A county assessed business tangible personal property tax on my trucking company's vehicles, and I disagreed with the situs and the tax rate used -- I wrote asking the county to explain the assessment and then appealed to the state when they wouldn't budge, but why won't the state hear it?

Plain-English summary

An interstate trucking business operating in a Virginia county was assessed county business tangible personal property (BTPP) tax covering a number of its vehicles for the 2023 tax year. Rather than filing a local appeal, the business wrote the county a letter asking how the assessment had been calculated. The county responded with some of the requested information and affirmed the assessment was correct. The trucking business then appealed to the Department, arguing (1) some of the assessed vehicles didn't have a taxable situs (location) in the county for 2023, and (2) the county used an improper tax rate for 2020 through 2023. The Tax Commissioner issued this Notice of Jurisdiction declining to decide either question.

Problem one: the wrong statute. As in other BTPP appeals in this corpus, the taxpayer filed under Va. Code § 58.1-1821 -- the general statute for correcting assessments of taxes the Department administers. BTPP tax isn't one of those; it's a local tax administered by the county's own commissioner of the revenue, so § 58.1-1821 was never the right vehicle. The correct route is Va. Code § 58.1-3983.1's local-business-tax appeal process.

Problem two: there was never a proper local appeal to begin with -- not even an attempted one. This is the sharper wrinkle in this ruling compared to similar cases: the taxpayer's letter to the county didn't just fall short of the Guidelines' written-appeal requirements -- it wasn't an appeal attempt at all. By its own terms, the letter simply asked the county for information "so that it could analyze the basis for the assessment" and prepare a further response by a later date. It cited no local-appeals statute and made no claim that the assessment was wrong. The Department found this was "clearly not an application for correction."

The county's reply didn't fix the problem either. The county's response was styled as if answering an "application for correction" under Va. Code § 58.1-3980, affirmed the assessment, and supplied some of the requested information -- but it wasn't expressly labeled a final local determination, and it didn't include the appeal-rights notice that § 1.7.3 of the Guidelines for Appealing Local Business Taxes (P.D. 04-28) requires for a valid final local determination.

No jurisdiction over either issue raised. Because no valid local appeal, and no compliant final local determination, ever occurred, the Department has no jurisdiction to reach the situs question for 2023 -- or the tax-rate question the taxpayer raised for 2020-2023, which the Department separately noted had never even been mentioned to the county before this appeal.

What happens next. The taxpayer may still file a proper local appeal under either § 58.1-3980 or § 58.1-3983.1, and should include the tax-rate argument in that filing since it was never raised locally. Only after the county issues a compliant final local determination can the taxpayer come back to the Department (or go to circuit court) on the merits.

What this means for you

Trucking and other multi-location businesses disputing where their vehicles are taxed (situs)

A letter merely asking a county to explain its assessment is not the same as appealing it. If you disagree with where or how your vehicles were assessed, you must file a written local appeal that actually says so and cites the local appeals statute (§ 58.1-3980 or § 58.1-3983.1) -- not just a request for backup documentation.

Businesses disputing a local tax RATE, not just the assessment amount

Raise every issue you plan to dispute -- including the rate applied -- in your initial LOCAL appeal. The Department will not consider an issue for the first time on appeal if it was never presented to the locality.

Anyone who received a county reply that merely "affirms" an assessment

Check whether it's actually styled as a final local determination with the required appeal-rights notice (Guidelines § 1.7.3). If it isn't -- and if you never filed a proper written appeal in the first place -- the Department may find it has no jurisdiction to help you, regardless of how substantively the county responded.

Common questions

Q: I wrote the county asking how they calculated my BTPP assessment -- doesn't that count as an appeal?
A: No. A request for information, without disputing the assessment or citing the local appeals statute, is not an application for correction -- it doesn't start the local appeal process.

Q: Can I raise a new argument (like an improper tax rate) for the first time when I appeal to the Department?
A: Not effectively -- if you never raised that issue with the locality, the Department can't reach it either, since it has no jurisdiction until a proper local appeal on that issue has run its course.

Q: The county responded to my letter and said the assessment was correct -- isn't that a final determination I can appeal?
A: Only if it's styled as one and includes the specific notice of appeal rights the Guidelines require (§ 1.7.3), and only if it followed an actual local appeal (not just an information request).

Citations and references

Statutes:

• Va. Code § 58.1-1821 -- application to the Tax Commissioner for correction; applies only to taxes administered by the Department, not local BTPP tax
• Va. Code § 58.1-3980 -- general local application for correction to the assessing official
• Va. Code § 58.1-3983.1 -- local business tax appeal route (one year locally, then 90 days to the Department)
• Va. Code § 58.1-3984 -- judicial correction in circuit court

Authorities the Department relied on (described here, not linked): the Guidelines for Appealing Local Business Taxes, P.D. 04-28 (6/25/2004); and P.D. 22-145 (10/7/2022) (the Department declines local BTPP appeals not filed under § 58.1-3983.1). This ruling is a companion to this corpus's P.D. 24-150 -- both are BTPP jurisdiction dismissals for lack of a proper written local appeal -- but here the taxpayer's local letter wasn't even an attempted appeal (just a request for information), a step further removed from compliance than P.D. 24-150's verbal-appeal-plus-site-visit scenario.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 24-93-0

Original ruling text

September 25, 2024

Re: Appeal of Final Local Determination

Business Tangible Personal Property Tax

Dear *:

This notice of jurisdiction is issued upon the administrative appeal filed on behalf of * (the “Taxpayer”) with the Department of Taxation. The Taxpayer appeals assessments of business tangible personal property (BTPP) tax issued to it by *** (the “County”) for the 2020 through 2023 tax years.

The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections 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 Taxpayer operated an interstate trucking business in the County. The County issued an assessment of personal property tax covering a number of the Taxpayer’s vehicles for the 2023 tax year. By letter dated February 29, 2024, the Taxpayer requested information from the County concerning how the assessment was made. The County responded with some of the requested information and affirmed that the assessment was correct. The Taxpayer appealed to the Department, contending 1) the County issued the assessment based on vehicles that did not have a situs in the County for the 2023 tax year; and 2) the County used an improper tax rate for the 2020 through 2023 tax years.

ANALYSIS

Application for Correction

As an initial matter, the County asserts that the Department lacks jurisdiction over the Taxpayer’s appeal because it was filed under Virginia Code § 58.1-1821 rather than under Virginia Code § 58.1-3983.1. The County is correct that this was an error on the Taxpayer’s part. Applications for correction filed under Virginia Code § 58.1-1821 are appropriate only for taxes administered by the Department. The BTPP tax is not administered by the Department, but rather by the Virginia localities themselves.

Virginia Code § 58.1-3980 provides that any person aggrieved by an assessment of local taxes “may, within three years 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, apply to the commissioner of the revenue or such other official who made the assessment for a correction thereof.” Under this procedure, if the taxpayer disagrees in whole or in part with the local assessing officer’s determination, the taxpayer may then seek correction with the circuit court under the provisions of Virginia Code § 58.1-3984.

Virginia Code § 58.1-3983.1 B 1 provides that any person assessed with a “local business 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 such assessment, whichever is later, to the commissioner of the revenue or other assessing official.” Under this provision, if the taxpayer’s appeal is denied in whole or in part by the local assessing official, the taxpayer may, within 90 days of the date of the final local determination, appeal to the Department.

The Department has declined to address administrative appeals involving BTPP tax unless the taxpayer files them under Virginia Code § 58.1-3983.1. See, e.g., Public Document (P.D.) 22-145 (10/7/2022). Consistent with this policy and the additional reasons set forth below, the Department has determined that it does not have jurisdiction over this appeal at this time.

Local Appeals Process

As discussed above, taxpayers assessed with BTPP tax may appeal to the locality under either Virginia Code § 58.1-3980 or Virginia Code § 58.1-3983.1. 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 and the Guidelines for Appealing Local Business Taxes (the “Guidelines”), issued as P.D. 04-28 (6/25/2004). 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.

After the Taxpayer received an assessment indicating BTPP tax was due on a number of its vehicles, it requested additional information from the County by letter dated February 29, 2024, so that it could analyze the basis for the assessment. The County’s reply stated that it was in response to the Taxpayer’s application “for a correction of an alleged erroneous assessment.” The County then affirmed the assessment was correct and provided some of the information requested. In response, the Taxpayer filed a letter with the Department.

The facts of this case reveal procedural errors made by both the Taxpayer and the County. The County’s reply was styled as a response to the Taxpayer’s application for correction filed under Virginia Code § 58.1-3980. The Taxpayer’s letter of February 29, 2024, however, did not cite any provision of the Code of Virginia applicable to local appeals procedures. Rather, it was merely seeking additional information so the Taxpayer could prepare a further response by March 25, 2024. Therefore, this letter was clearly not an application for correction.

The County’s reply, however, was issued by the County’s Commissioner of the Revenue and concluded there was no error in the assessment. As such, the Taxpayer apparently believed it was eligible to file an administrative appeal with the Department. The County’s letter, however, was not expressly styled as a final determination, nor did it contain the notice of the taxpayer’s further appeal rights described in § 1.7.3 of the Guidelines. Ultimately, these combined procedural errors impeded the goal of the local appeals process, which is to establish the correct tax liability after the taxpayer has had an opportunity to present all of the facts and arguments in support of its position and the locality has had an opportunity to address them fully.

DETERMINATION

There is no indication that a local appeal has ever been filed with the County. Accordingly, if the Taxpayer continues to disagree with the assessment for the 2023 tax year, it may file a local appeal under Virginia Code § 58.1-3980 or § 58.1-3983.1. If the Taxpayer files a local appeal, it is incumbent on the County to issue a final local determination addressing the facts, assertions and authorities submitted by the Taxpayer. See § 1.7.3. of the Guidelines. The final local determination must also be signed by the Commissioner of the Revenue or an express designee and include the required statement referencing the Taxpayer’s appeal rights. See id. If the County issues a final determination and the Taxpayer disagrees with the outcome, then the Taxpayer may appeal to the local circuit court under Virginia Code § 58.1-3984 or to the Department under Virginia Code § 58.1-3983.1. Until the local appeals process is completed, the Department does not have jurisdiction to decide the Taxpayer’s appeal on the merits.

In addition, the Department notes that the Taxpayer did not allege that the County applied an improper tax rate before filing its appeal to the Department. If the Taxpayer is also attempting to seek a refund of BTPP taxes erroneously paid for the 2020 through 2023 tax years based on an improper tax rate, the Taxpayer should first make such request in accordance with the County’s local ordinances and the Commissioner of the Revenue office’s filing requirements. The County then has the discretion to 1) simply grant the request, consistent with the self-reporting nature of the system; or 2) perform a verification process, such as an audit. Should the locality choose to perform a review, fundamental due process requires that the taxpayer be informed of the results of that review, and if the claim is denied in whole or in part, also be informed of the reasons for such denial. If the Taxpayer’s refund request is denied in whole or in part, the Taxpayer may then follow the local appeals process as set forth in the Guidelines and further described above to the extent it disagrees with the County’s conclusions.

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

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

AR/4896.X

Related Documents

04-28

22-145