What does Virginia Ruling of the Tax Commissioner P.D. 20-178 conclude about Tangible : Administration - Failure to Issue Final Local Determination?

Plain-English summary

This ruling is not a decision on the merits of a tax dispute -- it is a jurisdictional dismissal. A taxpayer was assessed business tangible personal property tax (BTPP tax) by a Virginia county for the 2019 tax year on one of its vehicles. The taxpayer argued the vehicle was registered and exclusively garaged out of state and appealed to the county. The county refused to abate the assessment, citing multiple reports that the vehicle had been seen parked or garaged locally, and the taxpayer then appealed that county response to the Department of Taxation.

The Tax Commissioner never reached the question of whether the vehicle was properly taxable. Instead, he found that the county's response to the taxpayer did not qualify as a "final local determination" -- the legal trigger that starts the taxpayer's right to appeal to the Department. The county's reply was an e-mail from an employee in the personal property division, not from the Commissioner of the Revenue, chief assessing officer, or someone expressly designated to issue final determinations. It also did not say it was a final local determination and omitted the specific language that Virginia regulations require such a determination to contain.

Because there was no valid final local determination, the Tax Commissioner ruled that the Department lacked jurisdiction to hear the appeal at all. Rather than dismiss the taxpayer's case outright, he remanded it back to the county with instructions to issue a proper final local determination consistent with the Department's published guidelines (P.D. 04-28). Only after the county does that can the taxpayer pursue a further appeal -- either to circuit court under Va. Code § 58.1-3980, or administratively to the Department under Va. Code § 58.1-3983.1, depending on which track applies.

The upshot: this ruling is procedural, not substantive. It doesn't say whether the vehicle was correctly assessed; it says the appeal process was broken because the county's response wasn't in the legally required form, and it sends the case back to be redone properly.

What this means for you

Taxpayers appealing local BTPP or other local business tax assessments

If a locality denies your correction request, check who signed the response and what it says. To count as a "final local determination" that lets you escalate your appeal, the response should ordinarily come from the commissioner of the revenue or chief assessing official (or someone they've expressly designated, with proof of that designation), explicitly identify itself as a final determination, and include the specific content required by 23 VAC 10-500-710. An informal e-mail from a staff member, without more, may not start your appeal clock or give the Department jurisdiction -- so don't assume a denial you received is the final word if it doesn't meet these formalities.

Local commissioners of the revenue and county tax offices

This ruling is a reminder to localities handling BTPP and other local business tax appeals: responses that are meant to resolve an appeal need to be issued by (or under express, documented delegation from) the commissioner of the revenue or chief assessing officer, need to be labeled as final local determinations, and need to include the language 23 VAC 10-500-710 requires. Sending an informal staff e-mail instead can cause the whole appeal to be kicked back by the Department for a do-over, delaying resolution for everyone.

Accountants and tax professionals

When advising a client on a local tax appeal, confirm early whether the locality's response actually qualifies as a final local determination before treating appeal deadlines (such as the 90-day window under Va. Code § 58.1-3983.1 B 1, or the deadlines under Va. Code §§ 58.1-3980 and 58.1-3984) as running. If it doesn't qualify, the correct move -- as here -- may be to seek a jurisdictional ruling from the Department directing the locality to issue a compliant determination, rather than proceeding as if the appeal clock has already started.

Common questions

Q: Did the Tax Commissioner decide whether the vehicle was properly taxed in this county?
A: No. The Commissioner explicitly declined to reach that question because he found he lacked jurisdiction -- the county's response wasn't a valid final local determination, so there was nothing properly before the Department to review.

Q: What was wrong with the county's response to the taxpayer?
A: It was an e-mail from an employee of the county's personal property division, not from the commissioner of the revenue, chief assessing officer, or an expressly designated official. It also didn't state that it was a final local determination and left out the specific language 23 VAC 10-500-710 requires such a determination to contain.

Q: What happens next in this case?
A: The Department remanded the matter to the county with instructions to issue a proper final local determination consistent with P.D. 04-28. Once the county does so, the taxpayer -- if still dissatisfied -- can appeal within the statutory time limits, either to circuit court under Va. Code § 58.1-3980 or, if proceeding administratively, to the Department under Va. Code § 58.1-3983.1.

Q: Does this ruling apply to my own local tax dispute?
A: Not automatically. It's an official published ruling explaining how the Department applies the final-local-determination requirement, but it was issued on this taxpayer's specific facts. If you're dealing with a similar situation, review 23 VAC 10-500-710 and P.D. 04-28 and consult a Virginia tax professional about your circumstances.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-3980 (application to local assessing officer for correction of a local tax assessment)
• Va. Code § 58.1-3984 (appeal of a local assessment to circuit court)
• Va. Code § 58.1-3983.1 B 1 (administrative appeal of a local business tax assessment, first to the commissioner of revenue, then within 90 days to the Department)
• 23 VAC 10-500-710 (defines "local assessing officer" and the required content of a final local determination)

Related Department guidance:

• P.D. 04-28 (6/25/2004), Guidelines for Appealing Local Business Taxes
• P.D. 18-140 (3/30/2018), on who may sign a final local determination

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 20-178

Original ruling text

October 5, 2020

Re: Notice of Jurisdiction

Taxpayer: *

Locality: *

Business Tangible Personal Property Tax

Dear *:

This notice of jurisdiction is issued upon the application for correction filed by * (the “Taxpayer”), with the Department. The Taxpayer appeals an assessment of business tangible personal property tax issued to the Taxpayer by *** (the “County”) for the 2019 tax year.

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

FACTS

The County issued an assessment of business tangible personal property on one of the Taxpayer’s vehicles for the 2019 tax year. The Taxpayer appealed to the County, contending the vehicle was registered and exclusively garaged in the * (State A). The County responded by stating that the 2019 assessment would not be abated because the County had received multiple reports of the vehicle being parked or garaged in its jurisdiction. The Taxpayer then filed an appeal with the Department.

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 Virginia Code § 58.1-3984.

Virginia Code § 58.1-3983.1 B 1 provides that any person assessed with a “local business 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 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 completely by the local assessing official, the taxpayer may, within 90 days, appeal the assessment to the Department.

In addition, under Title 23 of the Virginia Administrative Code (VAC) 10-500-710 and the Guidelines for Appealing Local Business Taxes, issued as Public Document (P.D.) 04-28 (6/25/2004), “local assessing officer” means the Commissioner of Revenue or chief assessing officer or his designee. Therefore, to qualify as a final local determination, the letter should normally be signed by the Commissioner of the Revenue or chief assessing officer and not an employee working at their direction, unless the individual has been expressly designated by the Commissioner of the Revenue or chief assessing officer and evidence of such designation is included with the final local determination. See P.D. 18-140 (3/30/2018). Additionally, Title 23 VAC 10-500-710 contains specific language that must be included in any written final determination.

In this case, the response the Taxpayer describes as the final local determination was an electronic mail sent by an employee of the County’s personal property division. Nothing therein indicated that the individual was expressly designated by the Commissioner of the Revenue or chief assessing officer to issue final local determinations. In addition, the response did not state that it was a final local determination or contain the specific language that must be included in any written final local determination.

DETERMINATION

For the reasons stated above, the Department lacks jurisdiction to address this appeal. I am remanding this case back to the County with instruction to issue a final local determination in accordance with P.D. 04-28. Once a proper final local determination has been issued, the Taxpayer, if it is not satisfied with such determination, may file an appeal under either Virginia Code § 58.1-3980 or § 58.1-3983.1 within the time prescribed by law. If the Taxpayer wishes to appeal to the Department at that point, the Taxpayer must proceed under Virginia Code § 58.1-3983.1.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/3467.M

Related Documents

04-28

18-140