A Virginia tax Notice of Assessment is the Department of Taxation’s formal bill telling you it has calculated additional tax, penalty, or interest against you, and you generally have 90 days from the assessment date to pay it, set up a payment plan, or file an appeal before collection tools like liens and bank levies become available to the state. Interest keeps running from the assessment date no matter which path you choose, and combined late-filing and late-payment penalties can reach 30 percent of the tax owed, so acting inside that window is where you have the most leverage.
Why the 90-Day Clock Matters
The date printed on the notice does three things at once. It starts your 90-day window to apply to the Tax Commissioner for correction.1Virginia Code Commission. Virginia Code 58.1-1821 – Application to Tax Commissioner for Correction It fixes the point from which Virginia has seven years to collect.2Virginia Code Commission. Virginia Code 58.1-1802.1 – Period of Limitations on Collection And it marks the point from which additional interest accrues on top of what has already built up from the return’s original due date.
Interest is calculated at the federal underpayment rate under IRC § 6621 plus two percentage points.3Virginia Code Commission. Virginia Code 58.1-15 – Rate of Interest For the first quarter of 2026, that puts Virginia’s rate at 9 percent.4Internal Revenue Service. Revenue Ruling 2025-22 The rate resets each quarter, so a balance left to sit may be charged different rates in different periods.
Penalties sit on top of that. Virginia charges a 6 percent late-payment penalty for each month or partial month the balance is unpaid, and a separate 6 percent late-filing penalty. Each caps at 30 percent of the tax, and together they are also capped at 30 percent combined, not 60.5Virginia Tax. Virginia Tax Penalty and Interest Updates
Check the Notice Against Your Records First
Before you decide anything, pull the return for the tax period shown on the notice and compare each line. The notice separates the base tax from accrued interest and penalties, and that breakdown matters because penalties and interest can sometimes be reduced independently of the underlying tax. Note the assessment number; you’ll need it for every payment, phone call, or appeal. You can also log into Virginia Tax Online Services at tax.virginia.gov to see the current balance and any related notices.
Most assessments trace to one of a few causes: a math error on your return, income reported to Virginia on a W-2 or 1099 that didn’t appear on your filing, a federal change you didn’t carry over to your state return, or an estimated assessment the Department issued because no return was filed at all. Knowing which triggered yours tells you whether you’re more likely paying or disputing.
If You Agree: Pay in Full or Set Up a Plan
The fastest way to pay is through your Virginia Tax Online Services account or the Quick Pay system, which lets you debit a bank account directly. If you mail a check or money order, send it with the voucher from the notice to:
Virginia Department of Taxation
P.O. Box 2369
Richmond, VA 232186Virginia Tax. Individual Income Tax Payment Options
That address is different from the one used for regular return payments, so check it carefully. The postmark needs to be on or before the notice’s due date to avoid more interest and to keep the account out of field collection.
Installment Agreements
If you can’t pay in full, Virginia offers payment plans. You can set one up yourself online if your combined balance of tax, penalties, and interest is under $25,000 and the account hasn’t been sent to a collection agency, placed under a lien with your bank or employer, or flagged for bankruptcy.7Virginia Tax. Payment Plans
Individual plans can run up to five years, though the Department typically accepts terms around 24 months. A 10 percent down payment is recommended for individuals and 20 percent for businesses, but neither is strictly required. Penalties and interest keep accruing during the plan and aren’t baked into the scheduled installments, so your final payment will be larger than the sum of the earlier ones.7Virginia Tax. Payment Plans
Three ways to arrange a plan:
- Online through your Virginia Tax Online Services account.
- By automated phone system (Teleplan) at 804-440-5100, available 24 hours.
- By calling the Collections Department at 804-367-8045 during business hours. A representative may be able to arrange a plan even if you don’t qualify for the self-service option.
If You Disagree: Appeal to the Tax Commissioner
You have 90 days from the assessment date to apply to the Tax Commissioner for correction. The application has to be on the Department’s prescribed form, explain fully why the assessment is wrong, and come with the documents that back up your position, such as corrected forms, receipts, or third-party records.1Virginia Code Commission. Virginia Code 58.1-1821 – Application to Tax Commissioner for Correction
If you need more time to pull records together, file a notice of intent to appeal right away. Once the Commissioner receives it, collection is paused until the 90-day filing window expires, unless he determines collection is in jeopardy.1Virginia Code Commission. Virginia Code 58.1-1821 – Application to Tax Commissioner for Correction After the full application is in, collection stays suspended until the Commissioner issues a final determination. Interest on any unpaid balance keeps accruing during the appeal, though, so winning saves you the tax and penalties but not all the interest that built up in the meantime.8Virginia Tax. Administrative Appeals
Mail the application to:
Tax Commissioner
Virginia Department of Taxation
P.O. Box 2475
Richmond, VA 23218-24759Virginia Tax. Offer in Compromise
The 90-day deadline is enforced strictly. A late application will be rejected regardless of how strong the underlying argument is.10Virginia Code Commission. 23VAC10-20-165 – Administrative Appeals
Offer in Compromise
Virginia also allows an offer in compromise under Va. Code § 58.1-105 when you believe the assessment is wrong, when penalties resulted from circumstances outside your control, or when you can’t afford to pay. The Department uses two forms:
- Form OIC I-2 covers penalty waiver and doubtful liability. Use it if you believe you don’t actually owe the amount, or if something like a serious illness, a death in the family, or criminal activity by a third party kept you from filing or paying on time.
- Form OIC I-3 covers doubtful collectibility. Use it when financial hardship makes paying in full impossible.
Mail either form, along with a letter explaining your circumstances and the documents that support it, to the Tax Commissioner at P.O. Box 2475, Richmond, VA 23218-2475.11Virginia Tax. Form OIC I-2 – Individual Offer in Compromise A clean prior filing history, on its own, generally will not get a penalty waived. Interest usually won’t be waived unless the underlying liability itself is doubtful. And a mistake by your tax preparer is not grounds for penalty relief.
Taking the Case to Circuit Court
If the Commissioner’s determination goes against you, or if you want to skip the administrative route entirely, you can apply to a Virginia circuit court. The deadline is the later of three years from the assessment date or one year from the Commissioner’s determination.12Virginia Code Commission. Virginia Code 58.1-1825 – Application to Court for Correction Exhausting the administrative process first is not legally required, though the Department encourages it.13Virginia Code Commission. 23VAC10-20-160 – Assessments and Administrative Remedies
A judge hears the case without a jury, and you carry the burden of showing the assessment is wrong. The Department can also ask the court to require you to pay the assessed amount, post a surety bond, or file an irrevocable letter of credit before the case proceeds.12Virginia Code Commission. Virginia Code 58.1-1825 – Application to Court for Correction Litigation is slow and expensive, so for most people the administrative appeal remains the practical first move.
What Happens If You Ignore the Notice
If the tax is still unpaid 30 days after it becomes due, the Tax Commissioner can file a memorandum of lien in the circuit court clerk’s office wherever you live or do business. The lien works like a court judgment for the Commonwealth and attaches to your real estate in every county or city where it’s filed.14Virginia Code Commission. Virginia Code 58.1-1805 – Memorandum of Lien
The Department can also file a lien directly with a bank or other third party holding your funds, which freezes and seizes money in your accounts without a court hearing.15Virginia Code Commission. Virginia Code 58.1-1804 – Lien for Taxes Accounts can also be assigned to an outside collection agency, which usually adds its own fees to your balance.
Virginia’s collection window is seven years from the assessment date, and once it closes, collection has to stop even on actions already in motion.2Virginia Code Commission. Virginia Code 58.1-1802.1 – Period of Limitations on Collection That’s a long time to carry a lien on your credit and property, and it rarely works out well as a strategy.
If a Federal Audit Caused the Assessment
Virginia requires you to report any increase or correction to your federal taxable income to the Department within one year after the federal change becomes final.16Virginia Code Commission. Virginia Code 58.1-312 – Limitations on Assessment Skip that, and the Department can assess the additional Virginia tax at any time, with no statute of limitations on the assessment.
The IRS shares audit results and income-matching data with state agencies under IRC § 6103(d), so Virginia often learns of federal adjustments on its own and issues a Notice of Assessment for the state impact, with penalties and interest reaching back to the original due date of the affected Virginia return. Filing a Virginia amended return promptly after a federal change is the simplest way to keep the penalty portion off that bill.