Tax Type
BPOL Tax
Description
Interest on underpayments and overpayments; Interest on BPOL refunds
Topic
Penalties and Interest
Date Issued
03-19-1997
March 19, 1997
Re: Request for Advisory Opinion: BPOL
Dear*****************
This will respond to a facsimile dated February 18, 1997, regarding a question from your office on whether your locality must include interest on BPOL refunds relating to tax years prior to January 1, 1997.
The license tax is a local tax which is imposed and administered by local officials. The Code of Virginia limits the involvement of the Department of Taxation to promulgating guidelines and issuing advisory opinions. However, the department shall not be required to interpret any local ordinance.
While addressing the questions raised in your letter, this response is intended to provide advisory guidance only and does not constitute a formal or binding ruling.
FACTS
You inquire whether your locality must include interest on BPOL refunds relating to tax years prior to January 1, 1997. You also inquire whether your locality must pay interest on BPOL refunds which are pro-rated and given to a business which discontinues its operations and surrenders its BPOL license.
OPINION
Your locality must include interest on BPOL refunds relating to tax years prior to January 1, 1997, if the adjustments giving rise to such refunds relate to assessments made on or after January 1, 1997.
Whenever an assessment of additional or omitted tax is found to be erroneous, interest and penalties charged and collected on the erroneous part of the assessment shall be refunded, together with interest on the refund, from the date of payment or the due date, whichever is later. Moreover, interest shall be paid on the refund of any BPOL tax from the date of payment or due date, whichever is later, whether attributable to an amended return or other reason. If the refund is made within thirty days of the later of the date of payment creating the refund, or the due date of the tax, the locality is not required to pay interest on the refund. Code of Virginia § 58.1-3703.1 A 2e.
The Uniform Ordinance provisions relating to interest are applicable to assessments made on and after January 1, 1997, even if for an earlier license year. Code of Virginia § 58.1-3703.1 B 2.
An assessment means a determination of the proper rate of tax, the measure to which the tax rate is applied, and ultimately the amount of tax, including additional or omitted tax that is due. 1997 BPOL Guidelines, § 1. An assessment includes an adjustment of a taxpayer's BPOL tax liability by a locality, or an amended return filed by the taxpayer, resulting in a BPOL tax refund to the taxpayer.
Because interest must be paid on the refund of an erroneous assessment of additional BPOL taxes, your locality must include interest on the refund relating to tax years prior to January 1, 1997 if the adjustment giving rise to such a refund relates to an assessment made on or after January 1, 1997. Also, since interest must be paid on the refund of any BPOL tax, whether attributable to an amended return or other reason, your locality must include interest from the due date on the pro-rated refund of BPOL taxes where a business discontinues operations and surrenders its BPOL license.
I hope that the above information will be beneficial to you. Although I believe this letter conforms with the law, it is written only for your guidance, and the final determination is with the locality.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12189H
Rulings of the Tax Commissioner