When can the Department hear a business tangible personal property tax appeal, and what happens if the taxpayer used the wrong local appeal route or appealed before assessments were issued?

Plain-English summary

A freight-transportation taxpayer was assessed business tangible personal property (BTPP) tax by a county for 2015, and anticipated assessments for 2016 through 2018. The county conceded a wrong tax rate for 2015-2017 and issued refunds, but otherwise upheld the 2015 assessment and said the later years were premature. The taxpayer appealed to the Department.

The Department issued a notice of jurisdiction: it cannot hear either part.

• 2015 -- wrong local route. The taxpayer appealed the 2015 assessment to the county under Va. Code § 58.1-3980, the general correction procedure. That route leads to the circuit court under Va. Code § 58.1-3984 -- not to the Department. The Department's BTPP appeal power under Va. Code § 58.1-3983.1 D is a separate and distinct process. Because the taxpayer chose § 58.1-3980, the 2015 dispute belongs in circuit court.
• 2016-2018 -- premature. No assessments had been issued for those years; the taxpayer merely reserved the right to appeal anticipated assessments. The statute does not permit an appeal until an assessment exists. Without a valid § 58.1-3983.1 B local appeal and a final local determination, the Department has no jurisdiction.

What to do next. For the later years, the taxpayer must wait for the assessments, file a proper local appeal (which must identify the taxpayer, period, amount in dispute, remedy, each alleged error, and the grounds), and obtain a final local determination -- which must explain the right to appeal to the Department. Only then can it appeal to the Department. If the taxpayer amends returns to claim refunds and the county denies a refund, that denial is treated as an assessment that starts the local-appeal process (P.D. 11-124).

What this means for you

Pick the right local route -- it decides who hears your appeal. A § 58.1-3980 correction application routes to circuit court; only the § 58.1-3983.1 business/mobile property process leads to the Department. Using the wrong one forecloses a Department appeal.

You can't appeal a tax that hasn't been assessed. Reserving rights against future assessments is not a valid appeal. Wait for the assessment, then file.

Follow the full local ladder before the Department. A proper local appeal plus a written final local determination is a prerequisite to any Department administrative appeal, and a refund denial on an amended return can itself be the "assessment" that starts the clock.

Common questions

Q: I appealed my BTPP assessment to the locality -- why won't the Department hear it?

A: Because it was filed under § 58.1-3980, the general correction statute, which leads to circuit court. The Department hears BTPP appeals only under the separate § 58.1-3983.1 process.

Q: Can I appeal assessments I expect but haven't received yet?

A: No. Until an assessment is issued and you file a valid local appeal that yields a final local determination, there is nothing for the Department to review.

Q: How does a refund denial fit in?

A: If you amend a return to claim a refund and the locality denies it, that denial is treated as an assessment, which starts the local-appeal process (P.D. 11-124) that can eventually reach the Department.

Citations and references

• Va. Code § 58.1-3983.1 -- local business/mobile property tax appeal (to the locality, then the Department after a final local determination); B 1-B 5 set filing time, content, and determination requirements
• Va. Code § 58.1-3980 -- general application to the locality for correction; routes to circuit court
• Va. Code § 58.1-3984 -- appeal of a local assessment to the circuit court
• P.D. 11-124 (7/1/2011) -- a locality's denial of a refund claimed on an amended return is an assessment for the local-appeal process

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-197

Original ruling text

December 6, 2018

Re: Appeal of Final Local Determination

Taxpayer: *

Locality Assessing Tax: *

Business Tangible Personal Property Tax

Dear *:

This notice of jurisdiction is issued upon the administrative appeal filed by * (the “Taxpayers”) with the Department of Taxation. The Taxpayers seek correction of an assessment of business tangible personal property (BTPP) tax issued by the *** (the “County”) for the 2015 tax year and anticipated assessments of BTPP tax for the 2016 through 2018 tax years.

The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections and public document cited are available online in the Laws, Rules and Decisions section of the Department’s website, located at www.tax.virginia.gov .

FACTS

The Taxpayers were engaged in freight transportation. The County issued an assessment of BTPP tax to the Taxpayers for the 2015 tax year. The Taxpayers appealed this assessment to the County under Virginia Code § 58.1-3980. The Taxpayers also appealed additional assessments they anticipated would be issued for the 2016 through 2018 tax years.

The County conceded that an incorrect tax rate had been applied for the 2015 through 2017 tax years and issued refunds. The County otherwise concluded that the 2015 assessment was correct, and the Taxpayers’ appeal as to any additional assessments that would be issued was premature. The Taxpayers filed an appeal with the Department, raising a number of contentions as to the 2015 through 2018 tax years.

ANALYSIS

2015 Tax Year

In their local appeal, the Taxpayers specifically cited Virginia Code § 58.1-3980 when applying for correction of the assessment for the 2015 tax year. 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 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 Virginia Code § 58.1-3984.

The administrative appeals process involving the Department under Virginia Code § 58.1-3983.1 D is separate and distinct from the general appeals process afforded to taxpayers with local tax grievances under Virginia Code § 58.1-3980. The procedures for the process are clearly defined by statute. In this case, the Taxpayers appealed the 2015 assessment under Virginia Code § 58.1-3980. Therefore, the Department does not have jurisdiction to address issues regarding that assessment. Rather, the appeal as to the 2015 assessment must be directed to the appropriate circuit court.

2016 Through 2018 Tax Years

The Taxpayers filed their local appeal as to the 2016 through 2018 tax years under Virginia Code § 58.1-3983.1. A taxpayer assessed with BTPP tax 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 the assessment, whichever is later, to the commissioner of the revenue or other local assessing official. See Virginia Code § 58.1-3983.1 B 1. In addition, an administrative appeal to a locality must “ sufficiently identify the taxpayer, the tax period covered by the challenged assessment, the amount in dispute, the remedy sought, each alleged error in the assessment, the grounds upon which the taxpayer relies, and any other facts relevant to the taxpayer’s contention.” See Virginia Code § 58.1-3983.1 B 2.

In its appeal to the County, the Taxpayers anticipated forthcoming assessments from the County for the 2016 through 2018 tax years and reserved its right to apply for correction as to certain issues it believed could arise as to those assessments. The statute, however, does not permit a taxpayer to file an appeal until assessments have been issued.

DETERMINATION

The Taxpayers appealed the 2015 assessment under Virginia Code § 58.1-3980, which grants jurisdiction to the circuit court, not the Department, for local tax appeals. Therefore, the Department did not have jurisdiction to address the Taxpayers’ appeal as to the 2015 assessment. Rather, the appeal should have been made to a circuit court.

As to the 2016 through 2018 tax years, the Taxpayers’ local appeal acknowledged that assessments had not been issued and the local appeal merely reserved the right to apply for correction of certain issues the Taxpayers believed would arise as to those assessments. The Taxpayers, therefore, did not file a valid local appeal as to the 2016 through 2018 tax years. Until a valid local appeal is filed as to those years and the County issues a valid final local determination, the Department does not have jurisdiction to address the 2016 through 2018 tax years.

If the Taxpayers wish to appeal assessments from the County to the Department, they must wait for the assessments in question to be issued, then file a local administrative appeal pursuant to the process set forth in Virginia Code § 58.1-3983.1 B. In addition, the information submitted raises questions concerning whether the Taxpayers properly completed their returns of BTPP. If the Taxpayers wish to amend their returns to claim refunds, they must do so within the applicable statute of limitations. If the County denies some part or all of any refund claimed on an amended return, then such action is considered an assessment for purposes of the local appeals process. See Public Document (P.D.) 11-124 (7/1/2011). If the Taxpayers wish to dispute the denial of any refund claimed on an amended return to the Department, they must first file a local appeal with the County pursuant to Virginia Code § 58.1-3983.1 B.

Once a proper local appeal has been filed, it is incumbent on a locality to undertake a full review of a taxpayer’s claims and issue a written determination setting forth the facts and analysis in support of the locality’s decision. The final local determination must also include a written explanation of the taxpayer’s right to file an administrative appeal of the determination to the Department. See Virginia Code § 58.1-3983.1 B 5. Only when a proper final local determination has been issued can a taxpayer file an administrative appeal with the Department, if it wishes to contest any of the locality’s conclusions. See Virginia Code 58.1-3983.1 D.

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/1816