Tax Type
Bank Franchise Tax
Local Taxes
Description
Appraisal, Bank Franchise Tax, Subtractions
Topic
Computation of Tax
Subtractions and Exclusions
Date Issued
05-09-1984
[Opinion - Virginia Attorney General: 1984 at 340]
REQUEST BY: Honorable Benjamin L. Pinckard Commissioner of the Revenue for Franklin County
OPINION BY: Gerald L. Baliles, Attorney General
OPINION:
Your recent letter asked for my opinion on three different matters: (1) whether the board of assessors is obligated to visit each property and review the appraisal value or whether it may rely on the post-reassessment, taxpayer-protest hearings to remedy potential inequities of a reassessment; (2) whether the correct value of bank real property for purposes of determining the deduction from gross capital allowed for the Bank Franchise Tax under § 58-485.08(1) of the Code of Virginia is the 1983 reassessment value or the 1983 land book value; and (3) whether the maximum rate limitations for license taxes imposed under § 58-266.1 would apply individually or in the aggregate to a county and town license tax where the town imposes a license tax under § 58-266.1 and the governing body of the town within the county provides that the county license tax applies within the town limits. I will answer your questions seriatim.
1. Section 58-790 governs the answer to your first question pertaining to the obligation of the board of assessors to visit each property and review the appraisal value in the course of a general reassessment. This section reads:
"The assessors or appraisers designated under the provisions of this article shall, as soon as practicable after being so designated, proceed to ascertain and assess the fair market value of all lands and lots assessable by them, with the improvements and buildings thereon. They shall make a physical examination thereof if requested by the taxpayer, and in all other cases where they deem it advisable."
The meaning of this statute is clear on its face.1 The first sentence of § 58-790 imposes a general duty on the board of assessors to ascertain the fair market value of all real estate including improvements and buildings thereon assessable by it. The second sentence then specifically requires it to make a physical examination of the properties in only two instances: where a taxpayer requests it or where the board deems it advisable. While physical inspection in other instances could be utilized as an appraisal tool, it is plainly not required in the absence of a request by the taxpayer. Many other factors which can be determined without physical inspection may be considered; e.g., the size, location and economic situation in the area of the property as well as the rental value of the property, where applicable. See 1974-1975 Report of the Attorney General at 496.
Based on the foregoing, I am of the opinion that the board of assessors is not required to visit each property in the absence of a request by the taxpayer.2 The board is obligated, however, on the basis of the information available to it, to ascertain what, in its opinion, was the fair market value of each property assessable by it. Union Tanning Co. v. Commonwealth, 123 Va. 610, 632, 96 S.E. 780, 786 (1918).
The reassessment hearings to which you refer are provided for in § 58-792.01. Pursuant to this section, a notice of any change in the assessed value of real estate is sent by mail to the owner of the property as shown on the land books and the taxpayer is afforded the right to a hearing to protest the change. Although this hearing process allows landowners to object to the results of the reassessment, it does not relieve the board of assessors from its duty to ascertain the fair market value of property assessable by it.
2. Your second question concerning the Bank Franchise Tax requires an interpretation of § 58-485.08(1). Subject to certain limitations, this section provides for a deduction from gross capital of the assessed value of real estate which is owned by a bank as defined in § 58-485.01. The deduction is to be based on:
"[t]he assessed value of real estate . . . [for] the most recent assessment made prior to January one of the current bank franchise tax year for real estate owned by the bank or affiliate on January one of the current year." § 58-485.08(1).
The value to be used turns on the meaning of "assessment" as used in the last sentence of § 58-485.08(1). As originally enacted, this sentence read:
"The deduction of assessed value of real estate shall be the assessment as of the prior tax year for real estate owned by the bank or affiliate on January one of the current year." Ch. 578, Acts of Assembly of 1980. (Emphasis added.)
This exact language appeared in the Virginia Bankers Association draft of the proposed bank franchise tax statute.3 The Association's comments on the deduction stated:
"The use of the assessment as of the prior year should limit the bank's deductions and give the taxing authority the benefit of a one-year inflation lag . . . . Administratively it would simplify the bank's and the tax auditor's work, since new assessments are not usually available in March, requiring multiple amendment of returns." Virginia Bankers Association Draft at 4.
In light of these comments accompanying proposed language which was in fact enacted, the word "assessment" in the last sentence of § 58-485.08(1) could only refer to the valuation of the property which is placed on the land books for the prior tax year.4 Accordingly, it is my opinion that the correct value of bank real property for determining the deduction from gross capital pursuant to § 58-485.08(1) is the 1983 land book value.
3. Your final question pertains to the applicability of the maximum rate limitations of § 58-266.1(B) where a county, authorized by act of the appropriate town's governing body as provided by § 58-266.1(A)(7), and the town within the county both issue revenue licenses within the town limits.
Neither the rate limitation provisions of § 58-266.1(B) nor § 58-266.1(A)(7), which authorizes upon an act of the governing body of a town within a county, the county to impose its revenue license tax within the geographical limits of such town when the town also imposes a town license tax, contains any language which indicates a legislative intent to require the license taxes of the two jurisdictions to be considered in the aggregate for purposes of the rate limitations of § 58-266.1(B).
By way of contrast, under § 46.1-65(d), concerning the imposition of a local motor vehicle license fee by a county and a town therein, the General Assembly made a specific provision for a credit against the fee imposed by the county to the extent of the fees paid to the town. The net effect of this credit provision is that the aggregate tax imposed by the county and town will not exceed the maximum fee allowable under § 46.1-65(a). See 1970-1971 Report of the Attorney General at 259.
Because of the absence of any language in § 58-266.1 indicating that license taxes imposed by a county and town within the town limits should be considered in the aggregate for rate limitation purposes, while in the analogous situation of motor vehicle license fees the General Assembly did so provide, I must conclude that the town and county may each issue a license based on the maximum rate for the classifications set forth in § 58-266.1(B). This conclusion is supported logically by the requirement in § 58-266.1(A)(7) that both county and town license taxes may be imposed only with the express consent of the governing body of the town.
1 See Franklin & P.R. Co. v. Shoemaker, 156 Va. 619, 159 S.E. 100 (1931) holding that a statute plain on its face should be taken at its face value.
2 Because 1983 reassessments are at issue, § 58-790 as amended and effective July 1, 1983 is being utilized for purposes of this opinion. See Ch. 161, Acts of Assembly of 1983. The result would not change under the earlier versions of this section. See 1981-1982 Opinion of the Attorney General at 348 indicating that the language of § 58-790 is broad enough to permit physical inspection but noting further that information in the deed of record in the clerk's office should be considered as well as other information the Board possesses. See, also, Perkins v. Albemarle County, 214 Va. 416, 200 S.E.2d 566 (1973) (holding that with annual reassessments pursuant to § 58-769.2 physical inspection of all parcels within the county was not required).
3 The applicable language is found on page four of the draft under proposed § 58-485.9(d).
4 The subsequent changes to the wording of this sentence in 1981 did not affect the meaning of the word "assessment." Ch. 432, Acts of Assembly 1981. A summary of the Department of Taxation explaining the 1981 amendments to the Bank Franchise Tax indicates that the rewording was to clarify the reference in regard to localities assessing on a fiscal year basis. See § 58-851.7.
Attorney General's Opinion