Document Number
11-124
Tax Type
BPOL Tax
BTPP Tax
Description
Taxpayer's appeal was not timely filed
Topic
Classification
Local Power to Tax
Local Taxes Discussion
Statute of Limitations
Date Issued
07-01-2011


July 1, 2011





Re: Taxpayer: *****
Locality Assessing Tax: *****
Business Tangible Personal Property (BTPP) Tax
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 and BTPP tax assessments issued by the ***** (the "County") for the 2007 through 2010 tax years.

Virginia Code § 58.1-3983.1 D 2 requires the Tax Commissioner to determine whether he has jurisdiction to hear an appeal within 30 days of receipt of a taxpayer's appeal. The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections, regulation 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


In August 2008, the County issued a BTPP tax bill for the first half of 2008 to the Taxpayer. On August 19, 2008, the Taxpayer appealed the BTPP assessment, contending certain equipment that the County classified as business tangible personal property was actually machinery and tools. This letter did not reference a 2008 BPOL assessment or any 2007 assessments.

The County investigated the Taxpayer's operations and verbally indicated in December 2008 that the Taxpayer was not a manufacturer. Subsequently, the Taxpayer paid its 2007 and 2008 BPOL and BTPP tax assessments.

On April 14, 2010, the Taxpayer paid its 2010 BPOL tax under protest, stating that it was a manufacturer and that it intended to file a protest with the Tax Commissioner. The County issued a letter that was received by the Taxpayer on May 3, 2010. In this letter, the County concluded that the Taxpayer was not a manufacturer based on its analysis done in September 2008.

On March 2, 2011, the Taxpayer filed an appeal with the County, contending it was a manufacturer for purposes of the BTPP and BPOL taxes. On April 14, 2011, the County issued a letter concluding that the Taxpayer's appeal was not timely filed.

ANALYSIS

BTPP Tax Jurisdiction

The Taxpayer filed a request to be classified as a manufacturing business for both BTPP and BPOL tax purposes in 2008. There are no records that indicate that the Taxpayer filed an appeal of its BTPP tax assessments with the County for any other tax years. Further, the County conducted an examination of the Taxpayer in 2008 and concluded the Taxpayer was not a manufacturer. No final determination has been issued by the County.

Virginia Code § 58.1-3983.1 B 1 provides that any person assessed with:
    • any . . . local business tax as defined in this section may appeal such assessment within one year from the last day of the tax year for which such assessment is made, or within one year from the date of such assessment, whichever is later, to the commissioner of the revenue or other assessing official. [Emphasis added.]

Pursuant to Va. Code § 58.1-3983.1 D 1, if the Taxpayer's appeal is denied in part or whole by the local assessing official, the taxpayer may, within 90 days, appeal the assessment to the Tax Commissioner.

Under § 1.4 of the Guidelines for Appealing Local Business Taxes (the "Guidelines"), issued as Public Document (P.D.) 04-28 (6/25/2004), an "assessment" is defined as "a determination as to the proper rate of tax, the measure to which the tax rate is applied, and ultimately the amount of tax, including additional or omitted tax, that is due." When a taxpayer files an amended local business tax return, the local taxing authority must make a determination as to the proper amount of the tax. If the locality denies the refund, it has made a determination as to the proper amount of tax, even if the assessment on that locality's books is not changed. Consequently, the denial of a refund by a local taxing authority would constitute an assessment for purposes of filing an appeal under Va. Code § 58.1-3983.1.

When responding to requests for refunds of local taxes, local taxing officials have the discretion to simply deny the request or issue a final local determination. When a final local determination is not issued by a locality, the Taxpayer may file an appeal within the statutory time prescribed with the locality as provided under Va. Code § 58.1-3983.1 B 1.

The Taxpayer timely filled a request for a review of the County's assessment of BTPP tax for the first half of the 2008 tax year. The County performed an examination and upheld its assessment in December 2008. Under the provisions of Va. Code § 58.1-3983.1 B 1, the Taxpayer would have been required to file a local appeal with the County by December 31, 2009. In March 2011, the Taxpayer filed an appeal with the County contesting unspecified tax years and assessments.

Under § 1.4 of the Guidelines, an appeal should include a copy of a notice of assessment or some other indication as to the tax years and amounts at issue. Because the Taxpayer's March 2011 letter fails to identify the specific tax years and amounts at issue, the Department would not consider this correspondence to be a complete appeal under Va. Code § 58.1-3983.1.

Virginia Code § 58.1-3980, however, 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." The Department has ruled that a locality's denial of an amended return requesting a refund constitutes an assessment from which a Taxpayer would become eligible to file an appeal under Va. Code § 58.1­3983.1. See P.D. 10-103 (6/18/2010) and P.D. 11-44 (3/23/2011). Because a denial of a refund request does create an assessment as defined in the Guidelines, a taxpayer denied a refund by a locality is eligible to appeal under Va. Code § 58.1-3983.1, provided such appeal is timely filed.

BPOL Tax Jurisdiction

The Taxpayer timely filed a protest of its 2010 BPOL tax assessment. The evidence does not show that the Taxpayer filed an appeal of its BPOL tax assessments for any other tax year. The County issued a determination in May 2010. The Taxpayer filed an appeal for unspecified tax years and assessments with the County in March 2011. The County responded that the appeal was filed beyond the statute of limitations.

Virginia Code § 58.1-3703.1 A 5 b provides:
    • Any person assessed with a local license tax as a result of an appealable event as defined in this section may file an administrative appeal of the assessment within one year from the last day of the tax year for which such assessment is made, or within one year from the date of the appealable event, whichever is later, with the commissioner of the revenue or other local assessing official.

For the 2010 tax year, the Taxpayer would have until December 31, 2011 to file an appeal provided the County makes no subsequent adjustments to the Taxpayer's assessment resulting in an appealable event within the time prescribed under Va. Code § 58.1-3903.

Further, Title 23 of the Virginia Administrative Code (VAC) 10-500-710 D requires each final local determination to include prescribed language concerning a taxpayer's right to appeal the local determination. The County's determination letter of May 2010 does not include the required language. Accordingly, this determination would not be considered to be a final local determination for purposes of the appeals process under Va. Code § 58.1-3703.1.

The Taxpayer filed its protest for the 2010 tax year in April 2010. As of this date the County has not issued a final determination. As such, the Taxpayer would still be able to file an appeal of the County's May 2010 determination for the 2010 tax year. In addition, the Taxpayer has not filed an appeal with the County for any other tax year.

Under Va. Code § 58.1-3703.1 A 6 a, taxpayers may file an appeal with the Department only after a final determination has been issued by a locality. Virginia Code § 58.1-3703.1 A 5 e, however, does allow a taxpayer to appeal directly to the Department if an appeal to a locality has been pending for more than one year. Under such circumstances, the taxpayer can elect to consider the local appeal to have been denied. The taxpayer is required to give a locality 30 days written notice of such an election.

DETERMINATION


It is the Department's determination that no appeal of BTPP tax has been filed with the County for the 2007 through 2010 tax years. As such, the Department lacks the jurisdiction to make a determination concerning the BTPP tax issues at this time. However, if the Taxpayer files refund requests with the County pursuant to Va. Code § 58.1-3980, the County would be required to issue a determination as to whether the refunds were valid.

If the County denies the refunds, the Taxpayer would be eligible to appeal pursuant to the procedures set forth under Va. Code § 58.1-3983.1. In the alternative, the County would have the discretion to issue a final determination in response to the Taxpayer's requests for refund in order to expedite the appeals process.

With regard to BPOL tax, the Department is prohibited from addressing the Taxpayer's appeal of BPOL taxes for the 2007 through 2010 tax years at this time. The Taxpayer may, however, seek correction of its assessments with the County as permitted under Va. Code § 58.1-3980. Again, the County's response to such claims would be considered to be an appealable event under Va. Code § 58.1-3703.1 A 5 a.

If you have any questions regarding this response, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
                • Sincerely,



Craig M. Burns
                • Tax Commissioner



AR/1-4764327701.B


Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46