March 20, 2024
Re: Appeal of Final Local Determination
Taxpayer: *****
Locality: *****
Machinery and Tools (M&T) tax
Dear *****:
This notice of jurisdiction is issued upon the application for correction filed by you on behalf of ***** (the “Taxpayer”) with the Department of Taxation. The Taxpayer appeals the denial of a refund of Machinery & Tools (M&T) tax paid to ***** (the “County”) for the 2017 through 2019 tax years. I apologize for the delay in responding. The appeal was timely received by the Department but was not forwarded to the Appeals division. Once discovered, the Department took immediate action to respond.
The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections 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 Taxpayer operated a business that extracted limestone from open pit quarries in the County. It also had operations in other Virginia localities and in ***** (State A). The Taxpayer filed amended M&T tax returns for the 2017 through 2019 tax years, claiming it was only subject to the M&T tax on machinery and tools used in what the Taxpayer characterized as its mining operation in the County and any other assets that were not such machinery and tools were not subject to local property tax because they were considered intangible assets as defined by Virginia Code § 58.1-1101.
The County denied the Taxpayer’s refund claim, concluding that its operations were properly characterized as processing and, thus, the assets the Taxpayer was seeking to exempt generally remained subject to local property tax. The Taxpayer appealed to the Department, contending that it is due the remaining refund because it was a mining business, not a processor.
ANALYSIS
The procedural background of this case is similar to the facts of Public Document (P.D.) 22-113 (6/21/2022). In that case, the taxpayer requested a refund on the basis that it had erroneously paid BTPP taxes to the locality. The locality later issued a purported “Final Local Determination Letter” in response to the taxpayer’s “appeal application.” The taxpayer, however, had not filed an appeal. Amended returns or refund claims seeking to correct mistakes in a taxpayer’s own filings are not appeals. In such cases, the locality should either grant the request, or perform a verification process. If the locality chooses to perform a verification process, the taxpayer should be informed of the results of that review and then should be given the opportunity to appeal the locality’s decision. Like that case, here the County proceeded to issue a final local determination in response to the Taxpayer’s initial refund claim, instead of denying the refund and informing the Taxpayer of its local appeal rights.
DETERMINATION
In this case, the Taxpayer filed a refund claim, the County issued a response, and the Taxpayer should now be afforded an opportunity to participate in the local appeals process. Because the County has issued a response, the Taxpayer may now file a local appeal under Virginia Code § 58.1-3980 or § 58.1-3983.1. If the County issues a final determination and the Taxpayer disagrees with the outcome, then the Taxpayer may appeal to the Department under Virginia Code § 58.1-3983.1 or the local circuit court under Virginia Code § 58.1-3980. Until the local appeals process is completed, the Department does not have jurisdiction to decide the Taxpayer’s appeal on the merits.
Even through the Department does not have jurisdiction to respond to the Taxpayer’s appeal, the County and the Taxpayer should be aware that the Department has determined that mining includes the extraction of limestone from a quarry for purposes of Virginia Code § 58.1-1101. See Public Document (P.D.) 23-43 (4/12/2023) and P.D. 23-93 (8/3/2023). The Taxpayer and the County should review these determinations in connection with any local appeal the Taxpayer may file.
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/4751.B