Virginia Administrative Code › Title 23 - TAXATION › Agency 10 - DEPARTMENT OF TAXATION › Chapter 500 - BUSINESS, PROFESSIONAL AND OCCUPATIONAL LICENSE TAX REGULATIONS › Section 23VAC10-500-600 - Recordkeeping and audits

Current through Register Vol. 40, No. 24, July 15, 2024
A. Every
				person who is assessable with a local license tax must keep sufficient records
				to enable the assessor to verify the correctness of taxes paid for the license
				years assessable and to enable the assessor to ascertain what is the correct
				amount of tax that was assessable for each of those years. All such records,
				books of accounts and other information must be open to inspection and
				examination by the assessor in order to allow the assessor to establish whether
				a particular receipt is directly attributable to the taxable privilege
				exercised within a jurisdiction. The assessor must provide the taxpayer with
				the option to conduct the audit at the taxpayer's place of business if the
				records are maintained there. If maintained outside the assessor's
				jurisdiction, copies of the appropriate books and records must be sent to the
				assessor's office upon demand.
B. A
				taxpayer must keep its records for the current license year and the preceding
				three license years where it regularly files BPOL tax returns; however, a
				locality may review a taxpayer's records for the current license year and the
				six preceding license years when there has been a failure on the part of the
				taxpayer to file BPOL tax returns or obtain a BPOL license, or where there has
				been fraud on the taxpayer's part relating to BPOL taxes. For each license year
				under audit or for which the taxpayer must keep records, base year records
				provide the measure for license tax on gross receipts. (§§
				58.1-3703.1A 4 b and B 2 of the Code of Virginia.) For example:
1. Company A regularly pays BPOL taxes and is
				audited in 1997 for license years 1994, 1995 and 1996 by the locality in which
				it operates. In order for a full review covering all relevant tax years to take
				place, Company A must have its records for the current year and for license
				years 1994 through 1996.
2. Same
				facts as in the first example, except Company A has not applied for a BPOL
				license nor filed BPOL tax returns since 1989. Section 58.1-3703.1A 4 b of the
				Code of Virginia allows a locality to assess the BPOL tax for the current
				license year and the previous six license years where there is fraud or the
				taxpayer fails to apply for a BPOL license. However, in cases of fraud or a
				failure to apply for a BPOL license, 58.1-3703.1 B 2 of the Code of Virginia
				limits the application of § 58.1-3703.1A 4 b of the Code of Virginia to
				BPOL assessments for license years beginning on and after January 1, 1997. The
				ability to assess a BPOL tax for the current license year and the previous six
				license years under § 58.1-3703.1A 4 b of the Code of Virginia is in
				addition to the statutory authority to assess a BPOL tax for three preceding
				years under § 58.1-3903 of the Code of Virginia. Therefore, under §
				58.1-3903 of the Code of Virginia, Company A can be assessed a license tax for
				1997, 1996, 1995, and 1994.