My county charged me a BPOL late-payment penalty and interest — can I appeal that penalty to the Virginia Department of Taxation?

Plain-English summary

A retail business filed and paid its 2024 BPOL (Business, Professional, and Occupational License) tax after the due date, and its county assessed a late-payment penalty and interest. The business emailed the county asking that the penalty be waived; a business tax supervisor said no. The business then appealed to the Department, arguing the penalty (and interest) should be waived under § 58.1-3703.1 A 2 d because it had acted responsibly and the late payment was caused by events beyond its control.

The Department has no jurisdiction over a penalty-only dispute. Virginia's local BPOL appeal statute (§ 58.1-3703.1 A 5) only covers "appealable events" — an increase in the tax assessed, the denial of a refund, a first-time assessment where none existed before, or a classification dispute. Combined with the statutory definition of "assessment" (a determination of the tax rate, the base, and the amount of tax due, § 58.1-3700.1), an administrative appeal has to involve a genuine dispute about the AMOUNT OF TAX owed. Here, the county assessed only penalty and interest for a late payment — there was never any disagreement about the underlying tax amount itself. Because of that, the local BPOL appeals process (and, downstream, the Department's own appellate jurisdiction) simply doesn't apply to this kind of dispute at all.

Even the paperwork wasn't right. The Department noted two additional, independent problems. First, the taxpayer's original email to the county was a waiver REQUEST, not a proper local administrative appeal — a taxpayer can't retroactively convert an initial ask into a formal appeal just by later calling it one. Second, even if it had been a proper appeal, the county's reply wasn't a valid "final local determination": under 23 VAC 10-500-710, a final determination must include specific required language and be signed by the local assessing official or a designee, and the county's response met neither requirement. A taxpayer can only bring a matter to the Department after a locality has issued a PROPER final determination (§ 58.1-3703.1 A 6 a) — which never happened here.

Even on the merits, this outcome likely wouldn't have changed. The Department went further and explained the substantive rules anyway. A 10% BPOL late-payment penalty CAN be excused if the taxpayer shows it acted responsibly and the failure was due to events beyond its control — but whether that standard is met is a factual call left entirely to the LOCALITY, and even where a locality finds fault, it retains full discretion whether to waive the penalty. Either way, that decision is not subject to Department review at all. And interest is even more rigid: under § 58.1-3703.1 A 2 e, interest on a late BPOL payment is charged regardless of fault or reason — even a taxpayer who successfully proves the delay was entirely beyond its control still owes the interest.

What this means for you

Businesses disputing only a BPOL penalty or interest charge (not the underlying tax)

Don't expect the Department to hear this kind of dispute at all — your only real audience is the locality itself. Make your "acted responsibly / beyond our control" case directly and formally to your county or city's assessing official, since that's the only decision-maker with authority (and full discretion) over a penalty waiver.

Anyone appealing to a locality on a BPOL matter

Style your correspondence explicitly as a formal administrative appeal under § 58.1-3703.1, and confirm any determination you receive back actually meets the "final local determination" requirements (proper signature, required language under 23 VAC 10-500-710) before assuming you have a green light to escalate to the Department.

Accountants and tax professionals

Remember the categorical distinction: a dispute over the AMOUNT of BPOL tax owed can reach the Department on appeal; a dispute over PENALTY OR INTEREST ALONE cannot, no matter how sympathetic the facts. And interest, unlike penalty, is never waivable for any reason under this statute.

Common questions

Q: Can I appeal a BPOL late-payment penalty to the Virginia Department of Taxation?
A: No — a dispute limited to penalty and interest isn't an "appealable event" under the local BPOL appeal statute, so the Department has no jurisdiction to decide it.

Q: Who decides whether my BPOL penalty gets waived?
A: The locality alone. Even if it finds your failure to pay wasn't your fault, it retains full discretion whether to actually waive the penalty, and that decision isn't reviewable by the Department.

Q: Can interest on a late BPOL payment ever be waived?
A: No — the statute requires interest to be charged regardless of fault or the reason for the late payment.

Q: What should this business have done differently?
A: Framed its initial request to the county explicitly as a formal administrative appeal, and confirmed the county's response met the requirements for a "final local determination" before assuming it could go further — though ultimately, even a properly framed penalty-only dispute still couldn't reach the Department.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-3703.1 A 5 — local BPOL appeal process; "appealable event" definition
• Va. Code § 58.1-3700.1 — "assessment" defined
• Va. Code § 58.1-3703.1 A 6 a; 23 VAC 10-500-710 — Department appeal only after a proper final local determination
• Va. Code § 58.1-3703.1 A 2 d — late-payment penalty waivable only if not the taxpayer's fault
• Va. Code § 58.1-3703.1 A 2 e — interest charged regardless of fault

Prior rulings the Department relied on (described here, not linked): P.D. 22-87 (4/28/2022) (an initial request can't be recast as a formal appeal); P.D. 11-124 (7/1/2011) (Department appeal requires a proper final local determination); P.D. 20-3 (1/7/2020) and P.D. 20-18 (2/6/2020) (BPOL penalty waivers are within local discretion, not subject to Department review).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-7

Original ruling text

January 15, 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 a letter via electronic mail to the County, requesting that the assessment be waived. A business tax supervisor replied that the assessment would not be waived. The Taxpayer then appealed to the Department, 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.

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.

Even if the local appeals process applied to assessments of penalty and interest only, if the Taxpayer disagreed with the denial of its waiver request, its next step would have been to file an appeal with the County’s local assessing official pursuant to Virginia Code § 58.1-3703.1 A 5. The Taxpayer’s letter requesting the penalty and interest waiver was styled as an appeal; however, the Taxpayer cannot curtail the administrative appeals process by treating an initial refund request as an appeal. See also P.D. 22-87 (4/28/22).

Further, under Virginia Code § 58.1-3703.1 A 6 a, a taxpayer may file an appeal with the Department only after a final determination that met all the requirements of Title 23 VAC 10-500-710 has been issued by a locality. See P.D. 11-124 (7/1/2011). The letter from the County’s business tax supervisor did not meet the requirements for a final local determination, which must, among other requirements, be signed by the local assessing official or their designee. Further, Title 23 VAC 10-500-710 contains specific language that must be included in any final written determination for a BPOL tax appeal. This language was not included in the County’s response.

Penalty and Interest 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).

In addition, Virginia Code § 58.1-3703.1 A 2 e, provides that interest shall be charged on a late payment without regard to fault or other reason for the late payment. As such, the Taxpayer’s request for an interest waiver would not be granted even if the County determined to waive the late payment penalty. See also Title 23 VAC 10-500-570.

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 regarding assessments of penalty and interest only. Even if the Department had jurisdiction, there is no indication that a proper local appeal was filed with the County or that the County issued a proper final local determination. Accordingly, the Department does not have jurisdiction to decide the Taxpayer’s appeal on the merits.

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

Related Documents

11-124

20-3

20-18

20-178

22-87