58.1-1825 - Application to court for correction of erroneous or improper assessments of state taxes generally.
§ 58.1-1825. Application to court for correction of erroneous or improperassessments of state taxes generally.
A. Any person assessed with any tax administered by the Department ofTaxation and aggrieved by any such assessment, or aggrieved by an action bythe Department with respect to a transferred credit or other tax attribute,may, unless otherwise specifically provided by law, within (i) three yearsfrom the date such assessment is made or (ii) one year from the date of theTax Commissioner's determination under § 58.1-1822, whichever is later, applyto a circuit court for relief. The venue for such proceeding shall be asspecified in subdivision 13 b of § 8.01-261. The application shall be beforethe court when it is filed in the clerk's office.
B. Except as provided in subsection C, the court shall require the applicantto pay the assessment before proceeding with its application upon granting amotion by the Tax Commissioner seeking to compel such payment and showing tothe satisfaction of the court that the Department is likely to prevail on themerits 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 theextension, modification, or reversal of existing law; (iii) interposed for animproper purpose, such as to harass, to cause unnecessary delay in thecollection of the revenue, or to create needless cost to the Commonwealthfrom the litigation; or (iv) otherwise frivolous.
C. In lieu of the payment required in subsection B, the taxpayer may, within60 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 TaxCommissioner as to the bank or savings institution, the form and substance,and payable to the Commonwealth in the face amount of the contestedassessment increased by twice the interest rate for underpayments publishedby the Department and in effect at the time the application is filed. Theletter of credit shall be from a bank incorporated or authorized to conductbanking business under the laws of this Commonwealth or authorized to dobusiness in this Commonwealth under the banking laws of the United States, ora federally insured savings institution located in this Commonwealth. Suchbond or irrevocable letter of credit shall be conditioned upon payment by theapplicant of the amount of the taxes, penalty and interest ordered by thecourt pursuant to § 58.1-1826, if any.
D. Any person whose assessment has been improperly collected from propertyexempt from process may within three years from the date such assessment ismade, or if later, within one year of the Tax Commissioner's decision on aprocess exemption claim under § 58.1-1821 apply to a circuit court forrelief. The venue for such proceeding shall be as specified in subdivision 13b of § 8.01-261.
The Department shall be named as defendant, and the proceedings shall beconducted as an action at law before the court sitting without a jury. Itshall be the burden of the applicant in any such proceeding to show that theassessment or collection or action on a transferred credit or other taxattribute complained of is erroneous or otherwise improper. The court's ordershall be entered pursuant to § 58.1-1826.
E. Nothing in this section shall prevent the Tax Commissioner from collectingthe assessment if he determines that collection is in jeopardy.
(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.)