State Tax Debt: Virginia

Virginia State Tax Debt: Liens, Wage and Bank Levies, and Virginia Tax Collection Compared With the IRS

By Ray Neu, Publisher | Last reviewed: October 27, 2026 | Reading time: 8 min

Short answer

Virginia Tax, the state Department of Taxation, collects unpaid income tax apart from the IRS. Once a bill is 30 days old, it may levy wages and bank accounts or file a memorandum of lien in circuit court, and it uses outside collectors. For assessments since July 1, 2016, it has seven years to collect; the IRS has ten.

This page is for individuals who owe Virginia income tax, with or without a federal balance. Virginia Tax runs its own assessments, plans, offers and appeals; local taxes follow a separate process. For the federal side, see back taxes.

Deadline to know: Virginia Tax allows 30 days from the bill to pay or respond before collection may begin. A formal appeal to the Tax Commissioner is due within 90 days of the date of assessment (Va. Code section 58.1-1821), a limit the agency calls strictly enforced.

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What follows a Virginia Tax bill

The bill, called a notice of assessment, carries a date of assessment that starts the collection and appeal clocks.

The 30-day window. Unless other bills are unpaid, the agency says it will not act to collect until at least 30 days after the date of assessment, and it may act without another notice. A dispute raised with Customer Service inside those 30 days holds off collection during review.
Notice of intent to file a lien. Va. Code section 58.1-1805 requires ten or more days of notice before a lien filing, except in jeopardy cases.
Outside collectors. Taxes assessed at least 90 days earlier can be assigned to contracted agencies (section 58.1-1803), which then handle payment arrangements.

Interest is the federal underpayment rate plus 2% (section 58.1-15): 9% for the fourth quarter of 2026 under Tax Bulletin 26-4, against 7% federally. Late filing and late payment penalties each run 6% per month to a 30% cap.

Wage levies, bank liens and the memorandum of lien

Wage levies (garnishment)

The employer is told to withhold 25% of net wages and send it to Virginia Tax until the bill, penalties and interest are paid. Virginia’s general garnishment cap in Va. Code section 34-29 currently excludes “any debt due for any state or federal tax.” The version effective July 1, 2027 excludes only federal tax.

Bank liens and other third-party liens

Under section 58.1-1804, the Tax Commissioner can apply in writing to anyone holding funds of, or owing money to, a taxpayer whose taxes are more than 30 days delinquent. A lien attaches when the application is received, the taxpayer gets a copy, and the holder may take a $20 fee from the taxpayer’s funds. The bank freezes the accounts and pays up to the balance due; the levy expires after the due date on the levy letter, and no Virginia source reviewed sets a fixed number of days. Social Security, veterans’ benefits, unemployment, workers’ compensation and child support are among the listed exemptions.

Memorandum of lien

Once taxes are 30 days past due, the Tax Commissioner may file a memorandum of lien with the circuit court clerk where the taxpayer lives or does business, or in Richmond if neither is in Virginia. It carries the effect of a judgment, is public, and per Virginia Tax can remain for 20 years or until paid. A filing made in error can be appealed to the Tax Commissioner, who must decide within 14 days and release an erroneous lien within 7 days after that.

Other tools. State refunds and lottery prizes can be held against the bill, and as a last step the sheriff can seize and sell property after a 10-day notice.

The seven-year collection limit and its exceptions

Va. Code section 58.1-1802.1 allows collection only within seven years from the date of assessment; for assessments made on or after July 1, 2016, all collection must end when that period closes. The count pauses during an appeal or court case, while a court (bankruptcy included) controls the assets, and while an installment agreement runs, and a written agreement can extend it. The limit does not bar enforcing a memorandum of lien filed before the period closed. If the agency has no contact for six years and no lien is filed where the taxpayer owns real estate, interest and penalty stop accruing.

The IRS period is 10 years under 26 U.S.C. section 6502; the CSED calculator computes only that federal date.

A Virginia Tax levy and an IRS balance at the same time?

A free, confidential evaluation can review the Virginia and federal accounts together.

Start Your Free Evaluation Call (202) 968-1121

Payment plans, offers in compromise and hardship status

Payment plans. A plan requires a bill. Self-service setup is open under $25,000 combined when no levy, bankruptcy or outside-agency assignment is on the account. Individual income tax plans can run up to 5 years (section 58.1-1817). Interest continues, refunds are applied, and a missed payment can end the plan. Compare IRS installment agreements.

Offer in compromise. Section 58.1-105 allows settling disputed liabilities and debts of doubtful collectibility. Hardship offers use Form OIC I-3, Form FIN I-1 and Form OIC-Fee with a $50 fee, waived for individuals under the form’s low-income guidelines; doubtful liability and penalty waiver requests use Form OIC I-2. Virginia Tax answers within 90 days, files a memorandum of lien during hardship review, and allows payment in full or over up to 5 months. A denial cannot be appealed, but a new offer can be sent. Compare the IRS offer in compromise.

Penalty relief. Penalties of $2,000 or less can be waived for extenuating circumstances such as fire, death or hospitalization; larger amounts need an offer. Compare penalty abatement.

CNC status. Virginia’s currently not collectible status opens only after the IRS grants federal CNC; the taxpayer emails Virginia Tax the IRS transcript or notice, and the result is a pause, not forgiveness. A 2026 act adds this to section 58.1-105 effective July 1, 2027. Compare federal CNC.

Spouses. Section 58.1-1836, enacted in 2026, allows relief for a spouse meeting the section 6015 standards of the Internal Revenue Code even without a federal claim.

Challenging a Virginia Tax assessment

Informal review. Customer Service can resolve billing questions, but a review request does not extend the appeal deadline.
Tax Commissioner. An appeal on the Appeals Form is due within 90 days of the date of assessment (section 58.1-1821); filings returned as incomplete are not timely. A complete appeal, or a notice of intent to appeal inside the 90 days, suspends collection unless it is in jeopardy (23 VAC 10-20-165). Interest continues, dropping nine months after assessment to the federal short-term rate, 4% for the fourth quarter of 2026.
Protective claim. Past the 90 days, Virginia Tax describes paying the bill and filing a refund claim within three years of the assessment (section 58.1-1824).
Circuit court. Within three years of the assessment or one year of the Tax Commissioner’s determination, whichever is later (section 58.1-1825). Prepayment is not automatic, though the court can order it on a Department motion.

For significant hardship the Taxpayer Rights Advocate may issue a taxpayer assistance order staying an action (section 58.1-1818), but it cannot replace an appeal or change deadlines.

Virginia Tax and the IRS side by side

As of October 2026. Federal detail: IRS wage garnishment, IRS bank levy, federal tax lien.

Topic	Virginia Tax (individuals)	IRS
Collection period	7 years from assessment (on or after July 1, 2016); a timely memorandum of lien can be enforced later	10 years from assessment
Wage garnishment share	25% of net wages	Pay above an exempt amount tied to the standard deduction and dependents (Publication 1494)
Bank levy	Funds held and paid up to the balance; fixed hold period not stated	21 days under section 6332(c)
Lien	Memorandum of lien in circuit court; up to 20 years or until paid	Released within 30 days after payment
Payment plan	Self-service under $25,000; up to 5 years	Online long-term plan for $50,000 or less
Offer in compromise	$50 hardship fee; no appeal of a denial	Lump sum or periodic; $205 fee
Appeals body	Tax Commissioner, then circuit court	IRS Independent Office of Appeals

After an IRS change. Va. Code section 58.1-311 calls for an amended Virginia return within one year after the final determination date. Virginia Tax notes the IRS reports changes to it, sometimes years later, with interest running from the original due date.

Separate accounts. No Virginia Tax source reviewed says an IRS plan or offer settles a Virginia balance. Form FIN I-1 lists an IRS payment plan and a state tax payment plan as separate expenses, and Virginia CNC needs its own request.

When an attorney matters

Va. Code section 58.1-1845 gives taxpayers a right to “counsel or other qualified representatives.” Form PAR 101 lists four representative types (attorney, certified public accountant, enrolled agent, or family member or other), and the representative must be a person, not a firm. Where the roles differ:

Court. A Virginia dispute ends in circuit court, and the Bill of Rights itself recommends a lawyer for any application to the court.
Privilege. 26 U.S.C. section 7525 covers federally authorized tax practitioners only in noncriminal matters before the IRS and in federal court; it is silent on state agencies.

See tax attorney vs. CPA vs. enrolled agent.

Related guides

Frequently Asked Questions

How long can Virginia Tax collect a state tax debt?

Seven years from the date of assessment for assessments made on or after July 1, 2016 (Va. Code section 58.1-1802.1). Appeals, bankruptcy and installment agreements pause the clock, and a memorandum of lien filed in time can be enforced later. The IRS has 10 years.

How much of a paycheck can Virginia Tax garnish?

Virginia Tax asks the employer to withhold 25% of net wages until the bill is paid. The current Va. Code section 34-29 leaves state tax debts outside the general garnishment cap; a version effective July 1, 2027 keeps that exception for federal tax only.

How long does a Virginia memorandum of lien last?

Virginia Tax says a recorded memorandum of lien can remain in force for 20 years or until the debt is paid. It is filed in circuit court after at least 10 days’ notice and is public record.

What happens to a bank account under a Virginia Tax bank lien?

The bank holds the funds and sends Virginia Tax up to the balance due; the levy expires after the due date on the levy letter. Virginia sources state no fixed hold period; the IRS waits 21 days.

Who hears an appeal of a Virginia Tax assessment?

The Tax Commissioner, if the appeal is filed within 90 days of the date of assessment. A circuit court can then hear the case within three years of the assessment or one year of the Tax Commissioner’s determination, whichever is later.

Owe Virginia Tax and the IRS?

A free, confidential evaluation is one way to start, with notices from both agencies on hand.

Start Your Free Evaluation Call (202) 968-1121

About the Author

Ray Neu

Ray Neu is the publisher of IRSAttorneys.net. A former law enforcement officer with a background in criminal justice and digital publishing, he oversees editorial direction, partnership standards, and compliance review for the site. He is not an attorney and does not provide legal advice; all tax law content is sourced and reviewed against the standards documented on the Editorial Team & Standards page.

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Sources

IRS Circular 230 Disclosure: To ensure compliance with Treasury Department rules governing tax practice, any tax information contained on this website was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty. You should consult a licensed tax professional regarding your individual situation.

Results described on this website are not a guarantee, warranty, or prediction of the outcome of any tax matter. Every situation is different. Prior results do not guarantee a similar outcome. Article content reflects general information about federal and state tax procedure as of the last reviewed date and may not reflect subsequent changes in IRS or state tax agency policy, statutes, regulations, or case law.