June 17, 2019
Re: Notice of Jurisdiction
Taxpayers: *****
Locality Assessing Tax: *****
Business, Professional and Occupational License (BPOL) tax
Dear *****:
This notice of jurisdiction is issued upon the application for correction filed on behalf of your clients, ***** and ***** (the “Taxpayers”), with the Department. The Taxpayers appeal the denial of a refund of BPOL tax from ***** (the “County”) for the 2015 tax year.
The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections, regulations 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
The Taxpayers requested a refund of BPOL tax paid to the County for the 2015 tax year, contending that they were exempt from the County’s BPOL tax under the federal Anti-Head-Tax Act (the “AHTA”), codified at 49 U.S.C. § 40116. In a letter purporting to be a final determination, the County concluded that the Taxpayers were not exempt under the AHTA and denied the refund. The Taxpayers appealed to the Department.
ANALYSIS
The Code of Virginia includes a review process designed to encourage resolution of local license tax issues through an appeal process that includes review by the local assessing officer and appeal to the Tax Commissioner. Through this process, a taxpayer who disagrees with an audit assessment may apply to the local assessing officer for review. If the taxpayer is dissatisfied with the results of the local review, the taxpayer may appeal the local decision to the Tax Commissioner who will make a determination of the issues raised by the taxpayer. See Title 23 of the Virginia Administrative Code (VAC) 10-500-640.
Specifically, Virginia Code § 58.1-3703.1 A 5 provides that any person assessed with a local license tax as a result of an appealable event 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. An appealable event is an increase in the assessment of a local license tax payable by the taxpayer, the denial of a refund, or the assessment of a local license tax where none previously was assessed. In addition, an appealable event includes a taxpayer’s appeal of a classification, regardless of whether it is in conjunction with an assessment, examination, audit or any other action taken by the locality.
This statute also provides the procedure that a taxpayer must use to appeal a final local license tax assessment. A taxpayer must file an appeal with the locality in which the appealable event occurred. Once an appeal is filed, the locality’s assessing officer will fully review the taxpayer’s claims and issue a final determination letter setting forth the facts and arguments in support of its decision. See Virginia Code § 58.1-3703.1 A 5 b.
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 Public Document (P.D.) 11-124 (7/1/2001). 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.
Under Title 23 VAC 10-500-710, “local assessing officer” means the Commissioner of Revenue or chief assessing officer or his designee. Therefore, to qualify as final local determinations, such letters should normally be signed by the Commissioner of Revenue or chief assessing officers and not employees working at their direction, unless the individual has been expressly designated by the Commissioner of Revenue or chief assessing officer and evidence of such designation is included with the final local determination. See P.D. 18-140 (3/30/2018). Additionally, Title 23 VAC 10-500-710 contains specific language that must be included in any final written determination.
DETERMINATION
In this case, the appealable event occurred when the County issued the January 14, 2019, letter denying the Taxpayers’ refund request. The initial request for refund was not a valid local appeal. The denial of the refund by an employee of the local Commissioner of the Revenue’s office triggered the Taxpayers’ appeal right to the County. Thus, the letter denying the Taxpayers’ refund request was not a valid final local determination because it was not issued in response to a valid local appeal. It was also not a valid final local determination because it was not signed by the local Commissioner of the Revenue or an individual given the expressed written authorization to issue such final determination.
Accordingly, the Taxpayers should now file a local appeal with the County and await the final determination of the Commissioner of the Revenue or her designee. Once that is done, the Taxpayers will have 90 days to file an appeal with the Department if they disagree with the outcome of that determination. If the case has been pending with the County for more than one year, the Taxpayers may also appeal to the Department after giving the County the requisite notice.
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/2005.M