CODE OF VIRGINIA

APPLICATION TO COURT FOR CORRECTION OF ERRONEOUS OR IMPROPER ASSESSMENTS OF
STATE TAXES GENERALLY (§ 58.1-1825)

A. Any person assessed with any tax administered by the Department of Taxation
and aggrieved by any such assessment, or aggrieved by an action by the
Department with respect to a transferred credit or other tax attribute, may,
unless otherwise specifically provided by law, within (i) three years from the
date such assessment is made or (ii) one year from the date of the Tax
Commissioner’s determination under § 58.1-1822, whichever is later, apply
to a circuit court for relief. The venue for such proceeding shall be as
specified in subdivision 13 b of § 8.01-261. The application shall be before
the court when it is filed in the clerk’s office.

B. Except as provided in subsection C, the court shall require the applicant to
pay the assessment before proceeding with its application upon granting a motion
by the Tax Commissioner seeking to compel such payment and showing to the
satisfaction of the court that the Department is likely to prevail on the merits
of the case, that the application is (i) not well grounded in fact; (ii) not
warranted by existing law or a good faith argument for the extension,
modification, or reversal of existing law; (iii) interposed for an improper
purpose, such as to harass, to cause unnecessary delay in the collection of the
revenue, or to create needless cost to the Commonwealth from the litigation; or
(iv) otherwise frivolous.

C. In lieu of the payment required in subsection B, the taxpayer may, within 60
days of the court’s ruling, (i) post a bond pursuant to the provisions of
§ 16.1-107, with a corporate surety licensed to do business in Virginia, or
(ii) file an irrevocable letter of credit satisfactory to the Tax Commissioner
as to the bank or savings institution, the form and substance, and payable to
the Commonwealth in the face amount of the contested assessment increased by
twice the interest rate for underpayments published by the Department and in
effect at the time the application is filed. The letter of credit shall be from
a bank incorporated or authorized to conduct banking business under the laws of
this Commonwealth or authorized to do business in this Commonwealth under the
banking laws of the United States, or a federally insured savings institution
located in this Commonwealth. Such bond or irrevocable letter of credit shall be
conditioned upon payment by the applicant of the amount of the taxes, penalty
and interest ordered by the court pursuant to § 58.1-1826, if any.

D. Any person whose assessment has been improperly collected from property
exempt from process may within three years from the date such assessment is
made, or if later, within one year of the Tax Commissioner’s decision on a
process exemption claim under § 58.1-1821 apply to a circuit court for relief.
The venue for such proceeding shall be as specified in subdivision 13 b of §
8.01-261.The Department shall be named as defendant, and the proceedings shall
be conducted as an action at law before the court sitting without a jury. It
shall be the burden of the applicant in any such proceeding to show that the
assessment or collection or action on a transferred credit or other tax
attribute complained of is erroneous or otherwise improper. The court’s
order shall be entered pursuant to § 58.1-1826.

E. Nothing in this section shall prevent the Tax Commissioner from collecting
the assessment if he determines that collection is in jeopardy.

HISTORY: Code 1950, § 58-1130; 1950, p. 598; 1973, c. 280; 1976, c. 311; 1977,
c. 624; 1980, c. 633; 1984, c. 675; 1985, c. 221; 1991, c. 714; 1998, c. 529;
2003, c. 908; 2008, c. 549.