Could a business appeal a county's BPOL refund denial directly to the Virginia Tax Commissioner before obtaining a final local determination?

Subject

Taxpayer may file an appeal with the Tax Commissioner only after a final determination has been issued by a locality

Plain-English summary

A business amended its 2013 through 2015 BPOL returns and asked a county for refunds. The county denied the request and told the business to file a local administrative appeal if it disagreed. Instead, the business appealed directly to the Virginia Department of Taxation.

Virginia dismissed the state appeal as premature. The refund denial was an appealable event, but the business first had to ask the county's assessing official to review it and issue a final determination. Only then could the business appeal the county's conclusions to the Tax Commissioner.

There was one alternative for a delayed local appeal: if the county appeal remained pending for more than one year, the business could elect to treat it as denied after giving the county 30 days' written notice. Neither route had been completed here.

What this means for you

• Start a BPOL refund or assessment appeal with the locality.
• A denial letter that invites a local administrative appeal is not necessarily a final local determination.
• State review generally comes only after the locality issues its final determination.
• If a local appeal remains pending more than one year, the statute provides a notice-based route to state review.

Citations and references

• Va. Code § 58.1-3703.1 A 5 b, A 5 e, and A 6 a.
• 23 VAC 10-500-720.
• P.D. 11-124.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 17-137

Original ruling text

July 20, 2017

Re: Appeal of Final Local Determination

Taxpayer: *

Locality: *

Business, Professional and Occupational License (BPOL) 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 of Taxation. The Taxpayer appeals the denial of a refund of BPOL tax from the *** (the “County”) for the 2013 through 2015 tax years.

The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections, regulation and public document 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 filed amended BPOL tax returns for the 2013 through 2015 tax years, claiming refunds. The County denied the refunds and instructed the Taxpayer to file an appeal with the County if it disagreed. The Taxpayer appeals the denial of the refunds to the Department.

ANALYSIS

Virginia 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 the 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 Tax Commissioner only after a final determination has been issued by a locality. See Public Document (P.D.) 11-124 (7/1/2001). 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.

The County issued a letter denying the Taxpayer's refund request and instructing the Taxpayer to file an administrative appeal with the County within one year of the letter date if the Taxpayer disagreed. As such, the County has not issued a final determination that the Taxpayer may appeal to the Department.

DETERMINATION

Because the County has not issued a final determination, the Taxpayer should first file a local appeal with the County. Once the County has issued its final determination, the Taxpayer may file an appeal with the Department pursuant to Title 23 of the Virginia Administrative Code (VAC) 10-500-720 if it disagrees with any of the County's conclusions. The Taxpayer may also appeal to the Department if its local appeal is pending with the County for more than one year, provided the Taxpayer gives the County 30 days written notice that it is electing to treat the appeal as denied.

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/1351.M