Assessments - Rate of Assessment
November 7, 2025
Re: Notice of Jurisdiction and Appeal of Final Local Determination
Taxpayer: *****
Locality Assessing Tax: County of *****
Business Tangible Personal Property Tax
Dear *****:
This final state determination and notice of jurisdiction are issued upon the administrative appeal filed by you on behalf of ***** (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 2024 tax years.
The BTPP tax is imposed and administered by local officials. Virginia Code § 58.1-3983.1 D 1 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 and regulation 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 operated an interstate trucking business in the County. The County issued an assessment of personal property tax covering a number of the Taxpayer’s vehicles for the 2023 tax year. By letter dated February 29, 2024, the Taxpayer requested information from the County concerning how the assessment was made. The County responded with some of the requested information and affirmed that the assessment was correct. The Taxpayer appealed to the Department, contending that 1) the vehicles did not have a situs in the County for the 2023 tax year, and 2) the County applied an improper tax rate for the 2020 through 2023 tax years. In Public Document (P.D.) 24-93 (9/25/2024), the Department determined that it did not have jurisdiction to consider the Taxpayer’s appeal because the local appeals process was incomplete. The Department instructed the Taxpayer to file a local appeal of the 2023 tax year assessment and, if the County issued a final local determination with which the Taxpayer disagreed, the Taxpayer would then be eligible to appeal to the Department. The Department also advised the Taxpayer that it would need to request a refund of tax for the 2020 through 2022 tax years before resorting to the local appeals process. Subsequent to the Department’s determination, the County issued an assessment for the 2024 tax year.
In October 2024, the Taxpayer filed an appeal with the County, contesting the assessments for the 2020 through 2024 tax years. In January 2025, the County issued a final local determination concluding that 1) it did not have jurisdiction over the appeals of the 2020 through 2022 tax years because the Taxpayer had not filed its appeal within the statutory deadline provided under Virginia Code § 58.1-3983.1 B 1; 2) the Taxpayer’s vehicles had a taxable situs in the County for the 2023 and 2024 tax years because the Taxpayer was domiciled in the County for such years; and 3) the County applied the proper rate of tax in calculating the assessments for the 2023 and 2024 tax years. The Taxpayer filed an administrative appeal with the Department, contesting each of the County’s conclusions.
ANALYSIS
Jurisdiction
2020 through 2022 Tax Years
Virginia Code § 58.1-3980 provides that any person aggrieved by an assessment of local taxes “may, within three years from the last day of the tax year for which such assessment is made, or within one year from the date of the assessment, whichever is later, apply to the commissioner of the revenue or such other official who made the assessment for a correction thereof.” Under this procedure, if the taxpayer disagrees in whole or in part with the local assessing officer’s determination, the taxpayer may then seek correction with the circuit court under the provisions of Virginia Code § 58.1-3984.
Virginia Code § 58.1-3983.1 B 1 provides that any person assessed with a “local business tax . . . may appeal such 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 such assessment, whichever is later, to the commissioner of the revenue or other assessing official.” Under this provision, if the taxpayer’s appeal is denied in whole or in part by the local assessing official, the taxpayer may, within 90 days of the date of the final local determination, appeal to the Department.
As indicated above, the Department instructed the Taxpayer to file a refund claim in accordance with the County’s local ordinances and the Commissioner of the Revenue’s filing requirements. See P.D. 24-93. Then, if the claim had been denied in whole or in part, the Taxpayer could proceed through the local appeals process if it chose. Id. It appears, however, that the Taxpayer merely combined its claims as to the 2020 through 2022 tax years in the appeal it filed with the County in October 2024.
The denial of a refund claim, had such a claim been made, would have constituted an assessment, the date from which the Taxpayer would have had one more year to file a local appeal. See Virginia Code § 58.1-3983.1 B 1. See also Public Document (P.D.) 22-113 (6/21/2022). Cf. Virginia Code § 58.1-3703.1 A 5 b (providing that taxpayers have one year from the date of the appealable event, which is defined in relevant part to include the denial of a refund claim, within which to file a BPOL tax appeal). However, by proceeding directly to file an appeal under Virginia Code § 58.1-3983.1, the Taxpayer was limited to the statutory limitations periods set out therein, namely one year from the date of assessment or one year from the last day of the tax year, whichever was later. By the time the Taxpayer filed its local appeal under Virginia Code § 58.1-3983.1 in October 2024, these periods had already expired for each of the 2020 through 2022 tax years.
Therefore, the County correctly determined that it did not have jurisdiction to consider the Taxpayer’s appeal as to the 2020 through 2022 tax years under Virginia Code § 58.1-3983.1. Likewise, the Department does not have jurisdiction to address an appeal in which the locality also lacked jurisdiction. See P.D. 19-111 (9/27/2019) and P.D. 20-134 (8/11/2020).
2023 and 2024 Tax Years
The issues presented in this appeal are currently pending before the County Circuit Court in a case initiated by the County. The County argues that the Department “should respect the already initiated proceedings in state court by dismissing this appeal . . . .” In an October 2024 hearing before the Circuit Court, the court expressed its concerns about potential conflicting judgments in different venues and indicated a preference that the Department issue a determination on the merits of the case.
In general, the Department follows established policy and refrains from addressing an appeal while the same matter is pending in court. See P.D. 11-200 (12/12/2011). In this case, however, because the court has indicated its preference for the Department to proceed and the local appeals process is now complete, the Department will accept jurisdiction over this appeal for the 2023 and 2024 tax years.
Situs
Virginia Code § 58.1-3511 A provides that the situs of motor vehicles, travel trailers, boats, and airplanes is, with certain exceptions, the locality where the vehicle is normally garaged, docked, or parked. The commercial vehicles owned by the Taxpayer do not appear to fall within any of the exceptions for determining vehicle situs enumerated in Virginia Code § 58.1-3511.
The Virginia Attorney General has opined that the phrase “normally garaged, docked, or parked” means that the vehicle must have been located in a particular jurisdiction for six months or more. See 2003 Op. Va. Att’y Gen. 179 (2/6/2003) and 2023 Op. Va. Att’y Gen. 142 (12/18/2023). In the event it cannot be determined where such property is normally garaged, docked, or parked, Virginia Code § 58.1-3511 A provides that “the situs shall be the domicile of the owner of such personal property.” See also 1984-1985 Op. Va. Att’y Gen. 399 (8/20/1984).
Domicile is not defined for purposes of Virginia Code § 58.1-3511. In the corporate income tax context, Title 23 of the Virginia Administrative Code (VAC) 10-120-140 D defines “commercial domicile” as:
[T]he state in which is located the principal office from which the business affairs of the corporation are normally directed or managed. The commercial domicile will normally be the location of the headquarters office of the corporation. If the corporation has no office then the commercial domicile may be where the officers, directors, and shareholders regularly meet or where the principal officer or majority shareholder/officer conducts the affairs of the corporation, depending upon the facts and circumstances.
Similarly, the Supreme Court of Virginia has stated that a corporation’s principal office is equivalent to its domicile. See Union Tanning Co. v. Commonwealth, 123 Va. 610, 625 (1918). In the Department’s opinion, it seems reasonable to define the domicile of a corporation for purposes of Virginia Code § 58.1-3511 as its commercial domicile as defined in Title 23 VAC 10-120-140 D. See P.D. 17-41 (3/29/2017).
The County determined that the documentation provided by the Taxpayer was inadequate to establish that the vehicles were normally garaged or parked in any one location for at least six months. As such, the County determined that the situs of the Taxpayer’s vehicles was the Taxpayer’s domicile. Because the Taxpayer’s business registration with the Virginia State Corporation Commission (SCC) listed its primary office in the County, the County determined that the Taxpayer’s vehicles were subject to BTPP tax in the County.
The Taxpayer contends that because its vehicles were not normally garaged or parked for more than six months in Virginia, the situs of its vehicles must have been in ***** (State A), where the vehicles were titled and registered. The location where a vehicle is registered or titled, however, is only relevant in certain limited circumstances for vehicles weighing 10,000 pounds or less. See Virginia Code § 58.1-3511 A i.
The Taxpayer also argues that a number of its vehicles were garaged in a different Virginia locality. However, the Taxpayer has not provided sufficient documentation to prove that these vehicles were garaged in such locality. Further, this assertion conflicts with prior statements of the Taxpayer that its vehicles were not garaged or parked within the Commonwealth for six months or more in any of the tax years at issue.
In addition, the Taxpayer provided evidence that it changed its principal office to a different Virginia locality in 2024. Pursuant to Virginia Code § 58.1-3515, the effective date of assessment is January 1 of the tax year and a taxpayer’s status for tangible personal property tax purposes is fixed as of such date. Accordingly, any domicile change would not impact the situs of its vehicles before the 2025 tax year.
An assessment issued by a locality is deemed to be prima facie correct. See Virginia Code § 58.1-3983.1 B 4. Therefore, it is incumbent upon the Taxpayer to prove to the satisfaction of the local assessing officer that it properly reported the items on BTPP returns. The burden is on the Taxpayer to provide sufficient evidence to establish where its vehicles were normally garaged or parked for at least six months of the year. It appears the Taxpayer has failed to prove that its vehicles were normally garaged or parked in any one location for more than six months in either of the 2023 or 2024 tax years. As such, the vehicles had a taxable situs in the County on the basis that the County was its commercial domicile for such tax years.
Rate of Assessment
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. Article X, § 1 and § 2 of the Constitution of Virginia provides that all property, unless specifically exempted within the provisions of the Constitution, shall be taxed at a uniform rate among classes and that “all assessments of real estate and tangible personal property shall be at their fair market value to be ascertained as prescribed by general law.” Virginia Code § 58.1-3500 defines tangible personal property as “all personal property not otherwise classified by (i) § 58.1-1100 as intangible personal property, (ii) § 58.1-3510 as merchants’ capital, or (iii) § 58.1-3510.4 as short-term rental property. Such tangible personal property is hereby segregated for and made subject to local taxation only pursuant to Article X, § 4 of the Constitution of Virginia.”
Virginia Code § 58.1-3506 establishes specific classifications for certain tangible personal property. Among these are “motor vehicles, trailers, and semitrailers with a gross vehicle weight of 10,000 pounds or more used to transport property or passengers for hire by a motor carrier engaged in interstate commerce.” Virginia Code § 58.1-3506 A 25.
Virginia Code § 58.1-3506 B further provides that “[t]he rates of tax and the rates of assessment shall . . . for purposes of subdivisions A 7, 9, 21, and 25, not exceed that applicable to machinery and tools [M&T] . . . .” (Emphasis added.) The tangible personal property at issue in this case is described in Virginia Code § 58.1-3506 A 25 and, accordingly, the County must apply the rate of tax and the rate of assessment applicable to M&T to such property.
In 1985-1986 Op. Va. Att’y Gen. 318 (4/14/1986), the Attorney General of Virginia concluded that the rate of tax and rates of assessment on mobile homes must equal that applicable to real property under Virginia Code § 58.1-3506 B. Because real estate was assessed at 100% of fair market value, it followed that mobile homes must be assessed at 100% of fair market value for purposes of tangible personal property taxation. Based on this interpretation of Virginia Code § 58.1-3506 B, rate of assessment essentially means the amount of property value to which the tax rate is applied in order to determine the ultimate tax liability.
The Taxpayer and the County agree that the County applied the rate of tax applicable to M&T to the Taxpayer’s property. They disagree as to the proper method to determine the amount of property value to which the tax rate is applied (i.e., the rate of assessment, as explained above). The County states that it calculated this value by finding the vehicles’ purchase cost information and applying a specified percentage, depending on how long the Taxpayer had owned the vehicles. For the first year of ownership, the County assessed vehicles at 80% of their cost. For each subsequent year, the vehicles were assessed at 90% of the previous year’s value.
For the tax years at issue, M&T was assessed in the County at 10% of original cost. In the Department’s opinion, and consistent with the Attorney General’s opinion cited above, 10% of the original cost is the “rate of assessment” that should have been applied to the Taxpayer’s property.
Apportionment
Virginia Code § 58.1-3511 B requires localities to “apportion [a vehicle] in the same percentage as the total number of miles traveled in the Commonwealth . . . to the total number of miles traveled . . . .” The Taxpayer and the County disagree on whether the County properly apportioned the BTPP tax for the years at issue. The County states that it used the International Fuels Tax Agreement (IFTA) apportionment to apportion each vehicle in the same percentage as the total number of miles traveled in Virginia, divided by the total number of miles traveled by each vehicle.
The ITFA reduces compliance burdens on motor carriers by allowing the carrier to register and pay motor fuel road taxes in the carrier’s home or base state for all participating jurisdictions. The Department understands that certain records must be kept for each vehicle registered under the IFTA, including mileage by jurisdiction and total mileage. To the extent these records accurately reflected the total number of miles traveled in the Commonwealth to the total number of miles traveled everywhere, using such records for apportionment purposes would appear to be consistent with Virginia Code § 58.1-3511 B.
Vehicles Owned on Tax Day
As discussed above, the effective date of assessment is January 1 of the tax year. The Taxpayer alleges that the County improperly assessed certain vehicles that it did not own on tax day because they were leased vehicles, had been disposed of prior to tax day, or had been acquired after tax day.
Virgina Code § 58.1-3516.2 indicates that a lessor is required to give written notice to its lessee about tangible personal property taxes that the lessee is obligated to pay. See generally Reynolds Metals Company v. County of Henrico, 237 Va. 646 (1989). In some situations, the notice is found in a lease agreement. See, e.g., P.D. 05-55 (4/12/2005). Pursuant to the contracts provided, the Taxpayer was required to pay the applicable taxes on its leased vehicles. As such, the Taxpayer was required to report and file personal property tax returns for the tax years in question for such leased vehicles with the appropriate local jurisdictions.
Virginia Code § 58.1-3516 provides that a local governing body may enact an ordinance prorating personal property tax on motor vehicles which were acquired or disposed of during the tax year. The County’s local ordinances do not appear to provide for such proration. As such, only vehicles owned on tax day are subject to BTPP tax. The Taxpayer has provided some documentation to support its assertion that certain vehicles assessed by the County were not owned by it on the tax day for the tax years at issue. It is not clear whether the County reviewed this documentation prior to issuing the assessments. The assessments may need to be adjusted to exclude property that the Taxpayer did not own on tax day.
DETERMINATION
As discussed above, the County did not have jurisdiction over the appeal of the 2020 through 2022 tax years, based on the expiration of the one-year statute of limitations set forth in Virginia Code § 58.1-3983.1. In addition, the Department affirms the County’s final local determination with regard to situs of the Taxpayer’s vehicles, on the basis that the Taxpayer’s vehicles were not garaged or parked in any one location for more than six months and thus had a taxable situs of the Taxpayer’s commercial domicile in the County. The Department finds, however, that the proper rate of assessment was 10% of original cost, the same as for taxable machinery and tools in the County during the tax years at issue.
Based on this determination, the Department is remanding this case to the County with the instruction to redetermine the Taxpayer’s BTPP tax liability for the 2023 and 2024 tax years consistent with this determination. In addition, the County must review the documentation provided by the Taxpayer regarding vehicles which the Taxpayer did not own on January 1 of the 2023 and 2024 tax years and adjust the assessments as warranted. The County must then issue revised assessments as well as a revised final determination. If the Taxpayer disagrees with any part of the revised final determination, it will have a right to appeal to the Department or local circuit court under Virginia Code § 58.1-3983.1 or § 58.1-3984, respectively.
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 5134.Q