 90-day limitations period.

b. The department may declinewill not grant a conference for appeals it deemsan administrative appeal deemed frivolous or intended to delayfor cases in which a taxpayer requests a conference for the purpose of delaying collection action on a valid assessment.

5. Scheduling a conference. The department willEvery attempt will be made to schedule a date and time that is mutually convenient date and timefor both the taxpayer and will confirm the conferencethe department. The department will notify the taxpayer by a confirmation letter of the date and time for the conferencein writing.

6. Location of conference.

a. A conference will normally be held in the department's main office in Richmond, Virginia. As a convenience for taxpayers, a conference may be held by telephone or audio-video conferencing.

b. A conference may also be held, upon request and at the department's discretion, in the department's main office in Richmond, Virginia or at other locations. A taxpayer should provide the department sufficient information to support requests for conferences at other sites.

7. Conference attendees.

a. The conference will be conducted by the Tax Commissioner or ahis designee(s) of the Tax Commissioner. The and the analyst assigned to the taxpayer's administrative appeal will also attendconduct the conference.

b. The taxpayer and the taxpayer's representative(s) may attend; the conference. The taxpayer is not required to attend. See subdivision B 5 of this section for information regarding a power of attorney.

8. Documentation.

a. The taxpayer should be prepared to submit documentation supportingthat supports or validates the issues raised in the administrative appeal, as appropriate.

b. A sample of documentation is acceptable, provided the taxpayer agrees to give the department access to the remainder of the documentation for review.

9. After the conference.

a. NoThe Tax Commissioner or his designee will not issue a determination will be issued at the conference. The information and supporting documentation presented will be considered as part of the administrative appeal.

b. The Tax Commissioner will issue a written determination to the taxpayer's administrative appeal after careful consideration of all information provided, applicable statutes and regulations.

F. Request for reconsideration. A taxpayer who disagrees with the Tax Commissioner's final determination issued pursuant tounder § 58.1-1822 of the Code of Virginia may request a reconsideration of the determination.

1. Requirements. To be considered,In order for the Tax Commissioner to grant a request for reconsideration, the request must be received withinby the department not later than 45 days after the final determination and the taxpayer must demonstrate one of the following criteria:

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 addition, aA taxpayer's request for reconsideration must include the information required for a complete appeal. The taxpayer's request should also include the appropriate documentation (if applicable) to support the taxpayer's position. A sample of the documentation is acceptable, provided the taxpayer agrees to give the department access to the remainder of the documentation for review. Documentation provided with the original administrative appeal does not need to be resubmitted.

If at least one of the four requirements criteria listed above is satisfied, and the request for reconsideration includes the information required for a complete appeal, the Tax Commissioner will grant a taxpayer's request for reconsideration. For purposes of the criterion in subdivision F 1 c, a taxpayer should demonstrate that the department failed to apply the correct statute, regulation, or other source of policy. A disagreement as to the interpretation of such statute, regulation, or other source of policy is insufficient to satisfy that criterion.

2. Collection action.

a. Collection action will be suspended on the portion of the assessment related to the contested issues while the request for reconsideration is pending with the department.

b. Collection action will not be suspended on any portion of the contested assessment if the request for reconsideration fails to satisfy the requirements in subsection F 1A of this section. For example, a notice of intent to file a request for reconsideration or a request for a conference without any other information does not meet the requirements specified in subdivision F 1 of this subsection and is not sufficient to suspend collection action.

c. Collection action will not be suspended on the assessed amount amounts attributable to any uncontested issues.

3. Conference.

a. A conference to discuss the issues raised in the request for on reconsideration issues may be granted at the discretion of the department. In the event a conference is granted, it will be scheduled at a date and time that is mutually convenient for both the taxpayer and the department.

b. If appropriate and agreed to by both the taxpayer and the department, the conference may be held by telephone.

4. Denial of request for reconsideration. A request for reconsideration will not be granteddenied if the Tax Commissioner determines the request is:

a. Frivolous or intended to delay collection action on an assessment ruled to be proper in a determination issued pursuant to § 58.1-1822 of the Code of Virginiaan administrative appeal.

(1) A request for reconsideration will be deemed frivolous if it is based on arguments that are not grounded in law or fact.

(2) A request for reconsideration will be deemed as intending to delay collection action if it repeats the same information contained in the taxpayer's original administrative appeal letter and offers no new information or new legal arguments.

b. Received by the department more than 45 days after the final determination.

5. The Tax Commissioner's written response denying a request for reconsideration based on a finding that (i) the request fails to meet the requirements in subdivision F 1 of this subsection or (ii) one of the conditions specified in subsection D of this section exists is not a final determination pursuant to § 58.1-1822 of the Code of Virginia for purposes of filing an application for correction with the circuit court pursuant to § 58.1-1825 of the Code of Virginia.

G. The appropriate contact and mailing information related to the content of this section can be foundis available on the department's website at www.tax.virginia.gov.

H. See 23VAC10-20-160 A for the types of administrative remedies. See and 23VAC10-20-160 B for information about the exhaustion of administrative remedies.