Tax Type
BPOL Tax
Description
Gross receipts of third party pay
Topic
Basis of Tax
Computation of Tax
Date Issued
09-14-2004
September 14, 2004
Re: Appeal of Assessment: 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 Director of Finance of the ***** (the "County") for tax years 1998, 1999 and 2000. I apologize for the delay in this response.
The local license tax and fee are imposed and administered by local officials. Virginia Code § 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, that is, the local assessment will stand unless the taxpayer proves that it is incorrect.
The following determination is based on the facts presented to the Department as summarized below. Copies of the Code of Virginia sections and regulation cited, along with other reference documents, are available on-line in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.state.va.us.
FACTS
The Taxpayer manages property owned by the government as a result of foreclosure by the Department of Veterans Affairs (the "VA"). The Taxpayer also manages properties that are mortgaged by the VA that may be rented because the owner has a temporary duty assignment elsewhere. The Taxpayer's responsibilities include routine maintenance work and making the realty available to the open market. During the years in question, the Taxpayer was paid by the VA. Its compensation consisted of a flat fee plus a percentage override on any costs advanced. These costs included contracted work such as lawn maintenance, snow removal, homeowner's association dues and condominium fees.
The County assessed the Taxpayer additional BPOL tax based on the "gross receipts" filed on the Taxpayer's federal Form Schedule C. The Taxpayer contends that the monies received as reimbursement for expenses incurred for services performed by third parties should be excluded from gross receipts and, therefore, not be subject to the BPOL tax.
DETERMINATION
The County's final determination notes that its assessment is based on the definition of "gross receipts." The term is defined in Va. Code § 58.1-3700.1 as "the whole, entire, total receipts, without deduction." The law provides a limited number of exclusions and deductions from gross receipts. When an assessment is under appeal, the burden is on the taxpayer to identify the applicable exclusion or deduction. In this case, the Taxpayer has not met that burden.
Virginia Code § 58.1-3703.1 grants the Tax Commissioner the authority to consider an appeal of a final determination made by the local commissioner of the revenue. Under Section 7.9.3 of the 2000 BPOL Guidelines, if a taxpayer fails to provide missing items requested by the Department within the time allotted, the Tax Commissioner may proceed to decide the appeal based on available information. If sufficient information is unavailable to permit an adequate analysis, the appeal will be dismissed. In this case, the Taxpayer has not furnished requested information to substantiate its position or to permit an adequate analysis of the appeal. Therefore, it is my determination that the Taxpayer's appeal is dismissed. The final local determination stands, and the Taxpayer must remit all taxes and interest due to the County.
If you have any questions regarding this determination, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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Kenneth W. Thorson
Tax Commissioner
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AR/44738H
Rulings of the Tax Commissioner