Which BPOL assessments could a taxpayer still challenge when the county issued late and supplemental assessments during a local appeal?

Plain-English summary

The Tax Commissioner separated the taxpayer's BPOL dispute into three tax years, and each had a different procedural result.

• 2013: The county discovered underreported receipts and issued an assessment in August 2018. Va. Code § 58.1-3903 allowed assessment only for the three preceding tax years, so 2013 was too old and the county had to abate it.
• 2015: The deadline to appeal the county's original May 2015 assessment had expired. But the county increased that assessment in August 2018, creating a new appealable event. The taxpayer could file a local appeal within one year of the supplemental assessment, limited to challenging the amount of the increase.
• 2016: The deadline to appeal the original May 2016 assessment had expired by December 31, 2017. The county later reduced the assessment, but a decrease does not create a new appealable event, so the Department lacked jurisdiction over the original assessment.

The ruling illustrates that an audit adjustment does not reopen every issue from every year. A new or increased assessment can create a fresh appeal right, but only for that new assessment; a reduction does not revive an expired appeal.

What this means for you

Businesses receiving BPOL assessments

Track each assessment date, tax year, and later adjustment separately. The deadline is generally the later of one year from the assessment or appealable event and one year from the last day of the tax year.

Businesses receiving a supplemental increase

An increase can create a new local appeal right even when the original assessment can no longer be challenged. Frame the appeal around the supplemental amount because the earlier assessment remains closed.

Localities conducting multi-year audits

The three-year local assessment period limits how far back a locality can assess omitted or underreported BPOL tax. An assessment issued outside that period must be abated.

Common questions

Q: Why was the 2013 assessment invalid?
A: It was issued in 2018, beyond the three preceding tax years permitted by Va. Code § 58.1-3903.

Q: Did the 2018 increase reopen the whole 2015 assessment?
A: No. It created an appealable event only for the amount of the supplemental increase.

Q: Does reducing an assessment create a new appeal deadline?
A: No. The Commissioner held that a decrease is not a separately appealable event.

Citations and references

• Va. Code § 58.1-3703.1(A)(5) (BPOL appeals and appealable events)
• Va. Code § 58.1-3703.1(A)(5)(e) and (A)(6)(a) (Department jurisdiction)
• Va. Code § 58.1-3903 (three-year local assessment period)
• P.D. 11-124 and P.D. 18-213 (prior procedural rulings discussed)

Subject

Business, Professional Occupational License Tax Administration - Timely Appeal; Assessment Statute of Limitations

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 19-4-0

Original ruling text

January 25, 2019

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 * (the “Taxpayer”), with the Department of Taxation. The Taxpayer appeals assessments of BPOL tax issued to it by the *** (the “County”) for the 2013 and 2015 through 2016 tax years.

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

FACTS

In March 2018, the Taxpayer filed an appeal with the County regarding assessments for BPOL tax issued by the County for the 2015 through 2017 tax years. As a result of the County’s review, it increased the amount of BPOL tax due by the Taxpayer for the 2013 and 2015 tax years and issued supplemental assessments in August 2018. The County also abated a portion of the 2016 assessment and the entire 2017 assessment. The Taxpayer appealed to the Department, contending it obtained business licenses in other localities where it was conducting business.

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.

2013 Tax Year

While reviewing the Taxpayer’s local appeal, the County determined that the Taxpayer had underreported its gross receipts for the 2013 tax year and issued an assessment in August 2018, concurrent with the issuance of its final determination as to the 2015 through 2017 tax years. Virginia Code § 58.1-3903, however, only authorizes localities to assess omitted or underreported local taxes for the three preceding tax years. Because the 2013 tax year was before the three tax years preceding 2018, the County was not permitted to assess additional BPOL tax against the Taxpayer for the 2013 tax year.

2015 Tax Year

When the Taxpayer did not file a 2015 BPOL tax return, the County issued an assessment to it in May 2015. The Taxpayer had until December 31, 2016, to appeal this assessment to the County because that was the greater of one year from the assessment date or one year from the last day of the tax year for which the assessment was made. The County, however, increased this assessment in August 2018. This increase created a separate appealable event under Virginia Code § 58.1-3703.1 A 5.

2016 Tax Year

When the Taxpayer did not file a 2016 BPOL return, the County issued an assessment to it in May 2016. Thus, the Taxpayer had until December 31, 2017, to appeal this assessment to the County. The County decreased the assessment at the conclusion of its review in August 2018. The decrease of an assessment, however, does not create a separately appealable event. See P.D. 18-213 (12/18/2013).

DETERMINATION

The assessment for the 2013 tax year was issued beyond the three year statute of limitations. Accordingly, the County should abate this assessment.

The time the Taxpayer had to file a local appeal for the original assessments for the 2015 and 2016 tax years, however, had also expired prior to March 2018. Therefore, the Department lacks jurisdiction over those assessments.

The issuance of an assessment for the 2015 tax year in August 2018 created a separate appealable event. Therefore, the Taxpayer retains the ability to file a local appeal as to such supplemental assessment, but its appeal rights are limited to challenging just the amount of such assessment. If the Taxpayer wishes to dispute that supplemental assessment, it must file an appeal with the County within one year of the assessment date.

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

Related Documents

11-124

18-213