Virginia Society of Certified Public Accountants Statement on the Virginia Department of Taxation's Proposal for an Independent Hearing Officer in an Office of Tax Appeals

The Virginia Department of Taxation has made a recommendation to the Joint Subcommittee to Study and Revise Virginia's State Tax Code regarding a tax appeals process in Virginia. The proposal, presented by Commissioner Ken Thorson, calls for an independent hearing officer to preside over tax disputes prior to entering into the Circuit Court for an appeal of the Tax Commissioner's decisions in tax disputes.

The Virginia Society of Certified Public Accountants (VSCPA) urges the Joint Subcommittee to oppose instituting the process as outlined by the Department of Taxation. The VSCPA originally made recommendations on this process in August 2002 in the interest of protecting Virginia taxpayers. The VSCPA must oppose the recommendation because the Department of Taxation's proposal offers no significant additional protection, and in some areas, places the taxpayer at a disadvantage.

Fundamentally, the VSCPA opposes the proposal on the following points:

The appointment, supervision and management of the appeals process should rest with an independent body.

The $500 filing fee is an undue burden on the taxpayer, and is significantly higher than the charge to file in Tax Court.

The filing threshold of $30,000 makes the appeals process unreachable to the vast majority of Virginia taxpayers, and therefore does not add significant public protection. Taxpayers who have smaller assessments have a far greater need for an independent, inexpensive level of appeal without going to court.

The threshold for case acceptance should be lowered and be inclusive of penalties and interest. In many situations, it is the penalty and interest that is in question.

In the interest of transparency, all hearing results, as well as any non-acquiescence by the Commissioner, should be published.

The taxpayer should never be required to forfeit the right to appeal, regardless of the appeals process.

The tax appeals process should be housed, and wholly operated, outside of the Department of Taxation. The current proposal provides far too much influence by the Tax Commissioner to be considered independent.

The VSCPA understands that a tax appeals board in the current budget environment is not viable. However, the Department of Taxation's proposal does not adequately serve the public interest and may hinder an effective appeals process in the future. The VSCPA contends that the Department of Taxation's proposal should be abandoned until such time that the budget allows for an effective process that benefits all Virginians.

The VSCPA greatly values the opportunity to work with the Department of Taxation and the Joint Subcommittee to Study and Revise Virginia's State Tax Code in developing an effective appeals process and would be happy to provide further input. However, the VSCPA must oppose the tax appeals proposal in its current form due to its lack of independence and failure to adequately protect Virginia taxpayers.

Questions and concerns may be directed to VSCPA Government Affairs Leader, Erin Collins at ecollins@vscpa.com or 1(800) 733-8272. The VSCPA's legislative counsels are Ralph L. "Bill" Axselle Jr., (804) 783-6405, and Fred Helm, (804) 783-6933 of Williams Mullen.