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Virginia Tax Audits: Your Rights and Responsibilities


Posted in on May 6, 2019

Virginia taxpayers are routinely audited on their state taxes. Just as the IRS performs its audits, the Virginia Department of Taxation also audits tax returns to ensure compliance with state tax law. It is important for Virginia taxpayers to know their rights during these audits. And since a Virginia tax audit is a serious process, it is just as important for taxpayers to be aware of their responsibilities.

Virginia Taxpayer Rights During and After State Tax Audits

Every taxpayer in Virginia has important legal rights when under audit. These include their rights under the Virginia Taxpayer Bill of Rights, in addition to appeal rights for unfavorable audit results.

Virginia Taxpayer Bill of Rights

Under the Virginia Taxpayer Bill of Rights, state taxpayers are guaranteed the following rights during an audit:

  • Right to be informed of the audit process, audit procedure, and appeal rights.
  • Right to have the audit conducted at a reasonable time and place.
  • Right to receive a clear explanation of any changes in tax liability resulting from the audit.

Appeal Rights

When a taxpayer disagrees with an audit result or penalty assessed by the Virginia Department of Taxation, they may file an appeal with the department. This departmental appeal must be filed within 90 days of the notice of assessment date. If this appeal is unsuccessful, the taxpayer may file an appeal in the state court system.

Common Triggers for Virginia Tax Audits

The Virginia Department of Taxation does not publicize its exact methodology for selecting returns for audit. However, some common triggers for Virginia state tax audits are the following:

  • Past Taxes Owed: A taxpayer who owes taxes from the past tax season, or even before that, can often expect to be audited.
  • Tax Return Mistakes: These mistakes can include minor ones, such as misspellings. They can also be more substantial mistakes, such as missing documentation to support claimed deductions or credits.
  • Cash-based Business: Dealing in cash will generally act as a red flag for tax authorities, so it is vital to have supporting documentation.
  • Missed or Late Tax Filings: In addition to being audited, the taxpayer will likely owe fees and penalties.

Virginia Tax Audit Process

A Virginia state tax audit generally begins with a notification letter from the Virginia Department of Taxation. The letter will identify a possible discrepancy in the taxpayer’s return, as well as potential changes in the tax amount owed. The letter will also provide a deadline to respond with additional information or explanation, if the taxpayer disagrees with the findings.

The two main types of Virginia tax audits are desk audits and field audits.

Desk Audits: These audits are conducted by mail only.

Field Audits: These are on-site examinations of tax returns or records, conducted at scheduled times.

Speak With a Virginia Tax Attorney at Thorn Law Group

If you are being audited by the Virginia Department of Taxation, contact the Thorn Law Group to meet with a Virginia tax attorney. For a consultation, contact Kevin E. Thorn, Managing Partner, at 703-752-3752, or reach him by email at ket@thornlawgroup.com.

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