November 7, 2025
Re: Appeal of Final Local Determination
Taxpayer: *****
Locality Assessing Tax: *****
Business Tangible Personal Property Tax
Dear *****:
This final state determination is issued upon the administrative appeal filed by you on behalf of your client, ***** (the “Taxpayer”), with the Department of Taxation. You appeal the assessments of business tangible personal property (BTPP) tax issued to the Taxpayer by the County of **** (the “County”) for the 2020 through 2023 tax years.
The BTPP tax is imposed and administered by local officials. Virginia Code § 58.1-3983.1 D authorizes the Department to issue determinations on taxpayer appeals of BTPP tax assessments. On appeal, a BTPP tax assessment is deemed prima facie correct, i.e., the local assessment will stand unless the taxpayer proves that it is incorrect.
The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website.
FACTS
The Taxpayer was a corporation that provided technology and related services. In March 2018, the Taxpayer began leasing space at a data center located in the County. After discovering that certain assets had mistakenly been reported on BTPP returns filed in a neighboring locality where the Taxpayer had an office, the Taxpayer filed an original BTPP tax return in the County for the 2023 tax year to report such assets for the first time there. The County then issued assessments of BTPP tax for the 2020 through 2022 tax years based on the asset detail list provided by the Taxpayer with its 2023 return. According to the Taxpayer, it subsequently discovered that some of these same assets had never been located in the County. Accordingly, the Taxpayer filed an amended 2023 BTPP tax return as well as a local appeal of the assessments for the 2020 through 2022 tax years, seeking to correct the errors.
The County advised the Taxpayer that the 2023 BTPP return could not be amended but that the County would consider that return with the Taxpayer’s appeal of the assessments for the 2020 through 2022 tax years. In its final determination, the County upheld the assessments on the basis that the Taxpayer failed to show that the BTPP reported on the Taxpayer’s original 2023 BTPP tax return had been disposed of or was located outside of the County. The Taxpayer appealed to the Department, contending that the County was assessing assets that were not located in the County.
ANALYSIS
All tangible personal property, unless declared intangible under the provisions of Virginia Code § 58.1-1100 et seq., is reserved for local taxation by Article X § 4 of the Constitution of Virginia. Pursuant to Virginia Code § 58.1-3511 A, the situs of tangible personal property for purposes of the BTPP tax is the locality in which such property may be located on the tax day. Tax day is generally January 1. See Virginia Code § 58.1-3515.
Under the provisions of Virginia Code § 58.1-3109 6, the local commissioner of the revenue is empowered with the authority to require records and other information necessary to make an accurate assessment of a person’s tangible personal property. It is incumbent upon the taxpayer to prove to the satisfaction of the local taxing authority that it properly reported the value of its property on its BTPP returns. See Virginia Code § 58.1-3983.1 B 4. See also P.D. 11-54 (4/7/2011), P.D. 12-160 (10/12/2012), P.D. 22-29 (2/15/2022), and P.D. 24-91 (9/24/2024).
The County’s final determination upheld the assessments on the basis that the Taxpayer failed to prove that the assets in question were disposed of or located outside of the County. The Taxpayer acknowledges that it reported the contested assets in its original BTPP return for the 2023 tax year. The Taxpayer also does not dispute that it was required to file BTPP returns with the County for the 2020 through 2022 tax years. In the Department’s opinion, it was reasonable for the County to base its assessments for the 2020 through 2022 tax years on the asset detail list the Taxpayer submitted with its original 2023 BTPP tax return.
In general, when a taxpayer asserts that an item of BTPP is no longer on its premises, the taxpayer must provide sufficient documentation to the locality to show when it disposed of the property in question. In this case, however, the Taxpayer contends that the property was never located in the County, making proof of disposition irrelevant. The Taxpayer’s representative has provided an affidavit concerning the location of the Taxpayer’s BTPP for the tax years at issue. The affidavit states that 1) the property which the Taxpayer seeks to remove from its BTPP tax returns was never located in the County; and 2) the property listing attached to the affidavit accurately reflects the property located in the County for each of the taxable years at issue. The affidavit stated that these conclusions were based on a thorough review of the Taxpayer’s internal asset tracking records and accounting documentation.
DETERMINATION
When the evidence shows a taxpayer’s records are incomplete or inadequate and the locality’s basis for assessment is reasonable, the Department will consider the locality’s assessment to be prima facie correct. However, a locality must consider all evidence presented by a taxpayer that supports its allegations of errors in an assessment.
If the assets at issue were never located at the data center in the County, the Taxpayer is correct that proof of disposition would be irrelevant. The Department is remanding this case to the County to consider the documentation provided by the Taxpayer with its administrative appeal to the Department. In particular, because the Taxpayer’s affidavit was not provided to the County prior to the Taxpayer’s appeal to the Department, the County has not had an opportunity to express its opinion regarding the affidavit’s evidentiary value. In the Department’s opinion, absent evidence to the contrary, the affidavit represents a good faith effort on the part of the Taxpayer to support its contention that it included property on its 2023 BTPP filing which was never located in the County. See, e.g., P.D. 08-88 (6/16/2008).
In addition, the Taxpayer is instructed to provide the County with a more detailed explanation about how the Taxpayer’s internal asset tracking records and accounting documentation support the assertions contained in the affidavit. This explanation should be provided within 60 days of the date of this determination unless the Taxpayer and the County mutually agree to a different deadline. If the County determines that it needs further information, it should make the request in writing and provide the Taxpayer time to provide such information. Once the Taxpayer has submitted the explanation and any additional information and the County has had the opportunity to review everything submitted, the County must issue a revised final determination. If the Taxpayer disagrees with the results of that determination, it may appeal to the Department within 90 days of the final determination.
If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at ***** or *****@tax.virginia.gov.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR 5181.Q