Document Number
17-217
Tax Type
BPOL Tax
Description
Administration and Jurisdiction
Topic
Appeals
Date Issued
12-22-2017

December 22, 2017

Re:        Notice of Jurisdiction
               Taxpayer:     *****
               Locality:     *****

              Business, Professional and Occupational License (BPOL) Tax

Dear *****:

This final state determination is issued upon the application for correction filed on behalf of ***** (the “Taxpayer”) with the Department of Taxation.  You seek a reconsideration of Public Document (P.D.) 17-81 (6/1/2017) concerning the denial of a refund of Business, Professional and Occupational License (BPOL) tax paid to the       ***** (the “City”) for the 2011 through 2013 tax years.

The following determination is based on the facts presented to the Department summarized below.  The Code of Virginia sections and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department's web site.

FACTS

In P.D. 17-81, the Department determined that an appealable event occurred because the City issued a smaller refund than was requested by the Taxpayer.  The Taxpayer seeks a reconsideration because it asserts that the City did not issue a refund.

ANALYSIS

Under Virginia Code § 58.1-3703.1 A 6 a, a taxpayer may file an appeal with the Department only after a final determination has been issued by a locality. See P.D. 11-124 (7/1/2011).  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.

As indicated in P.D. 17-79, an appealable event includes the denial of a refund.  In this case, the Taxpayer timely filed requests for refunds for the 2010 through 2013 tax years in 2013 and 2014.  While the City indicated that it would issue partial refunds in June 2016, it has yet to do so.  Further, as of this date, the City has failed to issue its official findings with regard to the Taxpayer's refund requests.  Without a conclusion by the City, the question arises as to whether or not an appealable event has occurred.

Virginia Code § 58.1-3981 F requires the local assessing official to state, in writing, the facts and law supporting the action on an amended return filed pursuant to Virginia Code § 58.1-3980 and mail a copy of such writing to the Taxpayer.  This statute, unlike Virginia Code § 58.1-1823 which imposes a time limit on the Department to respond to amended returns, does not stipulate how much time a locality has to evaluate a refund request.  Thus, under the statute, a locality would not have denied a refund until it makes some type of official finding.  Because the City has failed to notify the Taxpayer in writing as to status of the refund request, no assessment has been changed or refund denied as required for an appealable event to occur under Virginia Code § 58.1-3703.1 A 5 a.

The City has had more than three years to evaluate the Taxpayer's claims and reach a conclusion as to the amount of the refunds, if any, are due.  It is understandable that complicated issues can take a considerable amount of time to resolve.  Still, a locality has a fiduciary duty to its constituents to issue its official findings within a reasonable time period.

In addition, the Department finds it doubtful that the General Assembly would establish the BPOL appeals process, but allow a locality to circumvent the process simply by failing to issue a written response to a taxpayer's refund request.  Thus, at some point, a locality's failure to act must be considered to be a denial of a refund. The Department, however, lacks the authority to set a time period under which a locality must respond to an amended BPOL tax return.

DETERMINATION

Pursuant to the BPOL statutes, the denial of the refund creates an appealable event. Because the City indicated that it would issue partial refunds, but failed to do so for more than a year, it would appear that the City has, in fact, denied the Taxpayer's refund request.  If this is the case, the Taxpayer may file an appeal to the City pursuant to Virginia Code § 58.1-3703.1 A 5.  Once the City issues its final determination, the Taxpayer may appeal to the Department pursuant to Virginia Code § 58-3703.1 A 6 and Title 23 VAC 10-500-720 if it disagrees with any of the City's conclusions.

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/1365.B

 

Rulings of the Tax Commissioner

Last Updated 01/24/2018 13:21