Tax Type
BPOL Tax
Description
Taxpayer's appeal under Va. Code § 58.1-3703.1 A 5 b.
Topic
Classification
Local Taxes Discussion
Taxpayers' Remedies
Date Issued
06-26-2014
June 26, 2014
Re: Appeal of Final Local Determination
Taxpayer: *****
Locality: *****
Business, Professional and Occupational License (BPOL) Tax
Dear *****:
This notice of jurisdiction is issued upon the application for correction filed by you on behalf of your client, ***** (the "Taxpayer") with the Department of Taxation. The Taxpayer appeals BPOL tax assessments issued by the ***** (the "County") for the 2009 through 2013 tax years.
The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections, regulations and public documents cited are available on-line in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.virginia.gov.
FACTS
The Taxpayer operated at a definite place of business in the County. The Taxpayer was originally classified as a professional service provider. In February 2012, the Taxpayer requested that the County reclassify it as a business service provider for the 2009 through 2011 tax years. The County agreed and issued refunds for the 2009 and 2010 tax years. The Taxpayer then filed its 2012 BPOL return classifying itself as a business service provider.
In December 2012, the County reversed its position concluding that the Taxpayer was engaged in professional services. However, the County granted the Taxpayer 30 days to provide additional documentation to support its claim that it was a business service.
Numerous interactions ensued in which the Taxpayer attempted to support its position and the County continued to defend its classification. Subsequently, the County found that the documentation provided was insufficient and issued assessments for the 2009 and 2010 tax years and denied the refund request for the 2011 tax year.
The Taxpayer filed its 2013 BPOL return classifying itself as a business service provider. The County reclassified the Taxpayer as a provider of professional services and issued assessments. The Taxpayer appealed to the County. In a final local determination letter of December 31, 2013, the County held that the Taxpayer was a professional service provider.
The Taxpayer appeals the County's final determination to the Tax Commissioner, for the 2009 through 2013 tax years, contending it should have been liable for the BPOL tax as a business service provider. The County filed a response asserting that the Department lacks jurisdiction because the Taxpayer failed to file its appeal within 90 days of the final determination letter for the 2009 through 2011 tax years issued in December 2012. The County also asserts, that the Department lacks jurisdiction to address the appeal stemming from the determination letter of December 31, 2013 because it was issued under Va. Code § 58.1-3981.
ANALYSIS
First Determination Letter
The County argues that it issued a final determination for the 2009 through 2012 tax years in December 2012. Under Title 23 of the Virginia Administrative Code (VAC) 10-500-710 D, the locality is required to issue a signed and dated final local determination setting forth the facts and arguments in support of its position. In addition, localities are required to notify taxpayers of their right to appeal a final local determination to the Tax Commissioner. The notification must include the time limitation for filing such an appeal and the address to which such an appeal should be submitted. In addition, the notice must include information about collection activity during the period under which an appeal is under review. In fact, Title 23 VAC 10-500710 D sets prescribed language to ensure localities give proper notice to taxpayers.
In its letter dated December 5, 2012, the County states the Taxpayer had not provided enough information to show that all Of the services performed should be considered business services and requested that the Taxpayer provide additional information within 30 days or the letter would be considered a final determination. The County's letter fails to clearly explain why it considers the services to be professional. Further, although the County had previously agreed to the change in classification and states in its letter that it made an extensive investigation, it provides no analysis to support its classification other than the Taxpayer had not provided enough evidence. In addition, the County appears to suggest the Taxpayer may be operating multiple businesses, but provided no explanation as to why it believes the Taxpayer may be doing so. Finally, while the County's first determination letter states that the Taxpayer may file an appeal with the Tax Commissioner, it fails to include all of the information required in the notice.
Because the County failed to follow state regulations in responding to the Taxpayer's appeal and left open the possibility to further consideration of the Taxpayer's claims, the Department finds it difficult to conclude the County's letter of December 5, 2012 is a final local determination for purposes of the appeals process under Va. Code § 58.1-3703.1. In fact, the record appears to indicate the County and the Taxpayer continued to exchange correspondence and documentation on numerous occasions after the December 2012 letter, indicating the County was still considering the Taxpayer's request for the 2009 through 2011 tax years.
Second Determination Letter
The County asserts the determination letter of December 31, 2013 for the 2012 and 2013 tax years was issued under Va. Code § 58.1-3981, which does not permit an appeal to the Tax Commissioner. It asserts that the second determination letter only applies to the 2013 tax year only because the prior tax years at issue were addressed by the first determination letter.
Virginia Code § 58.1-3980 provides that any person aggrieved by an assessment of local taxes "may, within three years from the last day of the tax year for which such assessment is made, or within one year from the date of the assessment, whichever is later, apply to the commissioner of the revenue or such other official who made the assessment for a correction thereof." Under this procedure, if the taxpayer disagrees in whole or in part with the local assessing officer's determination, the taxpayer may then seek correction with the circuit court under the provisions of Va. Code § 58.1-3984.
The Taxpayer's appeal letter to the County for the 2013 tax year failed to cite the statutory authority under which it was appealing. Under Va. Code § 58.1-3703.1 A b, appeals must sufficiently identify the taxpayer, the tax periods covered by the challenged assessments, the amount in dispute, the remedy sought, each alleged error in the assessment, the grounds upon which the taxpayer relies, and any other facts relevant to the taxpayer's contention. The Department's review of the Taxpayer's local appeal letter indicates that it met all of the requirements set forth above.
Generally, a statute authorizing the filing of action to challenge or correct the assessment of taxes is a remedial statute and as such should be constructed liberally to afford that relief envisioned by the legislature. See Reynolds Metals Company v. Count of Henrico, 237 Va. 646, 378 S.E.2d 833 (1989). In enacting the model ordinance in 1997, the General Assembly expressed its intent to allow taxpayers an administrative appeal to the Department. The mere fact that a taxpayer does not identify the specific statute under which it seeks relief does not disqualify it from proceeding under Va. Code § 58.1-3703.1 A 6. As such, a locality cannot bar a taxpayer's right to an appeal with the state with regard to a local tax appeal by issuing a final determination under Va. Code § 58.1-3980 unless a taxpayer specifically states that it is appealing under Va. Code § 58.1-3980. See Public Document (P.D.) 11-42 (3/23/2011).
Moreover, a well-recognized, rule of statutory construction confers "a specific or special statute supersedes a general statute insofar as there is a conflict." See P.D. 04138 (9/16/2004) and 1985-1986 Op. Va. Att'y Gen. 68, citing Roanoke v. Land, 137 Va. 89, 119 S.E. 59 (1923). In this case, the appeal procedure as specified under Va. Code § 58.1-3703.1 A for BPOL tax assessments is more specific than the general appeal statue for any local tax assessment under Va. Code § 58.1-3980.
As for the issue of which tax years were addressed by the second determination, the County includes the 2009 through 2013 tax years in the reference section. In the body of the letter, the County indicates that it is making further explanation of its December 2012 letter. Further, this determination letter requests payment for the 2009, 2010, 2012 and 2013 tax assessments.
DETERMINATION
The evidence clearly indicates the County continued to work on the unresolved issues for the 2009 through 2012 tax years after the issuance of the December 2012 letter. Further, because it did not meet the requirements of Title 23 VAC 10-500-710, the first determination cannot be considered to be a final determination.
With regard to the second determination letter, the Department concludes the Taxpayer's appeal must be considered to be an appeal under Va. Code § 58.1-3703.1 A 5 b. Further, this determination did address the 2009 through 2012 tax years, and the Taxpayer is not barred by statute of limitations from pursuing those tax years under the administrative appeals process under Va. Code § 58.1-3703.1 A 6 a.
In analyzing the second final determination, however, the Department finds that this letter also fails the requirements of Title 23 VAC 10-500-710 D for many of the same reasons as the first determination. Accordingly, the Department is returning this case to the County with instruction to issue a final local determination for the 2009 through 2013 tax years in accordance with the established regulation. In the alternative, the Taxpayer may proceed with an appeal to the Tax Commissioner for the 2009 through 2012 tax years provided it gives the County 30 days notice as provided under Va. Code § 58.1-3703.1 A 5 e.
If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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Craig M. Burns
Tax Commissioner
AR/1-5683422747.B
Rulings of the Tax Commissioner