Tax Type
BPOL Tax
Description
Telecommunications companies
Topic
Constitutional Provisions
Local Taxes Discussion
Date Issued
04-29-2002
April 29, 2002
Re: Appeal of Final Local Determination
Taxpayer: *****
Locality Assessing Tax: *****
Business, Professional and Occupational License (BPOL) Tax
Dear *****:
This final determination is issued upon an application for correction of a BPOL tax assessment filed by you on behalf of your client, ***** (the "Taxpayer"). The County of ***** (the "County") assessed the Taxpayer based on the utility rate of $0.50 per hundred, rather than the business services rate ($0.36 per hundred) for tax years 1995-2001.
The local license tax and fee are imposed and administered by local officials. Code of Virginia § 58.1-3703.1(A)(5) authorizes the department to issue determinations on taxpayer appeals of certain BPOL tax assessments. On appeal, a BPOL tax assessment is deemed prima facie correct. In other words, the local assessment will stand unless the taxpayer proves that it is incorrect.
Copies of the Code of Virginia, regulations and public documents cited are included for reference purposes. These and other reference documents are also available online in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.state.va.us.
FACTS
The Taxpayer was initially classified as a business service company for BPOL tax purposes. In 1994, the County wrote a letter to the Taxpayer stating that, while the Taxpayer was not a public service company, it was a "utility service" company effective tax year 1994. This classification was based on the fact that the County had amended its ordinance in 1994 to tax all telecommunications companies at the public service company rate provided for in Code of Virginia § 58.1-3731. The County again notified the Taxpayer of its change in classification on December 5, 1997, by sending a letter to the Taxpayer. Attached to the letter was a memorandum bill for tax years 1995-1997.
The Taxpayer responded to the December 5, 2000 letter on January 14,1998, stating that it had paid its taxes as a business service company and that, since the County had concluded that it was not a public service company as defined in Code of Virginia § 58.1-2600, the Taxpayer concluded that no further taxes were owed for the years in question.
The Taxpayer filed an appeal with the department for tax years 1996-2000. In a letter dated April 19, 2002, the Taxpayer contends that the County did not provide it with a proper "notice" of assessment as required by Code of Virginia § 58.1-3700.1, nor did it provide the Taxpayer with a notice of its appeal rights.
The County asserts that the department does not have jurisdiction in this issue because (1) the assessment was not the result of an audit, and (2) the appeal was not timely filed. For these reasons, the County has not addressed the merits of the case. The Taxpayer contends that the change in classification resulting in a tax increase constituted an audit. Further, it contends that because its self-reporting was not challenged until December 12, 2000, its Application for Review was timely filed.
DETERMINATION
BPOL Audits
For BPOL tax purposes, an audit is defined as follows:
-
- an examination of records, financial statements, books of accounts, and other information to evaluate the correctness of a local license tax. An audit shall include, but is not limited to, an examination to determine the correctness of a classification of a licensable business, examinations resulting in adjustments made to gross receipts, tax, and other information contained in the taxpayer's return, and examinations resulting in the imposition of a local license tax when no return has been filed. 2000 BPOL Guidelines, § 7.4.
None of the facts presented by either party demonstrate that any of the indicators defining an audit assessment as outlined above were met. The County took the Taxpayer's self-assessments and changed its classification. The County based its change in classification upon its interpretation of the law, not on an investigation of the Taxpayer's financial records or other information.
The Tax Commissioner only has jurisdiction for BPOL tax appeals that arise out of an audit as defined above. I have thoroughly reviewed and analyzed the arguments presented by the Taxpayer and the County. In this case, I find that the assessment at issue did not arise from an audit. Therefore, the Tax Commissioner does not have jurisdiction to address the Taxpayer's appeal. However, the Taxpayer may appeal the assessment to the circuit court pursuant to Code of Virginia § 58.1-3984.
It should be noted that House Bill 317, which was signed by the Governor on April 3, 2002, (Chapter 364 of the 2002 Acts of Assembly), amends the administrative appeals process for BPOL taxes. Effective July 1, 2002, taxpayers may utilize the BPOL administrative appeals process through the local commissioner of the revenue and the Tax Commissioner to appeal all assessments and denials of refund requests of BPOL taxes.
If you have any questions regarding this final determination, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
AR/38258H
Rulings of the Tax Commissioner