Could a leasehold owner appeal a county's local real-property tax assessment to the Virginia Department of Taxation?

Subject

The Code of Virginia does not permit taxpayers to file appeals of local real property tax assessments with the Department

Plain-English summary

A county assessed 2015 real-property tax on the taxpayer's leasehold interest. The taxpayer argued that the county failed to apply a sufficient discount under the leasehold valuation formula and asked the Virginia Department of Taxation to correct the assessment.

Virginia issued only a notice of jurisdiction. Real-property assessment disputes may proceed through local boards of assessors or equalization, the local assessing official for specified errors, or circuit court. Those statutes do not authorize an appeal to the Department of Taxation.

The Department may review final local determinations for specified business and mobile property taxes and BPOL assessments, but local real-property tax is outside that authority.

Virginia therefore did not decide whether the leasehold discount or assessed value was correct. It held only that the Department lacked jurisdiction over the 2015 assessment.

Common questions

Did the ruling approve the county's leasehold valuation? No. It made no substantive valuation decision.

Why could the Department not hear the appeal? Local real-property tax is not among the local taxes for which Virginia law grants the Department appellate jurisdiction.

Citations and references

• Va. Code §§ 58.1-3350, 58.1-3703.1 A 6, 58.1-3980 through 58.1-3983, and 58.1-3983.1 A and D.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 16-13

Original ruling text

March 1, 2016

Re: Taxpayer: *
Locality Assessing Tax: ***
Local Real 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 seeks correction of the assessment of real property tax issued to it by the *** (the "County") for the 2015 tax year.

The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections cited are available on-line in the Laws, Rules and Decisions section of the Department's web site, located at www.tax.virginia.gov .

FACTS

For the 2015 tax year, the County assessed real property tax on the Taxpayer's leasehold interest in certain real property located in the County. The Taxpayer filed an appeal with the Department, contending that the County did not sufficiently discount the assessment in accordance with the statutory formula applicable to leasehold interests.

ANALYSIS

Under Va. Code § 58.1-3350, an appeal of a real property tax assessment may be made to the board of assessors or board of equalization, as the case may be, or directly to the circuit court if the taxpayer is not first required to apply for relief with either of the boards. Alternatively, under Va. Code § 58.1-3980, a taxpayer may appeal a real property tax assessment to the local commissioner of the revenue or other assessing official if the taxpayer is seeking to correct an error made by such official. Virginia Code § 58.1-3980 provides that the procedural provisions of Va. Code § 58.1-3980 through § 58.1-3983 apply to appeals brought directly before the assessing official. None of those sections of the Code of Virginia , however, provide for an appeal to the Department, either directly or after a determination has been made by the assessing official.

Under Va. Code § 58.1-3983.1 D, the Department's jurisdiction is limited to appeals from final local determinations concerning local business and mobile property tax assessments. Local business taxes include the machinery and tools tax, business tangible personal property tax, merchant's capital tax and consumer utility tax. See Va. Code § 58.1-3983.1 A. Local mobile property taxes include the tangible personal property tax on airplanes, boats, campers, recreational vehicles, and trailers. See id . In addition, taxpayers may file appeals of local Business, Professional and Occupational License (BPOL) tax assessments with the Department pursuant to Va. Code § 58.1­-3703.1 A 6.

DETERMINATION

The Code of Virginia does not permit taxpayers to file appeals of local real property tax assessments with the Department. As such, I find that the Department lacks jurisdiction to determine whether and to what extent the County's assessment of real property tax for the 2015 tax year was erroneous.

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/1-6236462711.M