Was a 2008 amended machinery-and-tools tax return timely when the county learned of the representative's authorization only after the limitation period expired?

Plain-English summary

The representative timely filed the taxpayer's 2008 amended machinery-and-tools tax return. The representative filed amended returns for 2008 through 2011 on December 29, 2011. The county refunded 2009 through 2011 but denied 2008 because it did not receive proof of the representative's authority until after the limitation period.

The taxpayer showed that its former return-preparation provider had transferred the contract and servicing agent to the representative in January 2009. The assignment covered the 2008 through 2012 tax years and occurred before the amended return was filed.

The Commissioner's analysis distinguished Virginia's general local-tax correction procedure from the separate administrative appeal process for local business taxes. A locality's refund denial counted as an assessment for that appeal process.

Because the authority already existed when the representative filed, the county's later discovery of it did not make the filing late. The Commissioner returned the matter to the county for adjustment.

Common questions

Q: Did proof of authority have to reach the county before the limitation period expired?
A: Not on these facts. The representative actually had authority before filing; the county merely learned of it later.

Q: Did denying the refund count as an appealable assessment?
A: Yes. The denial determined the proper amount of local tax.

Q: Did the Commissioner calculate the final refund?
A: No. The matter was remanded to the county for adjustment.

Citations and references

• Va. Code §§ 58.1-3980, 58.1-3983.1(B)(1), and 58.1-3984.
• Virginia Public Document 04-28 (June 25, 2004), Guidelines for Appealing Local Business Taxes.

Subject

Amended return was timely filed by the duly authorized representative of the Taxpayer

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 12-166

Original ruling text

October 23, 2012

Re: Appeal of Final Local Determination

Taxpayer: *

Locality: *

Machinery and Tools Tax

Dear *:

This final state determination is issued upon the application for correction filed by the * (the "Representative") on behalf of (the "Taxpayer"). You appeal an assessment of machinery and tools tax issued to the Taxpayer by ** (the "County") for the 2008 tax year.

The machinery and tools (M&T) tax is imposed and administered by local officials. Virginia Code § 58.1-3983.1 authorizes the Department to issue determinations on taxpayer appeals of machinery and tools tax assessments. On appeal, a machinery and tools 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 public documents cited are available online in the Laws, Rules and Decisions section of the Department's web site, located at www.tax.virginia.gov.

FACTS

On December 29, 2011, the Representative filed amended M&T tax returns for the 2008 through 2011 tax years on behalf of the Taxpayer. The County issued refunds for the 2009 through 2011 tax years, but denied the refund for 2008. The County determined that the Representative was not authorized to represent the Taxpayer at the time the amended return was filed and did not obtain such authorization until after the statute of limitations had expired.

The Taxpayer filed an appeal with the County. In its final determination, the County acknowledged that the amended returns were timely filed; however, the 2008 refund was denied because the Representative's authorization was not received prior to the expiration of the statute of limitations. The Taxpayer appeals the County's final determination, contending the Representative has submitted all tax returns from tax years 2006 to present and provided evidence of the Representative's authorization for those years.

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 Va. Code § 58.1-3984.

Virginia Code § 58.1-3983.1 B 1 provides that any person assessed with a "local business tax as defined in this section 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 whole by the local assessing official, the taxpayer may, within 90 days, appeal the assessment to the Tax Commissioner.

The administrative appeals process involving the Tax Commissioner is separate and distinct from the general appeals process afforded to taxpayers with local tax grievances under Va. Code § 58.1-3980. The procedures for the process are clearly defined in the statute.

Under § 1.4 of the Guidelines for Appealing Local Business Taxes, issued as Public Document (P.D.) 04-28 (6/25/2004), an "assessment" is defined as "a determination as to the proper rate of tax, the measure to which the tax rate is applied, and ultimately the amount of tax, including additional or omitted tax, that is due." When a taxpayer files an amended local business tax return, the local taxing authority must make a determination as to the proper amount of the tax. If the locality denies the refund, it has made a determination as to the proper amount of tax, even if the assessment on that locality's books is not changed. Consequently, the denial of a refund by a local taxing authority would constitute an assessment for purposes of filing an appeal under Va. Code § 58.1-3983.1.

For the 2008 tax year, the Taxpayer had contracted with another entity to prepare its M&T tax returns. In January 2009, the entity transferred the contract and its servicing agent to a third party entity. The Taxpayer has provided evidence of the agreement, permitting the assignment of the 2008 through the 2012 tax years from the former service provider to the Representative.

Based on the information provided, the Representative held authorization to act on behalf of the Taxpayer for the 2008 tax year. This authorization was granted prior to the Representative filing the 2008 amended return. The fact that the County did not know the Representative was authorized to file the amended return until after the statute of limitations had expired does not negate the fact that the Representative was authorized to act on behalf of the Taxpayer and timely filed the amended return.

DETERMINATION

Based on the foregoing, I find that the 2008 amended return was timely filed by the duly authorized representative of the Taxpayer. As such, I am remanding the assessment back to the County to be adjusted accordingly.

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/1-5043518202.D