Tax Type
BTPP Tax
Description
County fails to provide a complete notification to the Taxpayer as required under the Guidelines
Topic
Local Taxes Discussion
Records/Returns/Payments
Tangible Personal Property
Taxpayers' Remedies
Date Issued
07-31-2013
July 31, 2013
Re: Appeal of Final Local Determination
Taxpayer: *****
Locality: *****
Business, Professional and Occupational License (BPOL) Tax
Business Tangible Personal Property (BTPP) Tax
Dear *****:
This final state determination is issued upon the application for correction filed by ***** (the "Taxpayer"), with the Department of Taxation. The Taxpayer appeals the assessment of BPOL tax issued to the Taxpayer for the 2006 through 2011 tax years and the assessment of BTPP tax for the 2008 through 2012 tax years by the ***** (the "County").
The local license tax and fee and business tangible personal property tax are imposed and administered by local officials. Virginia Code §§ 58.1-3703.1 A 5 and 58.1-3983.1 D 1 authorize the Department to issue determinations on taxpayer appeals of certain BPOL and BTPP tax assessments, respectively. On appeal, a tax assessment by a local assessing officer is deemed prima facie correct, i.e., the local assessment will stand unless the taxpayer proves that it is incorrect.
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 County audited the Taxpayer. After reviewing her federal income tax returns, the County determined that the Taxpayer was engaged in a licensable business activity and had business tangible property within its jurisdiction. The County issued assessments for the BPOL license fee and issued BTPP tax assessments for the tax years at issue. It also denied the Taxpayer's request for personal property tax relief for her automobile.
The Taxpayer appealed the County's assessments. In its correspondence, the County determined that the Taxpayer was subject to the BPOL tax on the basis that she was operating a licensable business. The Taxpayer filed an appeal with the Tax Commissioner, contending that she was not engaged in a licensable business and therefore owed no BPOL or BTPP tax. The Taxpayer also appealed the County's denial of personal property tax relief.
ANALYSIS
BPOL Tax
Virginia Code § 58.1-3703.1 A 5 allows any person assessed with BPOL tax to appeal such assessment within the later of 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. Pursuant to Va. Code § 58.1-3703.1 6, if a taxpayer's appeal is denied in part or whole by the local assessing official, the taxpayer may, within 90 days, appeal the assessment to the Tax Commissioner.
Title 23 of the Virginia Administrative Code (VAC) 10-500-710 D requires each final local determination to include prescribed language concerning a taxpayer's right to appeal the local determination. The County's determination letter of April 25, 2012, does not include the required notice concerning a taxpayer's right to appeal and the resumption of collection actions. Rather, it refers to the appeal language in Va. Code § 58.1-3983.1 which is only applicable to local business and local mobile property taxes. Accordingly, the County's determination would not be considered to be a final local determination for purposes of the appeals process under Va. Code § 58.1-3703.1.
Under Va. Code § 58.1-3703.1 A 6 a, taxpayers may file an appeal with the Department only after a final determination has been issued by a locality. Virginia Code § 58.1-3703.1 A 5 e, however, does allow a taxpayer to appeal directly to the Department if an appeal to a locality has been pending for more than one year. Under such circumstances, a taxpayer can elect to consider the local appeal to have been denied. A taxpayer is required to give a locality 30 days written notice of such an election. In this case, the evidence shows that the Taxpayer never gave the County 30 days written notice of its election to appeal to the Department. As such, the Department lacks jurisdiction to address the Taxpayer's BPOL appeal.
Further, the County requested a number of documents from the Taxpayer in order to accurately determine the BPOL tax liability. Virginia Code § 58.1-3109 6 grants local assessing officers the authority to require records and other information necessary to verify the accuracy of a taxpayer's BPOL tax returns. In addition, pursuant to Va. Code § 58.1-3703.1 A 5 b, a local assessing officer may require the submission of additional information or documentation deemed necessary in order to make a proper and equitable determination of an application for correction. See Public Document (P.D.) 13-82 (5/29/2013).
As indicated above, an assessment issued by a locality is deemed to be prima facie correct. See Va. Code § 58.1-3703.1 A 5 b. As such, it is incumbent upon the Taxpayer to prove to the satisfaction of the local assessing officer that it properly reported the items and value of property on BTPP returns.
BTPP Tax
Virginia Code § 58.1-3983.1 B 1 allows any person assessed with a local business tax to appeal such assessment within the later of 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. Pursuant to Va. Code § 58.1-3983.1 D 1, if a taxpayer's appeal is denied in part or whole by the local assessing official, the taxpayer may, within 90 days, appeal the assessment to the Tax Commissioner.
Section 1.7.3. of the Guidelines for Appealing Local Business Taxes (the "Guidelines") requires the local assessing authority to include a notice in each final determination concerning a taxpayer's right to appeal to the Tax Commissioner, where a taxpayer may obtain information about filing such an appeal, and the resumption of collection activities. While the County's letter cites the language in Va. Code § 58.1-3983.1 allowing a taxpayer to appeal to the Department, it fails to provide a complete notification to the Taxpayer as required under the Guidelines. Accordingly, the Department cannot consider the County's letter dated April 25, 2012 to be a final local determination for purposes of the appeals process under Va. Code § 58.1-3983.1.
In addition, under Va. Code § 58.1-3983.1 B 6, a taxpayer that has had an appeal to a local taxing authority pending for more than one year may, with not less than 30 days written notice to such local assessing official, elect to treat the appeal as denied and file an appeal to the Tax Commissioner. In this case, the evidence shows that the Taxpayer never gave the County 30 days written notice of its election to appeal to the Department. As such, the Department lacks jurisdiction to address the Taxpayer's BTPP appeal.
Further, the County requested a number of documents from the Taxpayer in order to accurately determine the BTPP tax liability. As of this date, the Taxpayer has not provided all of the information requested by the County. Virginia Code § 58.1-3109 6 grants local assessing officers the authority to require records and other information necessary to make an accurate assessment of a taxpayer's tangible personal property. In addition, pursuant to Va. Code § 58.1-3983.1 B 3, a local assessing officer may require the submission of additional information or documentation in order to make a proper and equitable determination of an application for correction. See P.D. 11-200 (12/12/2011).
As indicated above, an assessment issued by a locality is deemed to be prima facie correct. See Va. Code § 58.1-3983.1 B 4. As such, it is incumbent upon the Taxpayer to prove to the satisfaction of the local assessing officer that it properly reported the items and value of property on BTPP returns.
Personal Property Tax Relief
The Personal Property Tax Relief Act of 1998 (PPTRA) reduces the tangible personal property tax imposed on the first $20,000 of value on passenger cars, pickup or panel trucks, and motorcycles owned by natural persons and used for non-business purposes. The Taxpayer applied to the County for car tax relief on the basis that her vehicle was used for non-business purposes. The County disallowed the relief because it believes that the Taxpayer's vehicle was used for business. The Department has jurisdiction to address appeals of local license taxes under Va. Code § 58.1-3703.1.and appeals of local business taxes under Va. Code § 58.1-3983.1. It does not have jurisdiction over disputes of the PPTRA.
DETERMINATION
For the reasons stated above, the County failed to issue a proper final determination for the Taxpayer's BPOL and BTPP tax appeals and the Taxpayer did not give proper notice to the County before appealing its BPOL and BTPP assessments to the Department. Further, the Department lacks jurisdiction to address the Taxpayer's appeal of the County's denial of PPTRA relief. Accordingly, the Taxpayer's appeal of the County's BPOL tax assessment for the 2006 through 2011 tax years and its BTPP tax assessment for the 2008 through 2012 tax years with the Department has been closed.
I am, however, returning this matter to the County. The Taxpayer should provide the documentation requested by the County within 30 days of the date of this letter. Upon receipt of all documents, the County will make a full review of the assessments and make adjustments as needed and issue a final local determination in accordance with applicable laws, regulations and guidelines. If the Taxpayer does not agree with the final local determination, it may file an appeal with the Tax Commissioner as prescribed by law.
If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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Craig M. Burns
Tax Commissioner
AR/1-5356380861.B
Rulings of the Tax Commissioner