My county denied my request to waive a BPOL late-payment penalty and interest — can I take that dispute to the Virginia Tax Commissioner?

Plain-English summary

A retail business operating in a Virginia county paid its 2024 Business, Professional, and Occupational License (BPOL) tax after the due date. The county assessed a late-payment penalty and interest. The business emailed the county asking that the assessment be waived; the county said no. The business then filed a local appeal, arguing under Va. Code § 58.1-3703.1 A 2 d that it acted responsibly and the late payment resulted from events beyond its control — grounds that can excuse a penalty (though never interest). The county issued a final determination denying the waiver, and the business took the dispute to the Department.

No jurisdiction over a penalty-and-interest-only dispute. Virginia Code § 58.1-3703.1 A 5 lets a taxpayer administratively appeal a local license tax assessment, but only when it results from an "appealable event" — an increase in the assessed tax, the denial of a refund, a first-time assessment, or a dispute over classification. "Assessment" itself is defined in § 58.1-3700.1 as a determination of the proper tax rate, the measure the rate applies to, and ultimately the amount of tax due. Reading those definitions together, the Department concluded an administrative appeal must involve a genuine dispute over the AMOUNT of tax owed. Here, the county assessed only a penalty and interest for a late payment — the underlying BPOL tax amount was never in dispute. That means there was no appealable event, and the local (and, by extension, the Department's) appeal process under § 58.1-3703.1 A simply doesn't reach this kind of dispute at all.

Even on the merits, the outcome would be the same. Under § 58.1-3703.1 A 2 d, a 10% late-payment penalty may be excused only if the taxpayer shows it acted responsibly and the failure was due to events beyond its control — but whether that showing has been made is a factual call left entirely to the locality's own discretion, and is not subject to Department review (citing P.D. 20-3 and P.D. 20-18). Interest, by contrast, cannot be waived under any circumstances, regardless of fault.

What this means for you

Businesses disputing a late BPOL payment penalty

If your dispute is only about a penalty or interest charge — not the underlying license tax amount — the Department has no authority to step in. Your only avenue is the locality itself, and even there, penalty waivers are a discretionary call the locality makes on its own; interest can never be waived no matter the circumstances.

Knowing when the Department CAN get involved

The Department's BPOL appeal jurisdiction is triggered only by an "appealable event": an increase in the tax assessed, a denied refund, a first-time assessment, or a classification dispute. If none of those apply — as when a locality assesses only penalty and interest for a late payment — there's no route to the Department, however unfair the outcome may feel.

Accountants and tax professionals

Before advising a client to escalate a local BPOL dispute to the Department, confirm the dispute actually concerns the tax amount itself. A penalty-only or interest-only complaint, however sympathetic the facts, will be dismissed for lack of jurisdiction rather than decided on the merits.

Common questions

Q: My BPOL penalty and interest seem unfair — can the Tax Commissioner review that?
A: Only if your dispute also involves the actual amount of BPOL tax owed. A dispute limited to penalty and interest isn't an "appealable event" under Va. Code § 58.1-3703.1 A 5, so the Department has no jurisdiction to hear it.

Q: Can a locality ever waive BPOL interest?
A: No. Interest must be charged on a late BPOL payment regardless of the taxpayer's circumstances or fault.

Q: Who decides whether my late payment was "beyond my control" for penalty purposes?
A: The locality (commissioner of the revenue or other local assessing official) makes that factual determination, and it's a matter of local discretion — the Department does not review it.

Q: What should I do if the county denies my penalty waiver request?
A: If the underlying BPOL tax amount isn't in dispute, an appeal to the Department won't be heard; your remaining options are with the locality itself or, potentially, the courts.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-3703.1 A 5 — defines an "appealable event" that can be administratively appealed
• Va. Code § 58.1-3700.1 — defines "assessment" as a determination of tax rate, measure, and amount due
• Va. Code § 58.1-3703.1 A 2 d — 10% late-payment penalty; excused only if the taxpayer acted responsibly and the failure was beyond its control
• P.D. 20-3 (1/7/2020); P.D. 20-18 (2/6/2020) — penalty waivers are a locality's own discretionary call, not subject to Department review

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-10

Original ruling text

January 10, 2025

Re: Notice of Jurisdiction

Taxpayer: *

Locality Assessing Tax: County of *

Business, Professional, and Occupational License Tax

Dear *:

This notice of jurisdiction is issued upon the application for correction filed by you on behalf of * (the “Taxpayer”) with the Department of Taxation. The Taxpayer requests a waiver of penalty and interest assessed by the County of *** (the “County”) for late payment of Business, Professional, and Occupational License (BPOL) tax for the 2024 tax year.

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

FACTS

The Taxpayer operated a retail business in the County. When the Taxpayer filed its 2024 BPOL tax return and paid the tax due after the due date, the County issued an assessment for late payment penalty and interest.

The Taxpayer sent an electronic mail to the County requesting that the assessment be waived. The County replied that the assessment would not be waived. The Taxpayer then appealed to the County, contending that the late payment penalty and interest should be waived pursuant to Virginia Code § 58.1-3703.1 A 2 d because the Taxpayer acted responsibly, and the failure was due to events beyond its control. The County issued a final determination denying the waiver request.

ANALYSIS

Local Appeals Process

Virginia Code § 58.1-3703.1 A 5 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. An appealable event also includes a taxpayer’s appeal of a classification, regardless of whether it is in conjunction with an assessment, examination, audit, or any other action taken by the locality.

In addition, “assessment” is defined in relevant part as “a determination as to the proper rate of tax, the measure to which the tax rate is applied, and ultimately the amount of tax, including additional or omitted tax, that is due.” See Virginia Code § 58.1-3700.1. See also Title 23 of the Virginia Administrative Code (VAC) 10-500-10.

In this case, the County assessed penalty and interest only for a late payment of tax. The statute and regulations provide for administrative appeals of local tax assessments resulting from appealable events. Taking the definitions of appealable event and assessment together, an administrative appeal must involve a dispute as the actual amount of tax owed. As such, the local appeals process provided by Virginia Code § 58.1-3703.1 A 5 does not apply to assessments of penalty and interest only.

Penalty Waiver

Virginia Code § 58.1-3703.1 A 2 d provides that a penalty of 10% may be assessed for the failure to pay the BPOL tax by the appropriate due date. However, no late payment penalty may be assessed if the failure to pay was not the fault of the taxpayer. In order to demonstrate lack of fault, the taxpayer must show that they acted responsibly, and that the failure was due to events beyond their control.

The determination as to whether the Taxpayer acted responsibly, and whether the late payment of the BPOL tax was due to events beyond its control, are matters of fact to be determined by the County. Even if a locality determined that the late payment of BPOL tax was not due to events beyond a taxpayer’s control, it still may waive the penalty at its discretion. See P.D. 20-3 (1/7/2020). Waivers of BPOL tax penalties are subject to the review and discretion of the locality and are not subject to administrative review by the Department. See P.D. 20-3 and P.D. 20-18 (2/6/2020).

DETERMINATION

As discussed above, the local administrative appeals process provided by Virginia Code § 58.1-3703.1 A requires a dispute as to the amount of BPOL tax for which a taxpayer is ultimately liable. The Department does not have jurisdiction when the disputed assessment is only for penalties and interest.

If you have any questions regarding this determination, you may contact * in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at or **@tax.virginia.gov.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

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