Could Virginia hear a BPOL appeal based on a city employee's letter that did not identify itself as a final local determination?

Plain-English summary

Virginia returned a BPOL appeal because the city had not issued a valid final local determination. The letter upholding the assessments was signed by an employee, did not say it was final, and omitted the language required by the BPOL regulations.

A qualifying final determination normally must be signed and dated by the commissioner of revenue, chief assessing officer, or an expressly designated person whose authority is shown. It must also clearly identify itself as final and provide the required appeal information. After the city issued a compliant determination, the taxpayer could appeal to the Department; a separate route applied if the local appeal remained pending more than one year after 30 days' written notice.

Common questions

Did Virginia decide whether the BPOL tax was valid? No.

Can any city employee sign the final determination? Only with an express designation supported in the record, under the ruling's explanation.

Citations and references

• Va. Code § 58.1-3703.1 A 5 and A 6
• 23 VAC 10-500-10, 10-500-710, and 10-500-720
• P.D. 11-124

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-140

Original ruling text

July 12, 2018

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 by you on behalf of your client, * (the “Taxpayer”), with the Department of Taxation. The Taxpayer appeals an assessment of BPOL tax from the *** (the “City”) for the 2016 and 2017 tax years.

The following determination is based on the facts presented to the Department and summarized below. The Code of Virginia sections, regulations 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 received an assessment from the City for BPOL tax for the 2016 and 2017 tax years. The Taxpayer appealed the assessment to the City. The City issued a letter signed by an employee of the City’s Commissioner of the Revenue’s office upholding the assessments. The Taxpayer appealed the assessments to the Department, asserting that the BPOL tax cannot be imposed against him.

ANALYSIS

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 asserted.

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.

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.

The Taxpayer appealed a decision communicated to him by an employee in the office of the City’s Commissioner of the Revenue. This letter did not indicate it was a final local determination, nor did it include the language required for final local determinations as set forth in Title 23 of the Virginia Administrative Code (VAC) 10-500-710 D.

In addition, Title 23 VAC 10-500-710 C requires that the local assessing officer issue the signed and dated final local determination. Under Title 23 VAC 10-500-10, “local assessing officer” means the Commissioner of Revenue or chief assessing officer or his designee. Therefore, to qualify as final local determinations, such letters should normally be signed by the Commissioner of Revenue or chief assessing officers and not employees working at their direction, unless the individual has been expressly designated by the Commissioner of Revenue or chief assessing officer and evidence of such designation is included with the final local determination. In addition, regardless of whether there has been such designation or not, the final local determination should clearly indicate that it is a final local determination and otherwise conform to the requirements of the Department’s BPOL regulations.

DETERMINATION

Because the City has not issued a final determination, I am returning this case to the City to consider the facts and arguments presented by the Taxpayer and issue a final determination. Once the City has issued its final determination, the Taxpayer may file an appeal with the Department pursuant to Title 23 VAC 10-500-720 if it disagrees with any of the City’s conclusions. The Taxpayer may also appeal to the Department if its local appeal is pending with the City for more than one year, provided the Taxpayer gives the City 30 days written notice that it is electing to treat the appeal as denied.

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/1639.A