March 29, 2017
Re: Appeal of Final Local Determination
Taxpayer: *****
Locality: *****
Business Tangible Personal Property Tax
Dear *****:
This final state determination is issued upon the application for correction filed by you on behalf of your client, ***** (the “Taxpayer”), with the Department of Taxation. The Taxpayer appeals assessments of business tangible personal property (BTPP) tax issued to the Taxpayer by the ***** (the “County”) for the 2010 through 2015 tax years.
The BTPP 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 BTPP tax assessments. On appeal, a local tax assessment 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 regulation cited are available online in the Tax Policy Library section of the Department's web site, located at www.tax.virginia.gov.
FACTS
The County issued assessments of personal property tax to the Taxpayer, a corporation, for certain vehicles the County believed were garaged in its jurisdiction. The Taxpayer filed an appeal with the County. Although no final determination was issued by the County, the County abated several of the assessments. After the appeal with the County had been pending for more than one year, the Taxpayer notified the Department and the County of its intent to file an appeal with the Department.
The County did not object, and the Taxpayer subsequently filed its appeal with the Department. The Taxpayer contends that the assessments should be abated because it was a ***** (State A) company and paid property tax to certain State A localities for the tax years at issue.
ANALYSIS
Under 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. The vehicles owned by the Taxpayer do not appear to fit into any of the exceptions for the situsing of vehicles enumerated in Va. Code § 58.1-3511.
Further, the Attorney General has ruled that situs of a vehicle for BTPP taxation is the place where it is ordinarily garaged or parked as of January 1 of a tax year. See 1984 Op. Att'y Gen. 399. Situs would not, however, include the casual presence of property in a locality while in the course of transit. Hogan v. County of Norfolk, 198 Va. 733, 96 S.E.2d 744 (1957). When it cannot be determined where the vehicle is normally located, the situs is the domicile of the owner of such personal property. See 1983-1984 Op. Att'y Gen. 400.
Virginia Code § 58.1-3511 provides that “Any person domiciled in another state, whose motor vehicle is principally garaged or parked in this Commonwealth during the tax year, shall not be subject to a personal property tax on such vehicle upon a showing of sufficient evidence that such person has paid a personal property tax on the vehicle in the state in which he is domiciled.” Similarly, Va. Code § 58.1-3511 provides:
Any person who shall pay a personal property tax on a motor vehicle to a county or city in this Commonwealth and a similar tax on the same vehicle in the state of his domicile, or in the state where such vehicle is normally garaged, docked, or parked, may apply to such county or city for a refund of such tax payment. Upon a showing of sufficient evidence that such person has paid the tax for the same year in the state in which he is domiciled, the county or city may refund the amount of such payment.
Domicile is not defined for purposes of Va. Code § 58.1-3511. For individuals, domicile is defined as the permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere. See Va. Code § 58.1-302. Although that is the definition for purposes of Virginia's individual income tax laws, it is based on longstanding principles of domicile law as it applies to natural persons. See Mitchell v. United States, 88 U.S. 350, 1874 WL 17410 (1874).
The definition of domicile for individuals, however, is not the same as for businesses. In the corporate income tax context, Virginia defines “commercial domicile” as:
[T]he state in which is located the principal office from which the business affairs of the corporation are normally directed or managed. The commercial domicile will normally be the location of the headquarters office of the corporation. If the corporation has no office then the commercial domicile may be where the officers, directors and shareholders regularly meet or where the principal officer or majority shareholder/officer conducts the affairs of the corporation, depending upon the facts and circumstances.
See Title 23 of the Virginia Administrative Code (VAC) 10-120-140 D. Similarly, the Supreme Court of Virginia has stated that a corporation's principal office is equivalent to its domicile. See Union Tanning Co. v. Commonwealth, 123 Va. 610, 625, 96 S.E.2d 780, 784 (1918). In the Department's opinion, it seems reasonable to define the domicile of a corporation for purposes of Va. Code § 58.1-3511 as its commercial domicile as defined in Title 23 VAC 10-120-140 D.
The Taxpayer asserts that until sometime in 2014, it was a State A company in good standing and it paid property tax to certain State A localities on the vehicles. The Taxpayer argues that given these facts, Va. Code § 58.1-3511 should apply and it should not be subject to personal property tax. The Taxpayer submitted bills from the State A localities and some information concerning insurance policies that were placed on the vehicles. Except for a hand-written notation on one of the bills, however, there is no evidence the bills were paid.
DETERMINATION
If the Taxpayer was a corporation domiciled in State A, it would not have been subject to the County's personal property tax on vehicles to the extent (1) the vehicles were not ordinarily garaged or parked in Virginia as of January 1 of the tax year; (2) it could not be determined where the vehicles were normally located (in which case the situs would be State A); or (3) the vehicles were principally garaged or parked in Virginia during the tax year but the Taxpayer paid property tax to State A localities on the vehicles for any of the tax years at issue. By asserting that it had a State A domicile and paid a property tax to that state, the Taxpayer has presented its case to the Department as if it concedes the first and second possibilities. Even if the Taxpayer was domiciled in State A, the documentation provided does not indicate the bills issued by the State A localities were paid. Accordingly, I am remanding the case to the County to consider any evidence the Taxpayer may be able to provide to indicate where it was domiciled during the tax years at issue and whether the bills were paid. Such documentation or evidence should be provided to the County within 30 days of the date of this determination. If the required documentation is not provided within the time allowed, the assessments of BTPP tax will be considered to be correct.
Based upon its review, the County should adjust the assessments if warranted, and issue a final local determination explaining its conclusions. If the Taxpayer disagrees with that determination, it may appeal to the Department pursuant to Va. Code § 58.1-3983.1 D.
If you have any questions regarding this determination, you may call ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1022.M