I called my county to dispute a BPOL tax audit assessment, and the county later asked if that call counted as my appeal -- can a phone call be a valid local appeal?

Plain-English summary

A county audited a business's BPOL (business, professional, and occupational license) tax returns for the 2019 through 2021 tax years and assessed additional BPOL tax for 2019. Rather than filing a written local appeal, the taxpayer disputed the result in a February 2023 phone call. Nearly eight months later, the county emailed the taxpayer asking it to confirm whether that call was intended as an appeal of the 2019 assessment; the taxpayer replied that it wanted to proceed with an "informal internal appeal," to run alongside the still-open audit of the remaining years. The county then issued a letter titled an "Audit Determination & Final Local Determination of Administrative Appeal," and the taxpayer appealed to the Department, arguing the county wrongly denied deductions for business activity conducted outside Virginia and for payments made to an affiliated entity. The Tax Commissioner never reached those questions.

Virginia's BPOL appeal process, and what a valid local appeal requires. Virginia Code creates a two-step review process for local license tax disputes: first to the local assessing officer, then — if the taxpayer is dissatisfied — to the Department (23 VAC 10-500-640). Va. Code § 58.1-3703.1 A 5 lets a taxpayer file an administrative appeal of an "appealable event" (an assessment increase, a refund denial, a first-time assessment, or a business-classification dispute) within one year of the later of the tax year's end or the appealable event. Critically, subsection (A)(5)(b) requires that appeal to be filed in writing, in good faith, and to identify the taxpayer, the tax periods and amount in dispute, the remedy sought, each alleged error, and the grounds relied on (see also 23 VAC 10-500-700 D and P.D. 20-115).

Why the phone call didn't work. A verbal phone call — however clearly it communicated disagreement — cannot satisfy a statutory requirement that the appeal be filed in writing with specific required content. By merely calling to dispute the audit result, the taxpayer failed to follow the statutory local-appeal procedure, full stop.

The county's own misstep. The Tax Commissioner didn't just fault the taxpayer — it flagged that the county erred by asking the taxpayer to confirm whether the phone call was "intended" to be an appeal. That question implied a phone call could function as a valid appeal if the taxpayer just said so. It can't. A locality's later willingness to treat an informal conversation as though it were an appeal doesn't retroactively satisfy the statute's written-filing requirement.

No valid local appeal, no Department jurisdiction. Because a valid local appeal was never filed, the Department held it cannot accept this matter for review — leaving the deduction disputes (out-of-state business activity, affiliate payments) unaddressed on the merits.

What this means for you

Businesses disputing a local BPOL audit or assessment

Put your appeal in writing, and make sure it identifies the tax periods, the amount in dispute, your requested remedy, and your specific grounds, per § 58.1-3703.1 A 5 b. A phone call — even one the locality later acknowledges — does not start or preserve your appeal rights.

Anyone whose locality invites them to "confirm" that an earlier conversation was an appeal

Don't assume that confirmation retroactively creates a valid appeal. If you haven't yet filed a written appeal meeting the statutory content requirements, do so now rather than relying on the locality's informal framing of a prior conversation.

Tax professionals advising on BPOL appeals

This ruling shows the Department scrutinizes not just whether the taxpayer's actions satisfied the appeal statute, but whether the locality's own conduct (like inviting an informal appeal) created a false impression that the requirements had been met. Neither side's informality substitutes for a written, statutorily compliant appeal.

Common questions

Q: I called my county to dispute a BPOL assessment, and they later treated it as an informal appeal -- is that a valid appeal to the Department?
A: No. Virginia's BPOL appeal statute requires a written local appeal with specific content (tax periods, amount disputed, remedy sought, grounds). A phone call cannot satisfy that, regardless of how the locality later characterizes it.

Q: If my county asks whether an earlier phone call was meant to be an appeal, should I say yes?
A: Confirming a phone call as your appeal won't create a valid one -- the Department held a phone call categorically cannot serve as a BPOL appeal. File a proper written appeal instead.

Q: What happens to my substantive dispute (like a denied deduction) if my local appeal wasn't valid?
A: It won't be addressed. As here, the Department dismisses the entire matter for lack of jurisdiction without reaching the merits.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-3703.1 A 5 -- local BPOL license tax appeal (one year from the tax year's last day or the appealable event, whichever is later, filed with the local assessing official)
• Va. Code § 58.1-3703.1 A 5 b -- a local BPOL appeal must be in writing, filed in good faith, and identify the taxpayer, tax periods, amount disputed, remedy sought, alleged errors, and grounds relied on
• 23 VAC 10-500-640 -- BPOL local review and appeal process
• 23 VAC 10-500-700 D -- content requirements for a valid local BPOL appeal

Authorities the Department relied on (described here, not linked): P.D. 20-115 (6/30/2020) (content requirements for a valid local BPOL appeal).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 24-151

Original ruling text

November 14, 2024

Re: Appeal of Final Local Determination

Taxpayer: *

Locality Assessing Tax: County of *

Business, Professional, and Occupational License 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 an assessment of business, professional, and occupational license (BPOL) tax issued to it by the County of *** (the “County”) for the 2019 tax year.

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

FACTS

The County audited the Taxpayer’s BPOL returns for the 2019 through 2021 tax years and issued an assessment of additional BPOL tax for the 2019 tax year. By electronic mail in October 2023, the County requested that the Taxpayer confirm whether a telephone conversation in February 2023 was intended to be an appeal with respect to the 2019 assessment. The Taxpayer responded via electronic mail, confirming that it would like to proceed with the “informal internal appeal” concurrently with the open audit of the remaining tax years.

Subsequently, the County issued a letter described as an “Audit Determination & Final Local Determination of Administrative Appeal.” The Taxpayer appealed the final determination with respect to the 2019 tax year to the Department, contending the County improperly denied its deductions for business activities outside Virginia and for payments to an affiliated entity.

ANALYSIS

The Code of Virginia creates a review process designed to encourage resolution of local license tax issues through an appeal process that includes review by the local assessing officer and appeal to the Department. Through this process, a taxpayer who disagrees with an audit assessment may apply to the local assessing officer for review. If the taxpayer is dissatisfied with the results of the local review, the taxpayer may appeal the local decision to the Department, which will make a determination of the issues raised by the taxpayer. See Title 23 of the Virginia Administrative Code (VAC) 10-500-640.

Specifically, 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. In addition, an appealable event includes a taxpayer’s appeal of a business classification, regardless of whether it is in conjunction with an assessment, examination, audit or any other action taken by the locality.

This statute also provides the procedure that a taxpayer must follow to appeal a local license tax assessment. A taxpayer must file an appeal with the locality in which the appealable event occurred. The appeal must be filed in good faith and sufficiently identify the taxpayer, the tax periods covered by the challenged assessments, the amount in dispute, the remedy sought, each alleged error in the assessment, the grounds upon which the taxpayer relies, and any other facts relevant to the taxpayer’s contention. See Virginia Code § 58.1-3703.1 A 5 b. See also Title 23 VAC 10-500-700 D and Public Document (P.D.) 20-115 (6/30/2020). 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.

By merely making a phone call to dispute the result of the audit, the Taxpayer failed to follow the statutory procedures for filing a local appeal. In addition, the County erred by asking the Taxpayer for clarification as to whether the Taxpayer intended for the phone call to be an appeal. Asking this question implied that a phone call could constitute a valid appeal, which it cannot.

DETERMINATION

Because a valid local appeal was not filed, the Department cannot accept this matter for review.

If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at or **@tax.virginia.gov.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

Related Documents

11-124

20-115