Tax Type
BPOL Tax
Local Taxes
Description
Insurance Company Field Office
Topic
Local Power to Tax
Local Taxes Discussion
Date Issued
04-29-1988
[Opinion - Virginia Attorney General: 1988 at 509]
REQUEST BY: Honorable N. Everette Carmichael Commissioner of the Revenue for Chesterfield County P.O. Box 124 Chesterfield, Virginia 23832
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask two questions concerning the imposition of the local business license tax upon the gross receipts of an insurance company's1 field office located in your jurisdiction. You first ask whether you may impose the tax upon the fees generated from the origination of mortgage loans, if that is the sole business activity of the field office. You next ask whether you may impose the tax if the field office issues insurance policies in addition to originating mortgage loans, provided that the tax is based only upon the gross receipts generated from the loan activities.
I. Applicable Statutes
Section 58.1-3703(A) of the Code of Virginia (effective until July 1, 1988) authorizes localities to impose the business license tax subject to limitations in subsection B of that statute, which provides:
No county, city, or town shall levy any license tax:
(11) On any insurance company subject to taxation under Chapter 25 of . . . Title [58.1] or on any agent of such company. . . . [Emphasis added.]
Section 58.1-2508(B), found in Ch. 25 of Tit. 58.1 ("Ch. 25"), provides, in part:
The license tax provided in this chapter, the tax on real estate and tangible personal property provided for in subsection A, the fee assessed by the Commission for the administration of the insurance laws pursuant to § 38.2-400 et seq., and the fee assessed by the Commission for the Fire Programs Fund pursuant to § 38.2-401 shall be in lieu of all fees, licenses, taxes and levies whatsoever, state, county, city or town. [Emphasis added.]
II. No Locality May Impose Local Business License Tax on Insurance Company Subject to State Insurance License Tax and Administration Fee
The clear language of § 58.1-3703(B)(11) prohibits the imposition of the local business license tax "[o]n any insurance company subject to taxation" under Ch. 25. (Emphasis added.) The language of the statute prohibits any local business license tax on a particular type of business, without limiting the prohibition to the nature of the business's gross receipts.
Section 58.1-2508(B) further illustrates the intent of the General Assembly to limit taxation of insurance companies in certain circumstances. The language of this statute clearly prohibits imposition of the local business license tax when an insurance company is subject to the state insurance license tax in § 58.1-2501 and the administration fee assessed pursuant to § 38.2-400.
III. Field Office as Part of Insurance Company Taxable Under Ch. 25 Is Not Subject to Local License Tax
The prohibition in § 58.1-3703(B)(11) against local business license taxation pertains to insurance companies generally, provided they are subject to taxes imposed by Ch. 25. The insurance company you describe pays the insurance license tax and administration fee assessed pursuant to §§ 58.1-2501 and 38.2-400. It is my opinion, therefore, that a local business license tax may not be imposed on the receipts of the field office located in your jurisdiction. The fact that receipts of that office are not related to insurance contracts is immaterial, since the statutory prohibition is based upon of the type of business involved and not the type of receipts generated by that business.
1 The insurance company is licensed to issue policies in Virginia and pays the insurance license tax and administration fee assessed pursuant to §§ 58.1-2501 and 38.2-400 of the Code of Virginia.
Attorney General's Opinion