May a Virginia business appeal a city BPOL assessment directly to the Department before first obtaining the city's final determination?

Plain-English summary

A business tried for a second time to take its city BPOL dispute directly to the Virginia Department of Taxation. The city had now issued assessments for 2017 through 2019, so an appealable event existed -- but the taxpayer still skipped a required step.

Virginia's local-license-tax procedure requires the taxpayer to appeal first to the local assessing official. The Department may review the dispute only after the locality issues a final determination. A city employee's same-day explanation of why the assessments were issued did not purport to be a final determination and expressly told the taxpayer that the assessments created the event it could appeal locally.

Because the taxpayer had not appealed to the city first, the Department lacked jurisdiction. The taxpayer could appeal to the Department after receiving the city's final determination. Alternatively, if the local appeal remained pending for more than one year, the taxpayer could appeal to the Department after giving the city 30 days' written notice.

What this means for you

A BPOL assessment starts the local appeal process

An assessment, increased assessment, refund denial, or certain classification disputes can be an appealable event, but that does not let the taxpayer bypass the locality.

Get a true final local determination

An explanatory email or letter from an employee is not necessarily the required final determination. The ruling says it should normally be signed by the commissioner of revenue or chief assessing officer, unless an expressly designated employee signs and evidence of that designation is included.

A stalled local appeal has a separate route

If the locality has not decided the appeal after more than one year, the taxpayer may go to the Department after giving 30 days' written notice of that intent.

Common questions

Did the Department decide whether the taxpayer was exempt from BPOL tax? No. It lacked jurisdiction and did not reach the merits.

Was the city's explanation of the assessment enough? No. It was not presented as a final local determination.

What must the taxpayer do next? Appeal the assessments to the city, then seek Department review if it disagrees with the city's final determination.

Citations and references

• Va. Code § 58.1-3703.1 A 5 -- appealable events and local appeal deadline.
• Va. Code § 58.1-3703.1 A 6 a -- Department appeal after a final local determination.
• 23 VAC 10-500-640 et seq. -- local business tax appeals and rulings procedure.
• P.D. 18-211, 11-124, and 18-140 -- prior guidance discussed in the determination.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 20-60

Original ruling text

April 10, 2020

Re: Appeal of Final Local Determination

Taxpayer: *

Locality Assessing Tax: *

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 Business, Professional and Occupational License (BPOL) tax issued by *** (the “City”) for the 2017 through 2019 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

In Public Document (P.D.) 18-211 (12/18/2018), the Department determined that it lacked jurisdiction over the Taxpayer’s appeal and instructed the Taxpayer to appeal to the City first, if and when an appealable event occurred. Subsequent to the Department’s notice of jurisdiction, the County issued assessments for the 2017 through 2019 tax years. The Taxpayer again appeals to the Department, contending it was exempt from BPOL tax.

ANALYSIS

As the Department previously explained in P.D. 18-211, 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 assessed. An appealable event also includes the appeal of a business classification, regardless of whether the taxpayer’s appeal is in conjunction with an assessment, examination, audit or any other action taken by the locality. In P.D. 18-211, the Department determined no appealable event had occurred as no assessments had been issued or increased, no refund denied, and the case did not involve a classification issue.

The Department also explained the procedure a taxpayer must use to appeal a final local license tax assessment. 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 P.D. 11-124 (7/1/2011). A final determination 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 determination. See P.D. 18-140 (3/30/2018).

On or around the same day the assessments were issued, an employee of the Commissioner of the Revenue communicated the City’s rationale for issuing the assessments. This communication did not purport to be a final local determination and the employee clearly explained that the issuance of the assessments would create the appealable event. The Taxpayer, however, appealed directly to the Department again, contrary to the express instructions given in P.D. 18-211.

DETERMINATION

Because the Taxpayer did not appeal the assessments to the City first, the Department lacks jurisdiction to decide the Taxpayer’s appeal. The Taxpayer should review the appeals and rulings procedures described in Virginia Code § 58.1-3703.1 and more fully described in Title 23 of the Virginia Administrative Code (VAC) 10-500-640 et. seq . If the Taxpayer wishes to dispute the assessments, it must first file an appeal with the City. Once the City issues its final determination, the Taxpayer may file an appeal with the Department if it still disagrees with the outcome. Alternatively, the Taxpayer may file an appeal with the Department if its appeal with the locality has been pending for more than one year, provided the Taxpayer gives 30 days written notice to the City of its intent to file an appeal with the Department.

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/2194.A

Related Documents

18-211

11-124

18-140