Could the Virginia Tax Commissioner review a Business Tangible Personal Property tax assessment when the taxpayer had only emailed the locality instead of filing a formal local appeal?

Subject

Tangible : Administration - Jurisdiction

Plain-English summary

A limited liability company that designs, manufactures, markets, and distributes products to law enforcement, fire-rescue, and military customers stored equipment in a warehouse in a Virginia county. The county assessed Business Tangible Personal Property (BTPP) tax on that equipment for the 2013 through 2019 tax years. The Taxpayer emailed the county contending the equipment had minimal or no value, and an employee in the Commissioner of the Revenue's office responded by email upholding the assessments. The Taxpayer then appealed directly to the Department of Taxation, arguing the equipment was overvalued and that the county never explained its classification criteria or appeals process.

The Tax Commissioner did not reach the merits of the valuation dispute. Instead, he issued a notice of jurisdiction concluding that the Department could not yet hear the case. Under Va. Code § 58.1-3983.1, a taxpayer contesting a local BTPP assessment must first file a local administrative appeal with the county's commissioner of the revenue or other local assessing official, and the locality must issue a written final local determination before the Department can be asked to review the matter (or, alternatively, the taxpayer may appeal to the Department if its local appeal has been pending more than a year and it gives the county 30 days' written notice). The emails the Taxpayer sent to the county requested guidance on appeal rights rather than constituting a formal local appeal, and the county's email response was not signed by the Commissioner of the Revenue or chief assessing officer (or an expressly designated designee) and did not follow the format required for final local determinations under the Guidelines for Appealing Local Business Taxes (P.D. 04-28). Because no proper local appeal had been filed and no final local determination had been issued, the Commissioner determined the Taxpayer must first pursue a local appeal with the county before the Department has jurisdiction to consider the dispute.

What this means for you

Businesses appealing local BTPP assessments

Contesting a Business Tangible Personal Property assessment by emailing the local commissioner of the revenue's office is not the same as filing a formal local administrative appeal. To preserve Department-level appeal rights, a taxpayer must file a local appeal under Va. Code § 58.1-3983.1 B and obtain (or wait out) a final local determination before going to the Department of Taxation.

What counts as a valid final local determination

Under the Guidelines for Appealing Local Business Taxes (P.D. 04-28), a final local determination should normally be signed by the Commissioner of the Revenue or chief assessing officer (or an expressly designated designee, with evidence of that designation included), and it must contain the specific language the Guidelines prescribe. An email reply from a staff member does not satisfy this standard.

Two paths to the Department if the county is slow or unresponsive

Once a proper local appeal is filed, a taxpayer has two ways to eventually reach the Department: (1) wait for the county to issue a final local determination and then appeal that determination within 90 days, or (2) if the local appeal has been pending more than one year, appeal to the Department directly after giving the county at least 30 days' written notice under Va. Code § 58.1-3983.1 B 6.

Common questions

Q: Did the Tax Commissioner rule on whether the equipment was overvalued?
A: No. The Commissioner did not address the valuation dispute at all. He determined only that the Department lacked jurisdiction because the Taxpayer had not yet filed a proper local appeal or obtained a final local determination from the county.

Q: Why didn't the Taxpayer's emails to the county count as a local appeal?
A: The emails detailed the Taxpayer's position on the equipment's value but requested guidance on its appeal rights rather than formally appealing the assessment, so the Commissioner found none of them constituted a local business tax appeal.

Q: Why didn't the county's email response count as a final local determination?
A: The response came from an employee of the Commissioner of the Revenue's office rather than the Commissioner of the Revenue, chief assessing officer, or an expressly designated designee, and there was no evidence of such a designation. A final local determination should also follow the format prescribed by the Guidelines for Appealing Local Business Taxes (P.D. 04-28).

Q: What does the Taxpayer need to do now?
A: File a proper local appeal with the county under Va. Code § 58.1-3983.1 and the Guidelines. Once the county issues a final local determination, the Taxpayer will have 90 days to appeal to the Department if it disagrees with the outcome.

Q: Is there any way to get to the Department without waiting for a final local determination?
A: Yes. If the local appeal has been pending with the county for more than one year, the Taxpayer may appeal to the Department after giving the county at least 30 days' written notice, per Va. Code § 58.1-3983.1 B 6.

Citations and references

Statutes:

• Va. Code § 58.1-3983.1 B 1 (deadline to appeal a BTPP assessment to the local assessing official)
• Va. Code § 58.1-3983.1 B (local administrative appeal procedure)
• Va. Code § 58.1-3983.1 D (final local determination required before Department appeal)
• Va. Code § 58.1-3983.1 B 6 (appeal to Department after one year of local appeal pendency with notice)

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 21-5

Original ruling text

February 2, 2021

Re: Notice of Jurisdiction

Taxpayer: *

Locality Assessing Tax: *

Business Tangible Personal Property (BTPP) tax

Dear *:

This notice of jurisdiction is issued upon the application for correction filed by * (the “Taxpayer”), with the Department. The Taxpayer appeals assessments of Business Tangible Personal Property (BTPP) tax issued to the Taxpayer by *** (the “County”) for the 2013 through 2019 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 Taxpayer was a limited liability company that describes its activities as designing, manufacturing, marketing, and distributing products to law enforcement, fire-rescue and military customers. It has a warehouse located in the county where it stored tangible property. The County assessed BTPP tax for the 2013 through 2019 tax years on equipment owned by the Taxpayer. The Taxpayer emailed the County contending that this equipment had minimal or no value. In an email response from an employee of the Commissioner of the Revenue’s office, the County upheld the assessments. The Taxpayer appealed to the Department, contending that the equipment at issue was overvalued by the County and that the County did not clarify its classification criteria or provide the appeals process.

ANALYSIS

A taxpayer assessed with BTPP tax may appeal such 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 assessment, whichever is later, to the commissioner of the revenue or other local assessing official. See Virginia Code § 58.1-3983.1 B 1. If a taxpayer wishes to appeal an assessment from a locality to the Department, it must first file a local administrative appeal pursuant to the process set forth in Virginia Code § 58.1-3983.1 B. Once a proper local appeal has been filed, the locality must undertake a full review of the taxpayer’s claims and issue a written determination setting forth the facts and analysis in support of the locality’s decision. Pursuant to Virginia Code § 58.1-3983.1 D, only when a final local determination has been issued can a taxpayer file an administrative appeal with the Department if it wishes to contest any of the locality’s conclusions. Alternatively, a taxpayer may file an appeal with the Department if its appeal with the locality has been pending for more than one year and it provides the locality with at least 30 days written notice. See Virginia Code § 58.1-3983.1 B 6.

Virginia Code § 58.1-3983.1 B and the Guidelines for Appealing Local Business Taxes (the “Guidelines”), issued as Public Document (P.D.) 04-28 (6/25/2004) provide taxpayers with the procedure for appealing local business tax assessments. The Taxpayer’s appeal to the Department attached multiple emails to the County that detail its position on with regard to the equipment at issue, but request guidance on its appeal rights. Thus, it does not appear that any of the emails directed to the County was a local business tax appeal.

Further, the Guidelines define a “local assessing officer” as the Commissioner of Revenue or chief assessing officer or his designee. Therefore, to qualify as a final local determination, the letter should normally be signed by the Commissioner of the Revenue or chief assessing officer and not an employee working at their direction, unless the individual has been expressly designated by the Commissioner of the 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). Additionally, the Guidelines contain specific language that must be included in any final written determination.

DETERMINATION

Because no local business tax appeal was filed, the Taxpayer must first file an appeal to the County pursuant to Virginia Code § 58.1-3983.1 and the Guidelines. The County should issue a final local determination in accordance with the Guidelines’ prescribed format for final local determinations. Once a final local determination is issued, the Taxpayer will have 90 days to file an appeal with the Department if it disagrees with the outcome. If the case has been pending with the County for more than one year, the Taxpayer may also appeal to the Department after giving the County the requisite notice.

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/3560.B

Related Documents

04-28

18-140