March 31, 2016
Re: Appeal of Final Local Determination
Taxpayer: *****
Locality: *****
Local Mobile Property Tax
Dear *****:
This final state determination is issued upon your application of correction filed by you on behalf of ***** (the "Taxpayer"), with the Department of Taxation. The Taxpayer appeals assessments of local mobile property taxes issued to the Taxpayer by the ***** (the "City") for the 2014 and 2015 tax years.
The local mobile property tax is imposed and administered by local officials. Virginia Code § 58.1-3983.1 D 1 authorizes the Department to issue determinations on taxpayer appeals of local mobile property tax assessments. On appeal, a local tax assessment is deemed prima facie correct, i.e., the local assessment will stand unless the taxpayer proves 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
The Taxpayer owned two boats, Boat A and Boat B. The City assessed local mobile property tax on Boat A for the 2014 and 2015 tax years and Boat B for the 2015 tax year. The Taxpayer appealed the assessments to the City. In its final local determination, the City established the assessed value of Boat A as a percentage of its original cost, to be discounted annually according to a formula used by the City for watercraft over ten thousand (10,000) pounds. The City also determined that Boat B was subject to tax by the City for the 2015 tax year. The Taxpayer filed an appeal with the Department, contending that the City's valuation of Boat A should have been its purchase price and that Boat B should not have been subject to tax by the City because its home port was in another Virginia locality and it had only been brought to the City for sale.
ANALYSIS
Valuation of Boat A
Under Va. Code § 58.1-3983.1, the Department has the jurisdiction to address appeals of local determinations of local business taxes and local mobile property tax. However, Va. Code § 58.1-3983.1 D 5 clearly states that the Tax Commissioner "shall not make a determination regarding the valuation or the method of valuation of property subject to any tax other than a local business tax." Local business taxes include machinery and tools tax, business tangible personal property tax, merchant's capital tax and, in certain cases, consumer utility tax. Local mobile property tax is that personal property tax on airplanes, boats, campers, recreational vehicles, and trailers. Pursuant to Va. Code § 58.1-3983.1 D 5, therefore, the Department does not have the authority to make determinations regarding the value of property subject to the local mobile property tax. See Public Document (P.D.) 11-198 (12/7/2011).
Situs of Boat B
Pursuant to Va. Code § 58.1-3511 A, the situs of motor vehicles, travel trailers, boats and airplanes is, with certain exceptions, the locality where the vehicle is normally garaged, docked or parked. Boat B does not appear to fall within any of the exceptions enumerated in Va. Code § 58.1-3511.
In George M. Hogan v. County of Norfolk, 198 Va. 733, 96 S.E.2d 744 (1957), the Virginia Supreme Court found that situs means more than the physical location of the property on tax day. According to the Court, the situs of property for tangible personal property tax purposes is its permanent location, not a casual or incidental location during the course of transit.
The Attorney General has repeatedly held that vehicles that were not garaged, docked or parked in a Virginia locality for at least six months could not be taxed in such locality. In Op. Att'y. Gen. 03-004 (2/6/2003), the Attorney General concluded that the situs required to impose personal property taxes on a boat weighing over 10,000 pounds had not been established because the boat had not been located in the Commonwealth for more than six months.
Tangible personal property is assessed as of the "tax day," which is generally January 1. See Va. Code § 58.1-3515. The City's final determination indicated that Boat B was first brought to the City in May 2014, where it remained continuously until March 2015. As such, Boat B was in the City for more than six months prior to the tax day for the 2015 tax year, January 1, 2015. The Taxpayer contends that Boat B was not subject to tax because its home port was in the other Virginia locality and it was only brought to the City to be sold. The City's final determination indicates, however, that the Taxpayer had not paid personal property tax on Boat B to the other locality.
As stated above, a local tax assessment is deemed prima facie correct, i.e., the local assessment will stand unless the taxpayer proves it is incorrect. Where a boat is normally docked is a question of fact. Although the facts indicate Boat B was sold in 2015, that does not by itself prove it was not normally docked in the City as of the tax day, January 1, 2015. The City indicates that Boat B was located in the City for more than six months up to and including January 1, 2015. In addition, it does not appear that the Taxpayer paid personal property tax on Boat B to the Virginia locality the Taxpayer claims was the boat's home port.
DETERMINATION
Because the Department is prohibited from issuing determinations regarding the valuation or method of valuation used in a local mobile property tax case, I find that the Department lacks jurisdiction to determine whether the assessed values assigned to Boat A for the 2014 and 2015 tax years were erroneous. In addition, I find that the Taxpayer has failed to present sufficient evidence to prove that the City incorrectly assessed local mobile property tax on Boat B for the 2015 tax year. Accordingly, the 2015 assessment against Boat B is upheld.
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/1-6245121017.M