Can a Virginia taxpayer appeal a local BPOL assessment to the Department when the locality's purported final determination was not properly signed or explained?

Plain-English summary

A county audited a business and assessed Business, Professional and Occupational License (BPOL) tax for 2015 through 2017. The business appealed locally. The county then sent a letter that purported to be its final determination, but the taxpayer still disputed the result and appealed to the Virginia Department of Taxation.

The Department remanded the case instead of deciding the tax dispute. The county's letter appeared not to have been signed by the Commissioner of the Revenue, and the record did not show that the signer had been expressly designated to issue final local determinations. The letter also did not adequately explain the taxpayer's business classification or the factual and legal basis for the county's gross-receipts-situs method.

Why the Department would not reach the merits

Under Va. Code § 58.1-3703.1(A)(6)(a), a taxpayer ordinarily may appeal a local BPOL matter to the Department only after the locality issues a final determination. The Department identified two defects in the county's letter:

• Authority to sign: A final local determination should normally be signed by the Commissioner of the Revenue or chief assessing officer. A subordinate may sign only if expressly designated, with evidence of that designation included with the determination (23 VAC 10-500-10; citing P.D. 18-140 and P.D. 19-6).
• Reasons for the decision: The locality must state the facts and arguments supporting its result (23 VAC 10-500-710(C)). Here, the letter did not reach a conclusion about what type of business the taxpayer operated and did not adequately support the method used to situs its gross receipts.

Because the purported final determination was defective, the Department sent the matter back to the county for a proper decision.

The taxpayer's two routes back to the Department

After the county issues a valid final determination, the taxpayer may appeal any disputed conclusions to the Department within 90 days under 23 VAC 10-500-720.

There is also a delay remedy. If a local appeal has been pending for more than one year, Va. Code § 58.1-3703.1(A)(5)(e) allows the taxpayer to elect to treat it as denied, but the taxpayer must first give the locality 30 days' written notice of that election.

What this means for you

• A letter labeled “final” may not be legally final. Check who signed it and whether a subordinate's written designation accompanies it.
• The locality must explain its work. A BPOL determination should identify the business classification and provide factual and legal support for its sourcing or situs conclusions.
• Watch both appeal paths. A proper final decision starts the 90-day Department appeal period; a local appeal stalled for more than a year may be treated as denied after the required 30-day notice.
• The ruling did not decide the underlying BPOL liability. It decided only that the county needed to issue a compliant final determination first.

Common questions

Q: Can an employee of the Commissioner of the Revenue sign a final BPOL determination?

A: Yes, if the employee was expressly designated to do so and evidence of that designation accompanies the final determination. The county's letter here did not establish that authority.

Q: How long do I have to appeal a proper final local BPOL determination?

A: The ruling states that an appeal to the Department may be filed within 90 days under 23 VAC 10-500-720.

Q: What if the locality never finishes my appeal?

A: If it has been pending more than one year, you may elect to treat it as denied after giving the locality 30 days' written notice.

Citations and references

• Va. Code § 58.1-3703.1(A)(6)(a) — Department appeal after a final local determination
• Va. Code § 58.1-3703.1(A)(5)(e) — appeal delayed more than one year; election and notice procedure
• 23 VAC 10-500-10 — local assessing officer
• 23 VAC 10-500-710(C) — supporting facts and arguments required
• 23 VAC 10-500-720 — 90-day appeal period
• Related Virginia rulings cited: P.D. 11-124, P.D. 18-140, P.D. 19-6

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 19-84

Original ruling text

August 8, 2019

Re: Notice of Jurisdiction

Taxpayer: *

Locality Assessing Tax: *

Business, Professional and Occupational License (BPOL) tax

Dear *:

This notice of jurisdiction is issued upon the application for correction filed on behalf of your client,* (the “Taxpayer”), with the Department. The Taxpayer appeals assessments of Business, Professional and Occupational License (BPOL) tax issued by *** (the “County”) for the 2015 through 2017 tax years.

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

FACTS

The County audited the Taxpayer and issued assessments. The Taxpayer appealed to the County. In a letter purporting to be a final local determination, the County communicated to the Taxpayer that it was adjusting the assessments. The Taxpayer, however, continued to dispute the outcome of the case, and it filed an appeal with the Department.

ANALYSIS

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 (7/1/2011). 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.

Under Title 23 of the Virginia Administrative Code (VAC) 10-500-10, “local assessing officer” means the Commissioner of Revenue or chief assessing officer or his designee. Therefore, to qualify as a final local determination, such letter should normally be signed by the Commissioner of Revenue or chief assessing officer 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. See P.D. 18-140 (3/30/2018).

In addition, under Title 23 VAC 10-500-710 C, a locality must set forth facts and arguments supporting its decision. The Department’s review of the letter issued by the County indicates that the County failed to: (1) reach a conclusion regarding the type of business the Taxpayer was engaged in, and (2) provide adequate factual and legal grounds to support the method it used to situs the gross receipts.

DETERMINATION

It appears that the purported final determination letter was not signed by the County’s Commissioner of the Revenue. Thus, it cannot be considered to be a final local determination. If the Commissioner of the Revenue wishes a subordinate to be designated with the authority to make final local determinations, that written designation should accompany the final local determination. See P.D. 19-6 (1/30/2019).

Therefore, the case is being remanded to the County to issue a proper final determination letter to the Taxpayer. Once the County has issued its final determination, the Taxpayer may file an appeal with the Department within 90 days 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 County for more than one year, provided the Taxpayer gives the County 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/2089.M

Related Documents

11-124

18-140

19-6