August 14, 2015
Re: Appeal of Final Local Determination
Taxpayer: *****
Locality: *****
Business, Professional and Occupational License (BPOL) Tax
Business Tangible Personal Property (BTPP) Tax
Machinery & Tools (M&T) Tax
Dear *****:
This final state determination is issued upon the application for correction filed by ***** and ***** (the "Taxpayers"), with the Department of Taxation. The Taxpayers appeal the assessments of BPOL tax issued to the Taxpayer for the 2006 through 2014 tax years and the assessments of BTPP tax for the 2007 through 2014 tax years by the ***** (the "City").
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 and public document cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department's web site.
FACTS
In Public Document (P.D.) 15-39 (4/4/2015), the Department remanded the case back to the City in order for the proper disposition of BPOL tax liability for the 2006 through 2011 tax years and M&T tax liability for the 2007 through 2010 tax years due to each party's insufficient record keeping. The Taxpayers seek reconsideration, contending that the Department did not consider supporting documentation and an additional letter submitted to refute the City's written reply to the appeal.
ANALYSIS
Generally, the Department will limit its analysis to the interpretation of statutes, regulations and rulings regarding the application of the tax to the facts in evidence. Where the facts have been clearly articulated or in cases where both the locality and taxpayer are in agreement as to the facts at issue, the Department can issue clear guidance with regard to specific facts. Where the facts are unclear or in dispute, however, the Department has consistently deferred to the locality as the authority for the final decision on factual issues.
In this case, multiple legal entities are operating out of a single definite place of business and the documentation provided fails to clearly identify which activities are being conducted by which legal entity. As a result, the Department determined, in P.D. 15-39, that "[I]ocal tax officials are responsible for making the determination as to whether a taxpayer is engaged in a single business or in two businesses, each of which could operate independently of the other." As such, it was proper for the Department to remand the case back to the City to determine whether the Taxpayer engaged in additional licensable businesses and its local business tax liability. Likewise, it was incumbent upon the Taxpayer to provide sufficient documentation to allow the City to make an accurate determination. See Va. Code § 58.1-3703.1 A 9 and Va. Code § 58.1-3983.1 K.
Throughout the appeals process, it has been evident that the audit was contentious. Both the City and the Taxpayers have made numerous statements about the nature of the interactions between the City's auditors and the Taxpayers' employees. Such disputes are beyond the scope of the local appeals process and will not be considered, nor addressed by the Department.
I have carefully reviewed the Taxpayers' letter responding to the City's reply submitted under Title 23 of the Virginia Administrative Code (VAC) 10-500-760. Both the City's reply and the Taxpayers' letter added no new information helpful to assist the Department in analyzing the application of the law to the facts in this case.
DETERMINATION
Based on the foregoing analysis, the Department appropriately remanded this case to the City to determine the Taxpayers' BPOL tax and M&T tax liabilities. Accordingly, the determination in P.D. 15-39 is affirmed.
Further, P.D. 15-39 constitutes the Department's final determination in this matter. If the Taxpayers wish to pursue an appeal of this matter, it should apply to the appropriate circuit court for judicial review of the determination as provided under Va. Code § 58.1-3703.1 A 7 and Va. Code § 58.1-3983.1 G.
If you have any questions regarding this response, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1-6007822171.B