May 24, 2023
Re: Appeal of Final Local Determination
Dear *****:
This notice of jurisdiction is issued upon the application for a waiver filed by you (the “Taxpayer”) with the Department of Taxation. The Taxpayer seeks the abatement of penalty and interest included with an assessment of local transient occupancy tax issued by (the “County”) for the 2019 through 2021 tax years.
The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections cited are available on-line in the Laws, Rules and Decisions section of the Department’s web site, located at www.tax.virginia.gov.
FACTS
The Taxpayer operated a short-term rental property in the County during the tax years at issue. She states that remitting transient occupancy tax was the responsibility of a third party, but no returns were submitted. As a result, the County issued assessments for unpaid transient occupancy tax, including penalties and interest. The Taxpayer requests that the penalty and interest be waived.
ANALYSIS
Under Virginia Code § 58.1-3983.1 D, the Department’s jurisdiction is limited to appeals from final local determinations concerning local business and mobile property tax assessments. Local business taxes include the machinery and tools tax, business tangible personal property tax, merchant’s capital tax, and consumer utility tax. See Virginia Code § 58.1-3983.1 A. Local mobile property taxes include the tangible personal property tax on airplanes, boats, campers, recreational vehicles, and trailers. The local transient occupancy tax is not a local business tax or a local mobile property tax. As such, the Department does not have jurisdiction to address appeals involving the local transient occupancy tax. See Public Document (P.D.) 07-141 (9/5/2007).
Further, under Virginia Code § 58.1-3916, penalty and interest for failure to file a local tax return or pay a local tax may not be imposed when such failure was not the fault of the taxpayer, or was the fault of the commissioner of revenue or the treasurer, as the case may be. This statute also grants the treasurer the power to make determinations of fault relating exclusively to failure to pay a tax. Determinations of fault relating exclusively to failure to file a return are reserved for the local commissioner of the revenue. In localities that do not have a treasurer or commissioner of the revenue, the local governing body may delegate the responsibility to make such determinations to the appropriate local taxing official. Virginia Code § 58.1-3916, however, does not authorize the Department to review the locality’s finding of fault. See P.D. 16-65 (4/29/2016).
DETERMINATION
The Taxpayer’s request for the waiver of penalty and interest for the 2019 through 2021 tax years was not eligible for review by the Department because the Department lacks jurisdiction over transient occupancy tax matters and because the Department does not have the authority to grant waivers of penalty and interest included with local tax assessments generally. The Taxpayer should contact the local taxing jurisdiction that issued the assessment for instructions as to how to request a waiver.
If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/4353.B