Tax Type
BPOL Tax
Local Taxes
Description
Bank Selling Repossessed Autos; Application of BPOL Tax
Topic
Local Power to Tax
Local Taxes Discussion
Date Issued
05-09-1990
[Opinion - Virginia Attorney General: 1990 at 227]
REQUEST BY: The Honorable Arthur L. Shoemake Commissioner of the Revenue for the City of Manassas P.O. Box 512 Manassas, Virginia 22110
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask whether a bank which sells repossessed automobiles from a lot it owns in the City of Manassas is subject to the local business license tax for this activity.
I. Applicable Statutes
Section 58.1-3703 of the Code of Virginia authorizes the governing body of a county, city or town to assess and collect license taxes on businesses within the locality. Subsection B of that statute limits this authority by detailing specific exemptions to this tax. One of these exemptions provides that no county, city or town shall levy any license tax "[o]n any bank or trust company subject to taxation in Chapter 12 (§ 58.1-1200 et seq.) of this title." §58.1-3703(B)(12).
Section 58.1-1202 provides:
Every bank . . . shall pay an annual franchise tax measured by its net capital . . . . Such tax shall be in lieu of all other taxes whatsoever for state, county or local purposes except . . . local license taxes in connection with the sale of tangible personal property sold by banks in connection with promotions or otherwise.
II. When Two Statutes Are in Apparent Conflict, More Specific Statute Controls; Exemptions Are Strictly Construed Against Taxpayer
Localities are authorized by § 58.1-3703 to assess license taxes on businesses operating within their jurisdiction, but this authority is limited by the exceptions detailed in § 58.1-3703(B). §58.1-3703(B)(12) provides that a locality shall not levy a license tax on any bank that is subject to taxation in Chapter 12. Pursuant to § 58.1-1202 of that chapter, however, a franchise tax is imposed upon banks in lieu of all other taxes except for those specifically enumerated.
Among the exceptions enumerated in § 58.1-1202 is the local license tax in connection with the sale of tangible personal property sold by banks "in connection with promotions or otherwise." This exception is more specific than the general exemption of § 58.1-3703(B)(12). When one statute deals with a particular subject in a general way and another statute deals with that subject in a more specific manner, the two statutes should be harmonized, if possible, and when they conflict, the more specific statute prevails. See Va. National Bank v. Harris, 220 Va. 336, 340, 257 S.E.2d 867, 870 (1979). See also 2 H.&S. Docs. Report of the Virginia Code Commission on the Revision of Title 58 of the Code of Virginia, H. Doc. No. 16, at 423, 425 (1984 Sess.) (§58.1-3703(B)(12) was added to serve as a reference to § 58.1-1202).
In addition, the rule of strict construction of tax exemption statutes is entrenched in Virginia law. Taxation is the rule and not the exception, and exemptions are strictly construed against the taxpayer. See Commonwealth v. Wellmore Coal, 228 V. 149, 153-54, 320 S.E.2d 509, 511 (1984).
III. Bank Is Subject to Local License Tax for Sale of Repossessed Automobiles
Section 58.1-1202 permits local license taxes to be imposed on banks in connection with the sale of tangible personal property for promotion or otherwise. The transaction you describe, the sale of repossessed automobiles, constitutes the sale of tangible personal property. See 1974-1975 Att'y Gen. Ann. Rep. 459. It is my opinion, therefore, that the bank in the facts you present is subject to the local business license tax for the sale of repossessed automobiles.
Attorney General's Opinion