Document Number
22-76
Tax Type
BPOL Tax
Description
Administration: Appeal - Jurisdiction, Raising New Issue with Tax Commissioner Prohibited
Topic
Appeals
Date Issued
04-19-2022

April 19, 2022

Re:    Appeal of Final Local Determination
         Taxpayer:  *****
         Locality:  *****
         Business, Professional and Occupational License (BPOL) tax

Dear *****:

This notice of jurisdiction is issued upon the application for correction filed on behalf of your client, ***** (the “Taxpayer”), regarding the denial of the Taxpayer’s reclassification request by ***** (the “County”) for purposes of the Business, Professional and Occupational License (BPOL) for the 2019 and 2020 tax years.  

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

FACTS

The Taxpayer initially classified itself as a business service provider for purposes of the BPOL tax for the tax years at issue. The Taxpayer subsequently requested that the County reclassify it as a wholesale merchant. The County denied the Taxpayer’s request. The Taxpayer filed an appeal with the Department, asking that it be allowed to present calculations and documentation to support situsing its gross receipts by payroll apportionment.  

ANALYSIS

The Code of Virginia created 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.

When an appealable event occurs, a taxpayer must file an appeal with the locality in which such 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.

In this case, the Taxpayer is not appealing the County’s denial of its reclassification request to the Department. Rather, the Taxpayer’s appeal to the Department requests that the County be instructed to review whether it should be allowed to use payroll apportionment. As such, the Department cannot address the Taxpayer’s request for the allowance of a different apportionment method because this issue was not the subject of an appeal to the County.

DETERMINATION

Because the Taxpayer has not yet attempted to use the payroll apportionment method to situs gross receipts, the Department lacks jurisdiction to address the issue. If the Taxpayer wishes to situs gross receipts by payroll apportionment, it must file amended BPOL tax returns with the County if it has not already done so, in accordance with the statute of limitations, utilizing the payroll apportionment method. If the County adjusts the returns to disallow such apportionment methodology, an appealable event will have occurred and the Taxpayer may then file an appeal with the County pursuant to Virginia Code § 58.1-3703.1 A 5 b. The County must then issue a final determination in response to the Taxpayer’s appeal. If the Taxpayer disagrees with the County’s final determination, it may then file an appeal with the Department in accordance with Virginia Code § 58.1-3703.1 A 6 a.

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/4005.B
 

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Last Updated 08/08/2022 11:42