October 7, 2022
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 you on behalf of ***** (the “Taxpayer”) with the Department. The Taxpayer appeals assessments of BTPP tax it paid to ***** (the “City”) for the 2019 through 2021 tax years.
The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections, regulation 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 operated a recycling facility in the City. The Taxpayer explains that the City had been taxing its machinery and tools at the higher tangible personal property rate rather than the lower rate applicable to machinery and tools used in a manufacturing facility. The Taxpayer requested certification of its manufacturing status from the City. In a letter from an employee of the City’s Commissioner of the Revenue’s office, the City concluded that the Taxpayer was not manufacturing at its location within the City. The Taxpayer appealed to the Department, contending that the activities at its location within the City qualified it as a manufacturer and that its machinery and tools should thus be taxed at the lower rate applicable to manufacturers.
ANALYSIS
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, including assessments of BTPP tax. The Taxpayer’s letter to the Department stated that it was appealing “personal property tax” paid to the City for the 2019 through 2021 tax years. It is unclear, however, from the Taxpayer’s letter to the locality whether it was 1) requesting a refund of BTPP tax the Taxpayer self-reported and paid; 2) appealing assessments of BTPP tax the City had issued; or 3) just attempting to clarify its status as a manufacturer on a prospective basis. In any event, the City’s letter in response could not constitute a final determination letter from which the Taxpayer could appeal to the Department because it was not signed by the Commissioner of the Revenue or an express designee. See P.D. 18-140 (3/30/2018) and P.D. 21-5 (2/2/2021).
DETERMINATION
Because it is unclear from the information provided what procedure the Taxpayer was following to seek redress from the City and because the City’s response did not constitute a final determination that was appealable to the Department, the Department lacks jurisdiction to decide the Taxpayer’s appeal. If the Taxpayer is attempting to seek a refund of BTPP taxes erroneously paid, as the Taxpayer’s letter to the Department suggests, the Taxpayer should first make such request in accordance with the City’s local ordinances and the Commissioner of the Revenue office’s filing requirements.
It is the Department’s position that if the Taxpayer receives a response to any such request denying the refund in whole or part, the Taxpayer may then file a local appeal under Virginia Code § 58.1-3980 or Virginia Code § 58.1-3983.1. If the Taxpayer wishes to retain the right to appeal later to the Department, the local appeal must be filed pursuant to Virginia Code § 58.1-3983.1. If the Taxpayer files a local appeal, it is incumbent on the City 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. See id. If the Taxpayer continues to disagree with the locality’s final determination, it may appeal to the Department within 90 days of the date of the final determination.
The Taxpayer should be aware that the City’s response also appears to reference the Taxpayer’s manufacturing status for Business, Professional and Occupational License (BPOL) tax purposes. Appeals of BPOL tax matters are separately governed by Virginia Code § 58.1-3703.1 and Title 23 of the Virginia Administrative Code (VAC) 10-500-640 et seq. The Taxpayer should consult these provisions to the extent it may wish to dispute any matters pertaining to the BPOL tax with the City.
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/4237.X