Tax Type
BPOL Tax
Description
Request for additional relief for a time preceding a statutory change
Topic
Allocation and Apportionment
Appropriateness of Audit Methodology
Local Power to Tax
Date Issued
05-02-2002
May 2, 2002
Re: Appeal of Final Local Determination
Taxpayer: *****
Locality Assessing Tax: *****
Business, Professional and Occupational License (BPOL) Tax
Dear *****
This final state determination is issued upon the application for correction filed by you on behalf of ***** (the "Taxpayer") with the Department of Taxation. You appeal a final local determination upholding an audit assessment of BPOL taxes made by the Commissioner of the Revenue of the ***** (the "City") for the second time.
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.
This determination addresses the questions of: (1) whether or not the City addressed the issue of apportionment as raised in an earlier final state determination, and (2) if the Taxpayer is entitled to the affiliated group exemption provided for in Code of Virginia § 58.1-3703(C)(10).
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
In August 1999, you appealed an assessment issued by the City to the Taxpayer, a parent limited liability company (LLC), based on the pass-through income it derived from its subsidiary LLCs. At that time you represented to the department that the Taxpayer had actually obtained business licenses in other jurisdictions. In issuing its determination, Public Document (P.D.) 99-309 (11/30/99), the department returned the matter to the City in order to give the Taxpayer an opportunity to prove that some of the gross receipts in question should have been attributed to jurisdictions other than the City. The department's November 30, 1999 determination concluded:
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- In this appeal, the Taxpayer has raised, for the first time, facts which support its contention that it was subject to license taxation in localities other than the City. Accordingly, this matter is returned to the City for a redetermination on this issue in accordance with the law set forth above. The Taxpayer shall provide any facts supporting its position to the City within 45 days of the date of this final state determination. If the Taxpayer disagrees with the City's determination based on this new information, the Taxpayer may appeal to the department within 90 days of the City's final determination. Otherwise, as the Taxpayer has not shown sufficient proof that the assessment made by the City is incorrect on any other grounds, the assessment stands as is. [Emphasis added].
The City contended that the Taxpayer did not meet the 45-day deadline established in the department's determination. Nonetheless, after receiving evidence of the Taxpayer's move to another jurisdiction, the City adjusted the Taxpayer's 1998 assessment. The adjusted assessment, issued on December 26, 2001, reflected the fact that the Taxpayer had moved to another jurisdiction and the gross receipts of the business were apportioned accordingly.
Affiliated Group Exclusion
The second question raised in the current appeal is that of the application of the 2000 amendments to Code of Virginia § 58.1-3700.1, in which LLCs were included in the definition of "affiliated groups." Code of Virginia § 58.1-3703(C)(10) provides for an exclusion in the calculation of those gross receipts that are:
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- On or measured by receipts or purchases by an entity which is a member of an affiliated group of entities from other members of the same affiliated group. This exclusion shall not exempt affiliated entities from such license or other tax measured by receipts or purchases from outside the affiliated group.
The 2000 amendment expanded the definition of affiliated group from "corporations" to include LLCs, limited liability partnerships, and limited partnerships. The effective date of that amendment was July 1, 2000; therefore it is inapplicable to previous years. See P.D. 00-16 (3/15/00).
DETERMINATION
Although the Taxpayer did not meet the 45-day requirement stipulated in P.D. 99-309 for providing the City with additional information, the City nonetheless granted the Taxpayer relief when the necessary information was provided. The Taxpayer's request for additional relief for a time preceding a statutory change is not provided for in the law. Therefore, it is my determination that the Taxpayer is not entitled to further relief.
If you have any questions regarding this letter, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
AR/37485H
Rulings of the Tax Commissioner