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Virginia sales tax notices

Got a letter from the Virginia Department of Taxation (Virginia Tax)? Find it below to see what it means, why businesses usually receive it, and what to do next.

Sources checked

Tax authority

Virginia Department of Taxation (Virginia Tax) (opens in a new tab)

Disagree with a notice?

First request an informal review, by calling Customer Service or writing with supporting documents. Notifying Virginia Tax of the dispute within 30 days of the bill date stops collection while it is reviewed. If you are not satisfied, file an administrative appeal with the Tax Commissioner under Va. Code 58.1-1821 using the Appeals Form, with a complete statement of facts and supporting documents. Incomplete appeals are not treated as timely.

Deadline: Informal dispute: within 30 days from the date the bill was issued. Appeal to the Tax Commissioner: within 90 days of the date of assessment (strictly enforced).

Source: Virginia Department of Taxation (Virginia Tax) (opens in a new tab)

Balance due

A bill for tax, penalty, or interest the authority says is unpaid.

Balance due

Bill (Notice of Assessment)

A bill for tax you owe plus any penalties and interest. Virginia Tax sends it when tax reported on a return was not paid or not paid in full.

Why you got it

  • Tax owed on a filed return was not paid, or was only partly paid

What to do

  1. Check the bill against your returns; if you think it's wrong, call Customer Service or write with documents within 30 days to request an informal review
  2. Pay the tax online through Virginia Tax Online Services or by check, or set up a payment plan if you can't pay in full
  3. If extenuating circumstances made you late, write to request a penalty waiver (penalties of $2,000 or less) or an offer in compromise for larger penalties
  4. If the informal review doesn't resolve it, file an administrative appeal with the Tax Commissioner within 90 days of the assessment

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: 30 days to pay or respond before additional penalties and interest accrue and collection may begin

Source: Pay a Bill (Notice of Assessment) | Virginia Tax (opens in a new tab)

Audit

A request for records or notice that the authority is examining your returns.

Audit

Virginia Notice of Field Audit Selection

An auditor notifies you by letter that your return or account was selected for an on-site audit. The letter describes the records needed and the planned audit method.

Why you got it

  • Your business was selected for an on-site review of returns and records

What to do

  1. Respond and provide the requested documents by the stated due date
  2. Review the list of required documents (such as invoices, contracts and exemption certificates) and confirm the audit period with your auditor
  3. Tell the auditor before the due date if you need more time

Response window: By the due date stated in the notice

Source: Audits | Virginia Tax (opens in a new tab)

Audit

Audit inquiry letter (desk audit / examination)

Many examinations are done by mail. An examiner writes to ask for more information about items on your return or to tell you about errors that need to be adjusted, and you can respond before a bill is issued.

Why you got it

  • Data from the IRS or other agencies does not match your Virginia return
  • A possible underpayment or unfiled return was identified

What to do

  1. Respond and send the requested documents by the stated due date
  2. Use the name, address and phone number on the letter for all contacts
  3. Ask the examiner for more time before the due date if needed

Response window: By the due date stated in the letter

Source: Audits | Virginia Tax (opens in a new tab)

Collections

Enforcement on unpaid balances, such as liens, levies, warrants, or referral to a collection agency.

Collections

Wage levy or bank / financial institution levy

If a bill is not paid or answered within 30 days, Virginia Tax may garnish wages or bank and investment accounts. It may also refer the account to an outside collection agency.

Why you got it

  • A tax bill was not paid or answered within 30 days

What to do

  1. Pay the balance in full or set up a payment plan
  2. If the levy causes severe financial hardship, call Collections (businesses usually must send a financial statement)
  3. If exempt funds were taken, tell Virginia Tax in writing with supporting documents

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: Collection Actions | Virginia Tax (opens in a new tab)

Collections

Memorandum of Lien

If a bill remains unpaid after collection attempts, Virginia Tax may file a Memorandum of Lien in one or more circuit courts. It has the same effect as a judgment, is public record, and can stay in force for 20 years or until paid.

Why you got it

  • A tax bill stayed unpaid after earlier collection attempts

What to do

  1. Request a Consolidated Bill Notice from Customer Service for a summary of all liabilities
  2. Pay the liability in full or contact Collections about payment options

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: Collection Actions | Virginia Tax (opens in a new tab)

Ask for penalty relief

Penalties on a Virginia notice aren't always final. You can ask for them to be waived. Follow the steps below, including anything the state requires you to file or pay before it reviews the request.

Waiver of Penalty (offer in compromise for penalties over $2,000)

  1. File any missing returns and pay the tax due
  2. Write to Virginia Tax, Office of Customer Services, P.O. Box 1115, Richmond, VA 23218-1115 with the details of your case and supporting documents
  3. For penalties over $2,000, request an offer in compromise instead

What qualifies: Extenuating circumstances that kept you from filing or paying on time, such as fire, death, illness requiring hospitalization around the due date, flood or natural disaster, or other unusual situations. Penalties are generally not waived for simple oversight.

Interest: Virginia Tax generally does not waive interest, which it treats as a charge for the use of money rather than a penalty. Interest is removed only if the underlying tax is adjusted, or through an offer in compromise based on doubtful liability or doubtful collectibility.

Source: Penalties and Interest | Virginia Tax (opens in a new tab)

Before you respond

  • Check the date on the notice. Response windows usually run from that date, not the day you open it.
  • Match the account number and filing period to your own records before paying or disputing.
  • If returns are missing, filing the actual returns usually replaces an estimated bill. Confirm how on the notice or with the authority.
  • Ask about penalty relief before paying penalties, and check what must be paid with the request. See how
  • Keep a copy of the notice and everything you send back.

This page is general information, not tax or legal advice. Notice names and procedures change, so always follow the instructions on your notice and the official sources linked above.

Need the rates, nexus thresholds and filing rules? Read the Virginia sales tax guide.

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