February 26, 2018
Re: Appeal of Final Local Determination
Taxpayer: *****
Locality: *****
Business Tangible Personal Property Tax
Dear *****:
This notice of jurisdiction is issued upon the application for correction filed by you on behalf of your client, ***** (the “Taxpayer”), with the Department. The Taxpayer appeals a final determination issued by the ***** (the “City”) concerning whether certain property located at the Taxpayer's facilities in the City is exempt from the Business Tangible Personal Property (BTPP) tax for the 2013 through 2016 tax years.
The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections cited are available online in the Laws, Rules and Decisions section of the Department's web site, located at www.tax.virginia.gov.
FACTS
The Taxpayer, a nonstock, nonprofit charity exempt from taxation under Internal Revenue Code (IRC) § 501(c)(3), provided health care services at five offices located in the City in conjunction with the ***** (the “School”), a medical school and hospital complex exempt from the BTPP tax as a political subdivision of the Commonwealth.
The City audited the Taxpayer for the tax years at issue and concluded that the Taxpayer's business tangible property was subject to the BTPP tax because it was not a political subdivision or licensed as a hospital. Pursuant to Virginia Code § 58.1-3980, the Taxpayer appealed the City's final determination arguing that its property was exempt from the BTPP tax because it was a hospital. In its final determination, the City upheld its assessments concluding that the Taxpayer was not a political subdivision or a licensed hospital. The Taxpayer appealed the City's local determination to the Department, contending it was a political subdivision of the Commonwealth because it was indirectly owned by the School. It also argued that it was a hospital because it operated as a charity and its business tangible property was exclusively used by the School.
ANALYSIS
Virginia Code § 58.1-3980 provides that any person aggrieved by an assessment of local taxes “may, within three years from the last day of the tax year for which such assessment is made, or within one year from the date of the assessment, whichever is later, apply to the commissioner of the revenue or such other official who made the assessment for a correction thereof.”
Under this procedure, if the taxpayer disagrees in whole or in part with the local assessing officer's determination, the taxpayer may then seek correction with the circuit court under the provisions of Virginia Code § 58.1-3984.
Virginia Code § 58.1-3983.1 B 1 provides that any person assessed with a “local business tax . . . may appeal such assessment within 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, whichever is later, to the commissioner of the revenue or other assessing official.” Under this provision, if the taxpayer's appeal is denied in part or completely by the local assessing official, the taxpayer may within 90 days, appeal the assessment to the Department.
The administrative appeals process involving the Department is separate and distinct from the general appeals process afforded to taxpayers with local tax grievances under Virginia Code § 58.1-3980. The procedures for the process are clearly defined in the statute. In this case, the Taxpayer appealed the City's assessments under Virginia Code § 58.1-3980. Therefore, the Department did not have jurisdiction to address the Taxpayer's appeal. Rather, the appeal of the City's determination should have been made to a circuit court. The City's final determination properly instructed the Taxpayer to file its appeal with its circuit court.
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/1494.B