Tax Type
Local Taxes
Retail Sales and Use Tax
Description
Local Meals Taxes; Application by Counties, Cities, and Towns
Topic
Local Power to Tax
Local Taxes Discussion
Taxability of Persons and Transactions
Date Issued
03-23-1992
[Opinion - Virginia Attorney General: 1992 at 168]
REQUEST BY: The Honorable Jerry M. Wood Member, House of Delegates 54 East Lee Street, Suite 101 Warrenton, Virginia 22186
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask whether the limitations applicable to county meals taxes under § 58.1-3833 of the Code of Virginia also apply to a tax on meals adopted by the Town of Warrenton (the "Town") pursuant to § 58.1-3840. You also ask whether the Town's tax applies to certain sales of food that is delivered or consumed outside of the Town's corporate limits.
I. Facts
A specialty grocery store in the Town prepares and sells sandwiches for consumption off premises. The sandwiches are sold from a delicatessen counter. The store provides condiments in packets for the sandwiches without additional charge. The store does not have seating or other facilities for consuming food on the premises, and thus is not licensed as a restaurant by the Department of Health. The store also has a catering operation that prepares food for delivery outside of the Town's corporate limits.
II. Applicable Statutes and Ordinances
Section 58.1-3833(A) authorizes counties, after meeting certain other requirements,1
to levy a tax on food and beverages sold, for human consumption, by a restaurant, as such term is defined in subdivision 9 of § 35.1-1 . . . . Grocery stores and convenience stores selling prepared foods ready for human consumption at a delicatessen counter shall be subject to the tax, for that portion of the grocery store or convenience store selling such items. The food and beverage tax levied on meals sold by grocery store delicatessens and convenience stores shall be limited to prepared sandwiches and single-meal platters.
Section 58.1-3840 authorizes cities and towns whose charters grant them general taxing powers under or consistent with those described in § 15.1-8412 to "impose excise taxes on cigarettes, admissions, transient room rentals, meals, and travel campgrounds," with certain exceptions not relevant to your inquiry.
Section 58.1-3841(A) provides:
The situs for taxation for any tax levied on the sale of food and beverages or meals shall be the county, city, or town in which the sales are made, namely the locality in which each place of business is located without regard to the locality of delivery or possible use by the purchaser. The term "sale" means a final sale to the ultimate consumer.
In 1968, the General Assembly amended the Town's charter to grant the Town general taxing powers pursuant to § 15.1-841. See Ch. 75, 1968 Va. Acts 118.
Pursuant to § 58.1-3840, the Town adopted ordinances imposing a meals tax in 1986. See Warrenton, Va., Code, art. V, §§ 15-86 to 15-100 (Ord. of June 12, 1986) ("Town Code").3
III. Town Meals Tax Not Limited by § 58.1-3833
Unlike counties, cities and towns historically have been authorized to impose excise taxes on meals under charter provisions granting the general power of taxation. See Att'y Gen. Ann. Rep.: 1982-1983 at 562 (concluding that counties could not then impose meals taxes and contrasting power of cities and towns with general taxing powers in their charters to do so); 1976-1977 at 286, 1974-1975 at 519 (Colonial Heights and Alexandria, respectively, empowered to impose meals taxes). The authorization for meals taxes traditionally granted to cities and towns through charter provisions was recognized and continued in the 1984 enactment of § 58.1-3840 as part of the recodification of Title 58. See Ch. 675, 1984 Va. Acts 1178, 1448.
In 1988, the General Assembly enacted § 58.1-3833 authorizing counties to impose taxes on food and beverages after voter approval or, in certain counties, by unanimous vote of the governing body. See Ch. 847, 1988 Va. Acts 1697. As originally enacted in § 58.1-3833(A), county taxes on food and beverages were limited to "food and beverages sold for human consumption and consumed on [the seller's] premises." 1988 Va. Acts, supra; see 1989 Att'y Gen. Ann. Rep. 318, 319 (county tax adopted pursuant to § 58.1-3833 applicable to caterers only when caterer controls premises where food and beverages are sold and consumed). This "on-premises" limitation, however, has never applied to meals taxes imposed by cities and towns under the separate authority of § 58.1-1340 and their respective charters. 1989 Att'y Gen. Ann. Rep., supra, at 319 n.2.
In 1990, the General Assembly repealed the "on-premises" limitation for counties in § 58.1-3833, but added other definitions and restrictions that limited the authorization for county food and beverage taxation to: (1) meals sold by restaurants as defined in § 35.1-1(9); and (2) prepared sandwiches and single-meal platters sold by grocery and convenience store delicatessen counters. Ch. 846, 1990 Va. Acts 1454 (Reg. Sess.); Ch. 862, id. at 1495; see also 1990 Att'y Gen. Ann. Rep. 231, 232 n.1. No comparable amendments were made to § 58.1-3840. During the same Session, the General Assembly enacted § 58.1-3841, providing the situs for taxation for taxes levied "on the sale of food and beverages or meals." Ch. 843, 1990 Va. Acts, supra, at 1452 (emphasis added).
This legislative history indicates clearly that the General Assembly did not intend meals taxes imposed by cities and towns under § 58.1-3840 to be subject to the same limitations that apply to food and beverage taxes imposed by counties under § 58.1-3833. See 1989 Att'y Gen. Ann. Rep., supra, at 319 n.2.4 The two taxes historically have been treated separately, as evidenced by the 1990 enactment of the situs provision in § 58.1-3841 that is specifically applicable both to taxes on "meals" and to taxes on "food and beverages."
The Department of Taxation also has concluded that the limitations in § 58.1-3833 do not apply to city and town meals taxes. See 2 [Va.] St. Tax Rep. (CCH) P201-902.
Based on the above, it is my opinion that the Town may apply its meals tax without regard to the limitations applicable to county taxes under § 58.1-3833. Enforcement action by the Town, of course, must be consistent with the definitions detailed in the Town Code. These definitions do not conflict with state law and their application in particular cases is a factual matter for local tax officials. See, e.g., Att'y Gen. Ann. Rep.: 1991 at 30, 31 (copy enclosed); 1987-1988 at 422, 423; id. at 590, 591; 1986-1987 at 347, 348; see also 2 [Va.] St. Tax Rep. (CCH) supra, at 12,720 (final determination about application of local meals taxes rests with locality).
IV. Meals Taxable by Seller's Locality, Regardless of Place of Delivery or Consumption
Section 58.1-3841(A) provides that the situs for taxation of meals or food and beverages shall be the locality in which sales are made, and expressly identifies that locality as the one in which the seller's place of business is located, regardless of the place of delivery or consumption. When the plain language of a statute is clear, there is no need to resort to rules of statutory construction. In my opinion, therefore, § 58.1-3841(A) permits the Town to tax meals sold by a catering operation located within the Town, even if those meals are delivered or consumed outside of the Town's corporate limits.
1 As a general rule, § 58.1-3833(A) requires that the food and beverage tax be approved by the county voters in a referendum. Under § 58.1-3833(B), certain counties are exempted from the referendum requirement if the county governing body holds a public hearing and adopts the tax by unanimous vote. § 58.1-3833(C)-(D) allows certain other counties that had adopted such taxes under prior statutory authorization to continue collecting those taxes without voter approval.
3 Section 15-90 of the Town Code levies a four percent tax on the amount paid for "every meal served, sold or delivered in the town by a restaurant or caterer." § 15-86 of the Town Code contains these definitions: "Caterer: A person who furnishes meals on the premises of another, for compensation.
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"Meal: Any prepared food and/or drink, and/or alcoholic beverages, offered or held out for sale by a restaurant or caterer for the purpose of being consumed by an individual or group of individuals at one time to satisfy the appetite. All such food and/or drink shall be included, whether intended to be consumed on the seller's premises or elsewhere, whether designated as breakfast, lunch, dinner, supper or by some other name, and without regard to the manner, time or place of service.
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"Restaurant: Any place or thing in the town from which or in which meals are sold, including but not limited to places of business known as bars, cafes, cafeterias, coffee shops, clubs, delicatessens, diners, dining rooms, eateries, grills, lunch counters, restaurants, snack bars, grocery stores, and convenience stores. "Restaurant" also means push carts or other mobile facilities from which meals are sold or furnished."
4 Compare 1990 Att'y Gen. Ann. Rep. 233, 235 (General Assembly presumed not to intend irrational consequence of voiding Virginia's eligibility for federal food subsidies by omitting exemptions contained in §§ 58.1-608(10)(f) [currently § 58.1-608(A) (10)(f)] and 58.1-3840 from § 58.1-3833).
Attorney General's Opinion