June 30, 2020
Re: Notice of Jurisdiction
Taxpayer: *****
Locality Assessing 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. The Taxpayer appeals assessments of Business, Professional and Occupational License (BPOL) tax issued by ***** (the “County”) for the 2014 through 2018 tax years.
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 County issued assessments for BPOL tax to the Taxpayer for the 2014 through 2018 tax years. The Taxpayer sent a letter to the County’s chief assessing officer dated January 9, 2020, asking him to explain the basis for why the BPOL tax was assessed. When a response was not received, the Taxpayer wrote to the Department for the explanation.
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. An appealable event also includes the appeal of a business classification, regardless of whether the taxpayer’s appeal 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.
Pursuant to Title 23 VAC 10-500-700 D, the taxpayer’s appeal should contain, among other things, a statement explaining why the taxpayer believes the assessment is erroneous. The statement should also include facts, issues and authority which the taxpayer believes support his position.
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.
In this case, the appealable event occurred when the assessments were issued. Although the Taxpayer attempted to obtain explanations from the County regarding why he was subject to BPOL tax, it is unclear whether the letter dated January 9, 2020, that the Taxpayer sent to the County’s chief assessing officer was a local appeal. The letter fails to meet the requirements of a local appeal or application for review, and it contained a series of questions that the Taxpayer wanted the County to answer. Even if that letter could be a considered a valid local appeal, the Taxpayer did not receive a response prior to writing to the Department for an explanation regarding why he was subject to BPOL tax by the County.
DETERMINATION
While the Department hopes that localities will be responsive to questions taxpayers have regarding the application of local taxes, the Department cannot compel local officials to respond. If the Taxpayer wishes to dispute the assessments, the Taxpayer must file an appeal with the County and explain why he believes he is not subject to BPOL tax under the particular facts of his case. The local appeal should clearly set forth the issues in addition to the facts and law the Taxpayer relies on to reach that conclusion.
Once the County has issued its final determination, the Taxpayer may file an appeal with the Department within 90 days pursuant to Title 23 VAC 10-500-720 if he disagrees with any of the County’s conclusions. The Taxpayer may also appeal to the Department if the local appeal is pending with the County for more than one year, provided the Taxpayer gives the County 30 days written notice that it is electing to treat the appeal as denied.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1871.M