Could a business bypass the county BPOL appeal process by asking Virginia for an advisory opinion during an active assessment dispute?

Subject

A taxpayer must first file an appeal with the locality in which the appealable event occurred.

Plain-English summary

A business disputed a county's 2015 BPOL assessment, which used 2014 gross receipts for a new and separate license classification. It asked Virginia whether the county could assess two tax years using the same year's receipts.

Virginia declined to answer the substantive BPOL question. The request was really part of an active local assessment dispute, and the county had not agreed to join in seeking an advisory opinion. The Department generally does not replace the statutory appeal process with an advisory opinion in that situation.

The taxpayer first had to seek correction from the local assessing authority. A BPOL administrative appeal normally goes to the locality that issued the appealable event; the local officer then reviews the claim and issues a final determination.

Only after a final local determination may the taxpayer generally appeal to the Department. A special route exists when a local appeal has been pending more than one year: the taxpayer may treat it as denied after giving the locality 30 days' written notice. Here, no local appeal had been filed.

Common questions

Did Virginia decide whether the county could reuse the same gross receipts? No. It expressly declined to reach that substantive issue.

When can a BPOL assessment reach the Department? Generally after the locality issues a final determination, or after the statutory one-year-delay procedure and notice.

Who administers BPOL tax? Local officials impose and administer it; the Department issues guidance and reviews qualifying final local determinations.

Citations and references

• Va. Code §§ 58.1-3701, 58.1-3703.1 A 5 and A 6 a, 58.1-3980, and 58.1-3990.
• 23 VAC 10-500-640; P.D. 09-48, P.D. 11-124, and P.D. 13-217.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 16-3

Original ruling text

February 2, 2016

Re: Request for Advisory Opinion
Business, Professional and Occupational License (BPOL) Tax

Dear *:

This will respond to your letter in which you request an advisory opinion regarding the assessment of the Business, Professional and Occupational License (BPOL) tax by the * (the "County").

The local license fee and tax are imposed and administered by local officials. Virginia Code § 58.1-3701 authorizes the Department to promulgate guidelines and issue advisory opinions on local license tax issues. The following opinion has been made subject to the facts presented to the Department summarized below. Any change in these facts or the introduction of new facts may lead to a different result.

The Code of Virginia sections, regulation 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 disputes the County's methodology in issuing an assessment of BPOL tax for the 2015 tax year based on the Taxpayer's gross receipts from the 2014 tax year that were attributable to a new, separate license classification. The Taxpayer requests an advisory opinion regarding whether the County may assess BPOL tax for two tax years based on the same year's gross receipts.

OPINION

Although the Taxpayer has requested an advisory opinion, the facts indicate an ongoing dispute with regard to a BPOL tax assessment from the County. Generally, the Department will not issue an advisory opinion when a taxpayer is actively engaged in disputing an assessment with a locality. See Public Document (P.D.) 13-217 (12/12/2013). The Department has made exceptions when both the locality and the taxpayer have agreed to request an advisory opinion to clarify a disputed matter. See P.D. 09-48 (4/27/2009). No evidence has been provided indicating that the County has agreed to seek this advisory opinion with the Taxpayer. As such, the Department will not address the substance of the Taxpayer's question.

However, Va. Code § 58.1-3980 provides that a taxpayer aggrieved by an assessment of local taxes apply for the correction of such assessment to local assessing authority "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." If the Taxpayer has paid the assessment, it must file a claim for refund in accordance with Va. Code §§ 58.1-3980 and 58.1-3990 and local ordinance.

Further, Va. Code § 58.1-3703.1 A 5 b provides that any person assessed with a local license tax as a result of an appealable event may file an administrative appeal of the 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 the appealable event, whichever is later, with the commissioner of the revenue or other local assessing official. An appealable event is an increase in the assessment of a local license tax payable by a taxpayer, the denial of a refund, or the assessment of a local license tax where none previously was assessed.

This statute also provides the procedure that a taxpayer must use to appeal a final local license tax assessment. A taxpayer must first file an appeal with the locality in which the appealable event occurred. Once an appeal is filed, the locality's assessing officer will fully review the taxpayer's claims and issue a final determination letter setting forth the facts and arguments in support of its decision. See Va. Code § 58.1-3703.1 A 5 b.

Under Va. Code § 58.1-3703.1 A 6 a, a taxpayer may file an appeal with the Department only after a final determination has been issued by a locality. See P.D. 11-124 (7/1/2011). Virginia Code § 58.1-3703.1 A 5 e, however, does allow a taxpayer to appeal directly to the Department if an appeal to a locality has been pending for more than one year. Under such circumstances, the taxpayer can elect to consider the local appeal to have been denied. The taxpayer is required to give a locality 30 days written notice of such an election. In this case, the Taxpayer has not filed a local appeal with the County.

The purpose of the appeals process is to encourage resolution of local license tax issues through a review by the local assessing officer and appeal to the Tax Commissioner. See Title 23 of the Virginia Administrative Code (VAC) 10-500-640. As stated above, the objective of an advisory opinion is to interpret the BPOL statutes and regulations. Thus, a taxpayer must first avail itself of the appeals process when an appealable event has occurred. Accordingly, the Taxpayer must seek a remedy as permitted under Va. Code § 58.1-3980 and Va. Code § 58.1-3703.1 A 5.

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

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AR/1-6180904128.M