Attorney General Opinions

Commissioner of the Revenue for the City of Suffolk

Section 58.1-3731 previously permitted localities to impose limited gross receipts taxes on light and power companies.⁶ Generally, the amount of business license taxes, including the local gross receipts tax imposed pursuant to Chapter 37 of Title 58.1, §§ 58.1-3700 through 58.1-3735, is based on the gross receipts from the preceding calendar year.⁷ The issue here, however, addresses a more specific question than one regarding the general application of a business license tax. Your question relates to a very specific provision regarding the phaseout of the gross receipts tax as applied to an electric supplier for a very specific period.⁸ § 58.1-3731 provides that "[a]fter December 31, 2000, the license tax … shall not be imposed on … electric suppliers as defined in § 58.1-400.2,⁹ except upon gross receipts for calendar year 2000."

Central to your inquiry are the amendments to §§ 58.1-3731 and 58.1-2901 enacted by the 1999 and 2001 Sessions of the General Assembly.

The General Assembly added language to § 58.1-3731 in 1999 stating that, "[a]fter December 31, 2000, the license tax authorized by this section shall not be imposed on electric suppliers …, except as provided in § 58.1-2901 D."¹⁰ In that same year, the General Assembly added Chapter 29 to Title 58.1, including §§ 58.1-2900 and 58.1-2901, pertaining to the imposition and collection of an electric utility consumption tax on consumers of electricity.¹¹ § 58.1-2901(D) originally provided that "[t]axes on electricity sales in the year ending December 31, 2000, relating to the local consumption tax, shall be paid in accordance with § 58.1-3731. Monthly payments [of the electric utility consumption tax] shall commence on February 28, 2001."¹² In a similar vein, the 1999 General Assembly also enacted § 58.1-2901(F) to provide that "[t]he portion of the electric utility consumption tax relating to the local consumption tax replaces and precludes localities from imposing a license tax in accordance with § 58.1-3731 … on electric suppliers subsequent to December 31, 2000, except as provided in subsection D."¹³

The 2001 General Assembly amended the last sentence in § 58.1-3731 to preclude the imposition of a license tax on electric suppliers, "[a]fter December 31, 2000, … except upon gross receipts for calendar year 2000," as provided in § 58.1-2901(D).¹⁴ It also amended § 58.1-2901(D) to require that "[t]axes on electricity sales in the year ending December 31, 2000, relating to the local consumption license tax, shall be paid in accordance with § 58.1-3731."¹⁵

The plain language of a statute should be given its clear and unambiguous meaning.¹⁶ The 1999 General Assembly made § 58.1-2901 effective for tax years beginning January 1, 2001.¹⁷ The amendatory language to § 58.1-3731, "upon gross receipts for calendar year 2000,"¹⁸ enacted during the 2001 Session of the General Assembly, plainly states that gross receipts for calendar year 2000 relating to the local license tax are subject to collection. The plain language of §§ 58.1-3731 and 58.1-2901(D) requires the gross receipts tax to be imposed on those receipts for the year 2000 and the consumption tax imposed for the year 2001.¹⁹ In essence, in 2001, the utility is required to remit the tax collected during 2000 from electric utility consumers,²⁰ while at the same time beginning collection of the consumption tax.

Moreover, assuming for argument that the 2001 amendments to §§ 58.1-3731 and 58.1-2901(D) create any ambiguity concerning whether the local gross receipts tax may be collected in 2001 on gross receipts received in 2000, the rules of statutory construction require the same conclusion. An important rule of statutory construction is that "‘every part of a statute is presumed to have some effect and no part will be considered meaningless unless absolutely necessary.’"²¹ The only language change to § 58.1-3731 during the 2001 Session of the General Assembly pertinent to this inquiry was the addition of the language "upon gross receipts for calendar year 2000."²² A determination that electric suppliers are not subject to the gross receipts tax for the year 2000 would require me to conclude that the amendatory language is without meaning and that the action of the General Assembly was useless. The rules of statutory construction disfavor such an interpretation.²³

¹I assume that such electric cooperative falls within the purview of § 58.1-400.2 (providing for taxation of certain electric suppliers).

²Pursuant to § 58.1-2901, "the provider of billing services" is responsible for collecting the electric utility consumption tax. § 58.1-2901(E) defines "provider of billing services" as "the person who bills a consumer for electric services rendered."

³See 2000 Va. Acts ch. 706, at 1380 1388-89 (adding Chapter 29.1 to Title 58.1, relating to natural gas consumption tax); 1999 Va. Acts ch. 971, at 2547, 2557-59 (adding Chapter 29 to Title 58.1, relating to electric utility consumption taxation).

⁴1999 Va. Acts ch. 971, supra note 3, at 2559 (codified as amended at Va. Code Ann. § 58.1-3731 (LexisNexis Supp. 2002)).

⁵See id. at 2557-58 (effective Jan. 1, 2001) (enacting § 58.1-2900, codified as amended at Va. Code Ann. § 58.1-2900 (Michie Repl. Vol. 2000)).

⁶See Op. Va. Att’y Gen.: 1971-1972 at 401, 401 (interpreting § 58-603(2), predecessor statute to § 58.1-3731).

⁷1997 Op. Va. Att’y Gen. 171, 172.

⁸To the extent it is argued that the statutes governing the imposition and collection of the gross receipts tax generally compel a different analysis, the statutes governing the same for electric suppliers are specific to electric suppliers and, therefore, override the more general statutes applicable to the gross receipts tax. An accepted principle of statutory construction is that, when it is not clear which of two statutes applies, the more specific statute prevails over the more general. See Va. Nat’l Bank v. Harris, 220 Va. 336, 257 S.E.2d 867 (1979); Scott v. Lichford, 164 Va. 419, 180 S.E. 393 (1935); City of Roanoke v. Land, 137 Va. 89, 119 S.E. 59 (1923); Op. Va. Att’y Gen.: 2001 at 17, 19; 1990 at 227, 228; 1987-1988 at 276, 277; 1980-1981 at 330, 331. Also, when statutes provide different procedures on the same subject matter, "the general must give way to the specific." Davis v. Davis, 206 Va. 381, 386, 143 S.E.2d 835, 839 (1965); see also Op. Va. Att’y Gen.: 2001, supra, at 19; 1976-1977 at 93, 94.

⁹"‘Electric supplier’ means any corporation, cooperative, partnership or other business entity providing electric service." § 58.1-400.2(C) (Michie Repl. Vol. 2000).

¹⁰1999 Va. Acts ch. 971, supra note 3, at 2559.

¹¹Id. at 2557-59.

¹²Id. at 2558. The 2001 Session of the General Assembly replaced the word "consumption" with the word "license" in § 58.1-2901(D). See 2001 Va. Acts ch. 829, at 1151, 1152; id. ch. 861, at 1608, 1608.

¹³1999 Va. Acts ch. 971, supra note 3, at 2558.

¹⁴2001 Va. Acts chs. 829, 861, supra note 12, at 1152, 1609, respectively.

¹⁵Id. at 1152, 1608, respectively.

¹⁶See Barr v. Town & Country Props., Inc., 240 Va. 292, 295, 396 S.E.2d 672, 674 (1990); 1999 Op. Va. Att’y Gen. 27, 27.

¹⁷1999 Va. Acts ch. 971, cl. 3, supra note 3, at 2560.

¹⁸See sources cited supra note 14.

¹⁹The Tax Commissioner concurs in this finding and notes that, prior to January 1, 2001, and including calendar year 2000, electric suppliers were allowed to embed the gross receipts tax in their rates. Tax Comm’r Priv. Ltr. Rul. PD 01-135 (Sept. 19, 2001), available here.

²⁰I note that the local gross receipts tax was embedded in the electric utility consumer’s rate through the year 2000, and that the consumer began paying the electric utility consumption tax in 2001 in lieu of having the gross receipts tax factored into the rates utilities charged its customers. For the electric utility consumer, the transition from a gross receipts tax to a consumption tax is seamless, as the consumer is not subject to double taxation.

²¹Sansom v. Bd. of Supvrs., 257 Va. 589, 595, 514 S.E.2d 345, 349 (1999) (quoting Hubbard v. Henrico Ltd. P’ship, 255 Va. 335, 340, 497 S.E.2d 335, 338 (1998)), quoted in 2000 Op. Va. Att’y Gen. 117, 118.

²²See sources cited supra note 14. A reference to § 58.1-2905(D) was also added to provide a cross-reference to gas utilities and gas suppliers, as defined in § 58.1-400.2, which are taxed in the same manner as electric suppliers. Id.

²³See Natrella v. Bd. of Zoning Appeals, 231 Va. 451, 461, 345 S.E.2d 295, 301 (1986) (citing Jones v. Conwell, 227 Va. 176, 181, 314 S.E.2d 61, 64 (1984) (rules of statutory construction argue against reading legislative enactment in manner that makes it useless or absurd; reasonable effect should be given to every word to allow enactment to remedy mischief at which it is directed)).