Tax Type
Property Tax
Description
Cargo Containers;Vessels;Situs
Topic
Property Subject to Tax
Date Issued
08-08-1975
I have received your letter inquiring whether the Commissioner of Revenue of the City of Norfolk has the authority to assess tangible personal property taxes upon cargo containers owned by a foreign shipping line which are located in the city. The containers are permanent, reusable articles of transport equipment durably made of metal and equipped with doors for easy access to the goods carried inside. They are designed to facilitate the handling, loading, stowage aboard ship, carriage, unloading and delivery of large numbers of packages of goods contained within, thus minimizing the costs and risks of transporting each package individually.
Article X, § 1, of the Constitution of Virginia (1971), provides that "[a]ll property, except as hereinafter provided, shall be taxed.' This mandate is not self-executing and legislation is necessary to carry it into effect. Prince William v. Thomason Park, 197 Va. 861, 867 (1956).
Section 58-9, Code of Virginia (1950), as amended, provides that all taxable tangible personal property is segregated and made subject to local taxation, and §58-864 requires each commissioner of revenue to ascertain and assess all personal property not exempt from taxation in his county or city, on the first day of January in each year, except as otherwise provided by law. § 2(1) of the Norfolk City Charter, Chapter 34, [1918] Acts of Assembly 33, authorizes the city to raise annually by taxes and assessments such sums as the council shall deem necessary for the purposes of the city in such manner as the council shall deem expedient, and in accordance with the Constitution and laws of Virginia and the United States.
The foregoing provisions clearly justify the assessment of tangible personal property by the city. See East Coast Freight Lines v. City of Richmond, 194 Va. 517, 521 (1953). Cargo containers are tangible personal property and, unless exempted, must be assessed and subjected to the Norfolk personal property tax if they have acquired a tax situs within the city. Although certain exemptions from taxation are provided by and pursuant to Article X, § 6, of the Virginia Constitution, I am not aware of any exemption applicable to the property under consideration.
Section 58-834 establishes the situs for the assessment of tangible personal property as "the county, district, town or city in which such property may be physically located on the first day of the tax year . . . .' This statute was interpreted in Hogan v. County of Norfolk, 198 Va. 733, 735 (1957), as follows:
- "The situs for taxation as used in this statute means something more than simply the place where the property is. It does not mean property which is casually there or incidentally there in the course of transit,but it does not necessarily involve the idea of permanent location like real property. It is sufficient if it is there and being used in such a way as to be fairly regarded as part of the property of the county.'
In Sea-Land Service, Inc., v. County of Alameda, 528 P. 2d 56 (Cal. 1974), the court found that the habitual presence of cargo containers created a taxable situs even though the identical containers were not there every day and none of the containers was continuously within the county. The court quoted from Braniff Airways v. Nebraska Board, 347 U. S. 590, 603 (1954), that "[p]roperty in transit may move so regularly and so continuously that part of it is always in the state. Then the fraction, but no more, may be taxed ad valorem.'
Although any particular container may be incidentally in Norfolk in the course of transit, the average presence rule applied in Braniff and Sea-Land is, in my opinion, equally applicable in Virginia, and accordingly containers may be taxed in Norfolk in proportion to their average presence in that city.
Attorney General's Opinion