Dr. Ronald E. Carrier
President, James Madison University
You ask whether the City of Harrisonburg may require James Madison University (the "University') or a private company that provides management services to the University to collect the city meals tax on the meals the University sells to its students through its dining services.1
In a 1983 opinion, the Attorney General considers whether the Town of Blacksburg could impose upon the officers and employees of a state university the obligation to collect the town meals tax for the meals sold by the university.2 The opinion concludes that the town has no authority to impose on the university the duty to collect and report the local meals tax.3 The rationale for the former opinion is that, without express legislative authority, a locality may not impose a tax or the economic incidence of a tax on the Commonwealth or its agencies and instrumentalities.4 The state's immunity from local taxation rests on the fundamental principle that the functions of government are not to be unduly impeded,5 a principle that "applies in equal measure to a requirement that the sovereign act as a collector of a local tax.'6
The General Assembly is presumed to acquiesce in the Attorney General's published interpretation of the law when it takes no legislative action to change the law.7 The General Assembly has taken no action to alter the conclusion reached in the 1983 opinion. Accordingly, it is my view that the earlier opinion controls to prohibit the city from requiring the University to collect the city meals tax.
You also ask whether, notwithstanding the earlier opinion, a private company that provides management services to the University's dining services unit may be required to collect and submit the city meals tax. The 1983 opinion concludes that a municipality has no authority to enforce collection of the tax "in facilities owned and operated by the University.'8 Whether the private company has assumed responsibility for the operation of the University's dining system is basically a question of fact.
The information you provide indicates that the University operates its own dining system. Only seven of approximately 900 employees of the University's dining service are employees of the private company.9 Employees of the University purchase the food, prepare and serve the meals, and collect the charges for the meals.10 The private company has no responsibility for handling, processing or accounting for any funds received by the dining services unit. While the private company may provide "management services' in these and other aspects of operation of the University's dining facilities, the private company does not manage the University's dining facilities. To permit the city to impose a tax collection duty on the private company under these circumstances would be inconsistent with the 1983 opinion.
1 Section 58.1-3840 of the Code of Virginia authorizes cities or towns with general taxing powers established by charter to impose excise taxes on meals. For purposes of this opinion, I assume that the language of the city ordinance would encompass meals sold through the University's dining facilities. The Office of the Attorney General has a long-standing policy, however, of not rendering opinions interpreting local ordinances. See Op. Va. Att'y Gen.: 1986-1987 at 347, 348; 1976-1977 at 17.
2 1983-1984 Op. Va. Att'y Gen. 381.
3 Id. at 383. The opinion noted first that, under the ordinance and state retail sales tax regulations, meals included in students' room, board or tuition charges are exempt from the local meals tax. Id. at 382. You state that the University and the commissioner of the revenue for the City of Harrisonburg likewise agree that the city meals tax may not be imposed on meals included within the students' room, board or tuition charges or fees. This opinion, therefore, deals only with meals not exempt from imposition of the tax.
4 Id. at 382-83. State tax regulations imposing on universities the obligation to collect the tax imposed under the state retail sales and use tax statutes are not relevant to the question you ask. See 23 VAC 10-210-4020(A)(4) (Law. Co-op. 1996) (institution must collect tax on retail sales of meals to students or others if price of meals is not included in room, board or tuition).
5 Id. at 383. For this principle, the opinion cited Pelouze v. Richmond, 183 Va. 805, 811, 33 S.E.2d 767, 769 (1945).
6 1983-1984 Op. Va. Att'y Gen., supra note 2, at 383.
7 See Deal v. Commonwealth, 224 Va. 618, 299 S.E.2d 346 (1983); Op. Va. Att'y Gen.: 1995 at 63, 64; 1992 at 42, 44; 1991 at 1, 2.
8 1983-1984 Op. Va. Att'y Gen., supra note 2, at 383.
9 In addition to the seven management employees of the private company, the University dining service has 19 of its own management employees.
10 The company receives a fixed fee and an incentive fee based on the results of satisfaction surveys and the University's attainment of specific budget and operational goals set by the University. The company's fees are unrelated to the University's profit or loss from operating the facilities.