Tax Type
BPOL Tax
Local Taxes
Property Tax
Description
Business Not Yet Open to Public; Method of Assessment; Proration of Tax
Topic
Basis of Tax
Computation of Tax
Local Power to Tax
Local Taxes Discussion
Property Subject to Tax
Date Issued
09-20-1988
[Opinion - Virginia Attorney General: 1988 at 578]
REQUEST BY: Honorable N. Everette Carmichael Commissioner of the Revenue for Chesterfield County P.O. Box 124 Chesterfield, Virginia 23832-0124
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask a number of questions dealing with the taxation of personal property and local business license taxes.
I. Taxation of Personal Property Owned by New Businesses Not Yet Open on Tax Day
In two questions, you ask whether personal property owned by, and in place ready for use in, a new hotel and a new retail business on January 1 of a tax year is subject to taxation in that year when the businesses are not yet open to the public on January 1.
A. Applicable Constitutional and Statutory Provisions
Article X, § 1 of the Constitution of Virginia (1971) requires that all property be taxed unless exempted pursuant to other constitutional provisions. Exemptions are provided in Art. X, § 6. There is no general exemption for property, real or personal, owned by a hotel or retail business, whether or not that property is in use.
Section 58.1-3015 of the Code of Virginia provides that property is to be taxed to its owner. Subject to certain exceptions not relevant to your inquiries, § 58.1-3515 fixes January 1 as the "tax day," the date on which the property's status for the place and value of taxation and ownership is established.
B. Taxability Based on Ownership, Not Use
Personal property is to be taxed to its owner on tax day. See §§ 58.1-3015 and 58.1-3515. There is no constitutional or statutory requirement that a business be open to the public in order for its property to be taxable.
C. Personal Property Owned by Hotel or Retail Business Taxable, Even Though Hotel or Business Not Yet Open to Public
Because the taxability of personal property is based on ownership on tax day, it is my opinion that the personal property of the hotel and retail business in the facts you present is taxable in the tax year for which the property was owned by the business on January 1. Cf. 1982-1983 Att'y Gen. Ann. Rep. 573 (taxpayer is liable for personal property taxes on a vehicle not licensed, not insured and not in running condition because taxation is based on ownership).
Language in § 58.1-3503, which classifies tangible personal property for valuation purposes as, for example, tangible personal property "used in a research and development business" (subdivision (A)(15)) and tangible personal property "employed in a trade or business" (subdivision (A)(17)), does not control taxability. As used in § 58.1-3503, the words "used in" and "employed in" are to be given a broad connotation. See 1972-1973 Att'y Gen. Ann. Rep. 404 (the phrase "used in a manufacturing business" in repealed § 58-412, which dealt in part with a separate classification for machinery and tools, not interpreted to exclude machinery and tools from liability for personal property taxation even though the manufacturer ceased to do business and closed plant). In the facts given, therefore, it is my opinion that personal property owned and in place ready for use in a business soon to open to the public is tangible personal property "employed in" or "used in" such a business.
II. Method of Assessment of Certain Personal Property
You also ask how certain personal property which has been converted from personal to business use is to be valued. You state that the original cost of this property is not known, but that the taxpayer has provided you with an estimate of fair market value on January 1 of the tax year. You then suggest two alternative methods of valuation based on the taxpayer's estimate of the January 1, 1988 fair market value of the property.1
A. Applicable Statutes
Exercising the authority granted by Va. Const. Art. X, § 1 to "define and classify taxable subjects," the General Assembly has enacted § 58.1-3503, which classifies tangible personal property for valuation purposes. § 58.1-3503(B) provides, in part:
Methods of valuing property may differ among the separate categories, so long as each method used is uniform within each category, is consistent with requirements of this section and may reasonably be expected to determine actual fair market value. Nothing herein shall be construed to prevent a commissioner of revenue from taking into account the condition of the property.
Section 58.1-3503(A)(17) provides that tangible personal property employed in a trade or business which is not subject to another classification category "shall be valued by means of a percentage or percentages of original cost."
B. As General Rule, Percentage of Original Cost Valuation Method Mandated by Statute, Provided Reasonable Expectation Exists that Method Determines Fair Market Value
Section 58.1-3503(B) mandates that the method of valuation be uniform within a particular category. The commissioner of the revenue or other assessment officer must value all tangible personal property employed in a trade or business by the percentage of original cost method, provided the property is not classified under another category. See Opinion to the Honorable Clive L. DuVal 2d, Member, Senate of Virginia, dated November 20, 1987 (copy enclosed). A value produced by a different method cannot be considered as long as the percentage of cost method may reasonably be expected to determine fair market value. Id. Whether an assessment based on the percentage of original cost of the property reflects the actual fair market value of the property is a factual determination to be made by the commissioner of the revenue. See 1984-1985 Att'y Gen. Ann. Rep. 371, 372.
C. Valuation May Not Rely Solely on Appraisal Submitted by Taxpayer
A prior Opinion of this Office concludes that it is the duty of the commissioner of the revenue to assess property taxes. See 1982-1983 Att'y Gen. Ann. Rep. 518. The commissioner may not, however, rely solely upon an appraisal provided by the taxpayer. See 1984-1985 Att'y Gen. Ann. Rep., supra. In carrying out these duties, a commissioner may deem it appropriate to hire a professional appraisal firm.
D. Commissioner Must Use Alternative Valuation Method When Original Cost Is Unknown; May Not Rely Solely on Estimated Values Submitted by Taxpayer
Based on § 58.1-3503(B), it is my opinion that, as a general rule, the tangible personal property in question must be valued by the percentage of original cost method unless that method is not expected reasonably to determine fair market value. Although the original cost is not known by the taxpayer in the facts you present, it is not clear whether such information is available from another source. If this information is available, the general rule stated above would apply.
Assuming that the commissioner of the revenue is unable to determine the original cost of the property, it is my opinion that the commissioner may choose an alternative valuation method reasonably expected to determine fair market value. Such authority is necessarily implied from the authority of the commissioner of the revenue to make the factual determination whether the percentage of cost method accurately reflects fair market value. When the original cost is unknown, determining fair market value through the percentage of cost method is an impossibility. Because, however, both methods which you suggest appear to rely solely on an estimated value submitted by the taxpayer, an alternative method of valuation must be found.2
III. Personal Property Taxation of Vehicles, Boats and Trailers Under Proration Ordinance
Three additional questions concern the personal property taxation of vehicles, boats or trailers pursuant to a proration ordinance authorized by § 58.1-3516.
A. Valuation of Automobile Under Proration Ordinance to Be Determined on Tax Day in Situs Day Condition
You ask whether the value of an automobile is to be determined as of January 1 or as of the date during the year that it acquires a situs in your locality.
1. Facts
A locality prorates personal property taxes, as permitted by § 58.1-3516. In assessing the value of automobiles, the commissioner of the revenue for the locality considers the physical condition of the vehicle, as permitted by § 58.1-3503(B). On March 15, 1988, a resident of the locality purchases an automobile which had been heavily damaged in a January 5, 1988 accident and had not been repaired. The resident reported the purchase to the commissioner of the revenue and requested that the condition of the vehicle be considered when the vehicle was assessed. Based on these facts, you ask whether the assessment of the vehicle should be based upon its condition as of January 1, 1988, the " tax day," or as of March 15, 1988, the date the vehicle acquired a situs in the jurisdiction, the "situs day."
2. Applicable Statutes
Section 58.1-3516 authorizes certain localities to provide by ordinance for the levy and collection of personal property tax for the balance of the tax year on motor vehicles which have acquired a situs within the locality after the "tax day". This tax is prorated on a monthly basis. The day on which the vehicle acquires a situs in the locality is referred to as the "situs day."
Section 58.1-3515 defines "tax day" as January 1, except as provided under § 58.1-3010 for those localities which choose a June 30 fiscal year and "except as provided by ordinance or special act in localities authorized to tax certain property on a proportional monthly or quarterly basis." (Emphasis added.) § 58.1-3515 also provides that the value of the property "shall be taken as of such date." (Emphasis added.)
In valuing tangible personal property, § 58.1-3503(B) authorizes the commissioner of the revenue to take into account the condition of the property.
3. Property Valued as of Tax Day but in Its Situs Day Condition Unless Otherwise Provided by Ordinance or Special Act
The authorization by an ordinance enacted pursuant to § 58.1-3516 to tax property on a pro rata basis without more does not authorize the locality to value the property on the situs day instead of tax day. A specific provision in an ordinance or special act authorizing situs day valuation is required. In the absence of such provision, the value of property is to be determined as of the tax day, and not the situs day. See 1982-1983 Att'y Gen. Ann. Rep. 571.
The property to be valued as of the tax day, however, is the property in the condition in which it exists on the situs day. As far as the pro rata taxing jurisdiction is concerned, the property in the facts you present does not exist prior to situs day. A vehicle gaining situs in a pro rata jurisdiction on March 15, 1988, therefore, would be listed for personal property tax purposes, not at its March 15, 1988 value, but at its January 1, 1988 value. Under the exercise of the authority of the commissioner of the revenue, pursuant to § 58.1-3503(B), to consider the condition of the property in valuing that property for tax purposes, however, a vehicle in a heavily damaged condition on the situs day, March 15, 1988, would be listed at the January 1, 1988 value for a car in that condition.
4. Tax Day Valuation of Vehicle in Its March 15, 1988 Condition Applies
I am aware of no ordinance or special act which authorizes your locality to value property on a day other than tax day. Based on the above, it is my opinion that the vehicle in question should be assessed based upon the January 1, 1988 tax day value of the vehicle in its March 15, 1988 situs day damaged condition.
B. Vehicle Moved from Another State to Virginia Jurisdiction Subject to Prorated Personal Property Tax in Virginia Jurisdiction Even Where Taxes Paid in Other State
You also ask whether a person who moves to your locality from another state is subject to the prorated personal property taxes on his motor vehicle in your locality.3
1. Facts
The taxpayer resided for a portion of a year in a state that assessed the personal property tax on his motor vehicle for the year. The taxpayer has paid the tax. The taxpayer then moves to your locality, which prorates personal property taxes pursuant to § 58.1-3516.
2. Applicable Statutes
Section 58.1-3511(A) provides that the situs for the assessment of motor vehicles is the locality in which the vehicle is normally garaged or parked. This subsection contains certain nonresident provisions which grant priority to the state of the taxpayer's domicile if the taxpayer is subject to taxation in more than one jurisdiction. If a taxpayer is domiciled in another state and normally parks his vehicle in Virginia, such taxpayer shall not be subject to personal property tax in Virginia upon a showing of payment of personal property tax on the vehicle in the state of domicile. Any person who pays a personal property tax to a county or city in Virginia and a similar tax in the state of his domicile may apply to the county or city in Virginia for a refund.
Section 58.1-3516(A) allows certain localities, including your jurisdiction, to enact an ordinance to collect personal property tax on motor vehicles on a pro rata basis -- i.e., for the portion of the year that the motor vehicle has its situs in that locality. This statute requires such a locality to provide relief from tax and a refund when the property loses its situs in the locality after the tax day or after the situs day.4 This statute further requires relief and a refund or credit when a person sells or otherwise transfers title to the vehicle after the tax day or situs day.
Section 58.1-3516(B) provides that, if the locality imposes a personal property tax on motor vehicles on a pro rata basis, the ordinance adopting this procedure also must exempt property "for any tax year or portion thereof during which the property was legally assessed by another jurisdiction in the Commonwealth and the tax paid." (Emphasis added.)
3. Person Moving Vehicle to Virginia Locality from Another State Subject to Prorated Personal Property Tax on Vehicle
None of the exemptions or refund provisions discussed above applies to the facts you present. The exemption in § 58.1-3511 applies only if the taxpayer is domiciled in another state. You state that the taxpayer is domiciled in Virginia.
The exemption required by § 58.1-3516(A) applies only if the property loses its situs in the locality or the taxpayer transfers title after the tax day or the situs day. In the facts you present, the property has not lost its situs in your locality after the tax or situs day.
The exemption in § 58.1-3516(B) applies only to property legally assessed in more than one jurisdiction within the Commonwealth. You state that the vehicle has been legally assessed in one jurisdiction within the Commonwealth and also in another state.
I am aware of no other exemption which applies to the facts you present. Although the taxpayer has paid personal property tax on the vehicle in another state, it is my opinion that he is subject to the personal property tax in your jurisdiction for the portion of the year that he is domiciled in Virginia and the vehicle is garaged or parked in your locality.5
C. Credit Not Available to Taxpayer for Prorated Taxes Paid on Motor Vehicle, Boat or Trailer Against Tax Due on Another Such Item
Your next question also concerns § 58.1-3516. You ask whether, in a locality which has enacted a proration ordinance pursuant to § 58.1-3516, personal property tax already paid on a motor vehicle, boat, or trailer which loses its situs in the locality may be credited against the tax due on other personal property owned by the same taxpayer.
A prior Opinion of this Office construes § 58-835.1, the statutory predecessor to § 58.1-3516, and concludes that a credit is not permitted pursuant to that statute, which specifically stated that the local ordinance shall provide for a "refund."6 See 1983-1984 Att'y Gen. Ann. Rep. at 398. I concur with the conclusion in this prior Opinion. Based on the above, it is my opinion that, in a locality which has enacted a proration ordinance pursuant to § 58.1-3516, personal property tax already paid on a motor vehicle, boat or trailer which loses its situs in the locality may not be credited against the tax due on other personal property owned by the same taxpayer.
IV. Business License Tax Matters Pertaining to Issuance of Business License; Exemption from and Calculation of Business License Tax
Three more of your questions require an interpretation of various provisions of Virginia's local business license tax statutes in §§ 58.1-3700 through 58.1-3735.
A. Issuance of Business License as Contractor and Broker Not Appropriate in Facts Presented
You ask whether a business license is issuable to (1) a person requesting a contractor's license for making repairs to his own home; and (2) a real estate broker requesting a business license for the 1988 tax year who states that he will be out of business and will not receive any real estate commissions during the 1988 tax year. You state that the broker plans to resume his business activities at the beginning of the 1989 tax year and has, in each of the previous several years, purchased a business license and paid the appropriate license tax based upon the brokerage commissions which he earned.
1. Applicable Statutes
Section 58.1-3703 provides for the "assessment and collection of county, city or town license taxes on businesses, trades, professions, occupations and callings and upon the persons, firms and corporations engaged therein."
Section 58.1-3714(B) provides that "[f]or the purpose of license taxation pursuant to § 58.1-3703, the term 'contractor' means any person, firm or corporation . . . accepting or offering to accept orders or contracts for doing any work on or in any building or structure."
With respect to real estate services, any person rendering a service for compensation as lessor, buyer, seller, agent or broker is providing a real estate service subject to license taxation. See Department of Taxation, Guidelines for Local Business, Professional and Occupational License Taxes § 3-3, at 18-19 (Jan. 1, 1984) ("BPOL Guidelines").
2. Business License Not Required for Person Contracting on Own Account; Person Not Eligible for Contractor's License in Facts Presented
As quoted above, § 58.1-3714(B) defines "contractor" for the purposes of license taxation as one "accepting or offering to accept orders or contracts for doing any work on or in any building or structure." A person making repairs to his own home is not encompassed by this definition of the term "contractor" because he neither accepts, nor offers to accept, contracts for work on a building. Based upon this construction of the substantively similar predecessor statutes to § 58.1-3714, prior Opinions of this Office consistently conclude that a contractor's license is not required for a person who builds, or makes repairs to, his own home. See, e.g., Att'y Gen. Ann. Rep.: 1973-1974 at 349; 1964-1965 at 51; 1938-1939 at 135. Based on the above, it is my opinion that a business license is not required for a person making repairs to his own home.7 Since the facts you present do not demonstrate the person requesting this business license satisfies the definition of "contractor" in § 58.1-3714, it is further my opinion that this person is not eligible for a contractor's license.
3. No License Issuable to Real Estate Broker for Year in Question
As quoted above, § 58.1-3703 authorizes the governing body of a county, city or town to impose a license tax "on businesses, trades, professions, occupations and callings and upon the persons . . . engaged therein." The question presented by your inquiry, therefore, is whether the real estate broker in the facts you present is "engaged" in business for the tax year in question. If he is, he would be subject to the tax and, therefore, eligible for a business license. See §§ 58.1-3700 and 58.1-3703.
The phrase "engaged in business" is defined as "a course of dealing which requires the time, attention and labor of the person so engaged for the purpose of earning a livelihood or profit. . . . It implies a continuous and regular course of dealing." Portsmouth v. Citizens Trust Co., 219 Va. 903, 906, 252 S.E.2d 339, 341 (1979). A person who is not receiving compensation or not engaged in business to earn a livelihood or profit is not engaged in a business for the purpose of procuring a local business license. See 1983-1984 Att'y Gen. Ann. Rep. 371.
The facts you present indicate that the real estate broker will conduct no business in 1988. Based on the above, it is my opinion that he would not be licensable for that year.8
B. Exemption for Public Service Corporations Inapplicable to Contract Carriers
You next ask whether contract carriers by motor vehicle are exempt from the local business license tax under the § 58.1-3703(B)(1) exemption for public service corporations.
Section 58.1-3703(B)(1) provides an exemption from local license taxation for "any public service corporation except as provided in § 58.1-3731 or as permitted by other provisions of law."9
1. Section 58.1-3703(B)(1) Exemption for Public Service Corporations Limited to Carriers Obtaining Certificate of Public Convenience and Necessity
Prior Opinions of this Office conclude that a carrier which has not obtained a certificate of public convenience and necessity from the State Corporation Commission is not exempt from local business license taxation as a public service corporation under § 58.1-3703(B)(1). See Att'y Gen. Ann. Rep.: 1986-1987 at 287; 1985-1986 at 285. Authorization to operate as a contract carrier by motor vehicle is evidenced by a permit issued pursuant to §§ 56-288 through 56-290.1. Such a permit is to be distinguished from a certificate of public convenience and necessity issued to a common carrier pursuant to §§ 56-278 through 56-287. See Opinion to the Honorable Robert R. Carter, Judge, General district Court for the City of Chesapeake, dated November 20, 1987 (copy enclosed). 2. Contract Carrier by Motor Vehicle Not Exempt from Local Business License Tax Under § 58.1-3703(B)(1)
A contract carrier by motor vehicle does not operate under a certificate of public necessity and convenience. Based on the above, it is my opinion that such a contract carrier is not exempt from the local business tax as a public service corporation under § 58.1-3703(B)(1).
C. Computation of Apportioned Business License Tax on Motor Vehicle Common Carriers in Interstate Commerce Applied to Total Gross Receipts
You also ask for clarification of the apportionment formula discussed in my Opinion to the Honorable E. Louise Beemer Cheatham, Commissioner of the Revenue for the City of Lynchburg, in the 1986-1987 Att'y Gen. Ann. Rep., at 287. In the Cheatham Opinion, I conclude that it appears that apportionment based on a ratio of miles traveled in the taxing jurisdiction to total miles traveled will meet the fair apportionment test.10 It is my opinion that this ratio should be applied to the total gross receipts of the company.11
V. Effect of Cessation of Business Prior to Tax Day on Taxability of Business's Personal Property
In another question, you ask whether certain personal property should be assessed for the 1988 tax year when the business owning such property ceased to operate prior to January 1, the tax day, but continues to own the property. The applicable constitutional and statutory provisions are discussed in Part I of this Opinion.
A. Facts
You present two factual situations. In the first, you have been informed that a taxpayer went out of business in November 1987. On January 1, 1988, and subsequent thereto, the office furniture and equipment of the taxpayer remained in the same office location and was owned by the taxpayer.
In the second situation, a real estate broker will be out of business during the 1988 tax year but plans to resume his business activities at the beginning of the 1989 tax year. The furniture and equipment previously used in this business remain in a separate office located in the broker's private residence.
B. In Both Fact Situations Presented, Business Personal Property Should Be Assessed for 1988 Tax Year Since It Continues to Be Owned by Business
My response to your questions in Part I of this Opinion is equally applicable to this question. Taxation is based on ownership. It is my opinion, therefore, that the tangible personal property you describe should be assessed for the 1988 tax year since it is still owned by the taxpayer and remains in place in a business location. See generally 1972-1973 Att'y Gen. Ann. Rep. 404 (machinery and tools taxable although, on tax day, manufacturer had ceased its operations, when the items remained in place in the manufacturing facility and continued to be owned by the manufacturer).
VI. Qualification for Apportioned Assessment Under § 58.1-3511(B) of Motor Vehicles, Trailers, Boats or Airplanes Operating in Interstate Commerce
You next ask three questions concerning the assessment of personal property taxes under § 58.1-3511(B) on motor vehicles, travel trailers, boats or airplanes that provide common, contract or other private carrier services in interstate commerce.
A. Applicable Statute
Section 58.1-3511(B) provides:
The assessment of motor vehicles, travel trailers, boats or airplanes operating over interstate routes, in the rendition of a common, contract or other private carrier service which are subject to property taxation in any other state on the basis of an apportioned assessment, shall be apportioned in the same percentage as the total number of miles traveled in the Commonwealth by such vehicle bears to the total number of miles traveled by such vehicle. [Emphasis added.] B. Section 58.1-3511(B) Applies to Property Leased to Common Carrier
You ask first whether the motor vehicles, travel trailers, boats or airplanes referred to in the statute include those leased by a common carrier.12 The statute quoted above is phrased in terms of the service for which the property is used. Prior Opinions of this Office conclude that under § 58.1-3507, which establishes a separate classification for machinery and tools used in a manufacturing business, it is the use of the property by the lessee that controls. See Opinion to the Honorable J. Ronnie Minter, Commissioner of the Revenue for the City of Martinsville, dated April 29, 1988 (copy enclosed); 1976-1977 Att'y Gen. Ann. Rep. 274, 276.
It is my opinion that the same analysis applies under § 58.1-3511(B) to the facts you present. If the property is used in the rendition of a common, contract or other private carrier service, § 58.1-3511(B) applies, even if the owner of the property and the one ultimately responsible for the payment of the tax leases the property to the person who actually provides the service.
C. Section 58.1-3511(B) Does Not Require Proof of Actual Apportioned Assessment of Taxes or Payment of Such Taxes in Another State
You also ask whether, in order to receive an apportioned assessment under § 58.1-3511(B), the common carrier must provide proof that the property has been assessed on an apportioned basis in another state and that the assessed taxes have been paid.
Section 58.1-3511(B) requires that the named property be subject to property taxation in another state on an apportioned basis.13 "Subject to taxation" means that another state has the power to tax the property, because the property has a tax situs in that other jurisdiction (e.g., through regular routes or habitual presence in another state or states). Whether the property is, in fact, assessed for taxation is immaterial. See Central R. Co. v. Pennsylvania, 370 U.S. 607, 613 (1962). Before a state may subject vehicles of interstate commerce to taxation, four requirements must be met to satisfy the Commerce Clause of the Constitution of the United States.14 Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977). One of the requirements is that the tax be fairly apportioned.15
Based on the above, it is my opinion that the common carrier does not need to provide proof that taxes actually have been assessed against the property in another state or that such tax has been paid in order for its property to be assessed on an apportioned basis in Virginia. To satisfy the "subject to taxation on an apportioned basis" requirement of § 58.1-3511(B), the common carrier need show only that the property in question has a tax situs in another jurisdiction as well as in Virginia.
D. Assessment of Trailer Pulled by Tractor Truck May Be Apportioned Under § 58.1-3511(B)
In your final question regarding § 58.1-3511(B), you ask whether a trailer pulled by a tractor truck may be apportioned under the statute even though such property is not specifically mentioned in the statute. In prior Opinions, this Office concludes that because a trailer under such circumstances is made to move from place to place, it is subject to the same "situs for taxation" definition as other motorized vehicles under § 58.1-3511(A). See Att'y Gen. Ann. Rep.: 1983-1984 at 396, 398 n.5; 1982-1983 at 615, 616. It is my opinion that the same analysis applies to § 58.1-3511(B). It is further my opinion, therefore, that the assessment of a trailer pulled by a tractor truck and otherwise meeting the requirements of § 58.1-3511(B) must be apportioned.
VII. Summary
To summarize, it is my opinion that:
(1) personal property owned by a new business on tax day is taxable in that year, although the business has not yet opened to the public for operation;
(2) when the original cost of property employed in a trade or business cannot be determined, an alternative method of valuation, not based solely on an appraisal submitted by taxpayer, must be utilized;
(3) in a jurisdiction which prorates personal property taxes, a vehicle is valued as of January 1 in its situs day condition, unless the local ordinance has a specific provision making situs day the date to measure value;
(4) a taxpayer who resides for a portion of a year in another state and pays personal property tax on his motor vehicle in that state still is subject to personal property tax on that vehicle in a Virginia jurisdiction which prorates such taxes upon moving to that Virginia jurisdiction and regularly garaging or parking his vehicle there;
(5) refunds, but no credits against other personal property taxes due, are allowable when a motor vehicle, trailer or boat loses its situs in a Virginia jurisdiction which prorates personal property taxes;
(6) no business license may be issued to, and a business license is not required for, (a) a person making repairs to his own home because the definition of the term "contractor" for license tax purposes does not apply to one contracting on his own account or (b) a real estate broker who will not engage in his business at any time during the entire tax year;
(7) the exemption from license tax for public service corporations is not applicable to contract carriers by motor vehicles because that exemption is limited to carriers holding a certificate of public convenience and necessity from the State Corporation Commission;
(8) the ratio of miles in the taxing jurisdiction divided by total miles traveled everywhere for an apportioned business license tax on motor vehicles traveling in interstate commerce is to be applied to total gross receipts of the business;
(9) personal property continues to be taxable to its business owner, although business operations cease prior to the tax day, because ownership controls taxation; and
(10) the apportionment provisions of § 58.1-3511(B) apply to both property owned by or leased to common carriers, do not require proof of actual apportioned assessments of tax or payment of such tax in another state, but only of the power to tax in another state on an apportioned basis, and may be applied to a trailer pulled by a tractor truck.
1 I assume that this inquiry concerns tangible personal property described in § 58.1-3503(A)(17).
2 If, for example, you are aware of property of similar age and character to that of the taxpayer in question, the original cost of that property might be utilized to value the tangible personal property in question under the percentage of original cost method.
3 I assume that the motor vehicle is normally garaged or parked in your locality after the taxpayer moves his legal residence to your locality.
4 See discussion in Part III(A)(2) of Opinion text for a definition of the terms "tax day" and "situs day."
5 This conclusion may subject the taxpayer to double taxation if he is not entitled to a refund from the state in which he is no longer domiciled. Prior Opinions of this Office conclude that such double taxation does not violate the Constitution of the United States and is otherwise permissible. See Att'y Gen. Ann. Rep.: 1982-1983 at 616, 617; 1976-1977 at 291; 1974-1975 at 527; 1957-1958 at 274.
6 After this Opinion was rendered, the General Assembly amended § 58.1-3516 to allow a credit or refund, at the option of the taxpayer, where sale or transfer of title occurred, without regard to situs. See Ch. 258, 1985 Va. Acts 312. A credit option, however, was not added to the portion of the statute requiring a "refund" when the motor vehicle, trailer, or boat loses its situs in the locality.
7 Cf. BPOL Guidelines, supra § 1-14, at 10 (persons constructing for their own account for sale are included in the contracting category for business license tax purposes).
8 You indicate that the broker plans to resume his business activities in 1989. At that time, the taxpayer will be deemed a beginner and the license will be based upon estimated gross receipts. See 1971-1972 Att'y Gen. Ann. Rep., supra. The requirement in § 58.1-3710 that a corporation permanently cease to engage in its business has no application to these facts because the language of the statute clearly makes the requirement applicable only to years in which business was conducted for a portion of the year and then was permanently ended.
9 Section 58.1-3731 is not relevant to your question because it pertains to taxation of telephone and telegraph companies, water companies and heat, light and power companies.
No apportionment is required if no tax situs is established in jurisdictions outside the state of domicile. See Central R. Co., 370 U.S. at 615-16.
Attorney General's Opinion