Tax Type
Local Taxes
Description
Privately Owned Subdivision Water System; Application of Local Tax
Topic
Exemptions
Local Power to Tax
Local Taxes Discussion
Date Issued
12-13-1991
Privately Owned Water Service
[Opinion - Virginia Attorney General: 1991 at 270]
REQUEST BY: The Honorable C. Richard Cranwell Member, House of Delegates P.O. Box 459 Vinton, Virginia 24179
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask whether a county may impose a consumer utility tax on consumers of water service provided by a small, privately owned subdivision water system in the county.
I. Applicable Statutes
Article 4, Chapter 38 of Title 58.1-3812 through 58.1-3816.1 of the Code of Virginia, details the authority of local governing bodies to impose consumer utility taxes on consumers of certain utility services, including services provided by water or heat, light and power companies described in § 58.1-3814. § 58.1-3814(A) provides that a locality may impose a tax on the consumers of utility services provided by "any water or heat, light and power company or other corporations coming within the provisions of Chapter 26" of Title 58.1. § 58.1-3814(B) allows the locality to impose the tax following notice to "the registered agent of the utility corporation that is required to collect the tax."
Chapter 26 of Title 58.1, §§ 58.1-2600 through 58.1-2690 ("Chapter 26"), provides for state taxation of public service corporations, including water companies. Under § 58.1-2626(A), "[e]very corporation doing in the Commonwealth the the business of furnishing water" is subject to an annual state license tax.
Sections 13.1-620(G) and 13.1-626 require a water or sewer company established after 1970 that serves more than fifty customers to file articles of incorporation stating that the corporation is to conduct business as a public service company. Under § 13.1-620(G), a water or sewer company established before 1970 that serves over fifty customers is subject to rate regulation upon application of the company or a majority of its customers.
II. Privately Owned Unincorporated Water System Not Public Service Corporation for Tax Purposes
Section 58.1-3814(A), by its plain language, limits the authority for local consumer utility taxes to those utility services provided by public service corporations subject to state taxation under Chapter 26. Statutes imposing taxes are strictly construed, with any reasonable doubt resolved against taxation. See, e.g., Commonwealth v. General Electric Company 236 Va. 54, 64, 372 S.E.2d 599, 605 (1988); see also Att'y Gen. Ann. Rep.: 1971-1972 at 418 (before 1971 amendment, county could not impose consumer utility tax on utility services provided by municipality); 1969-1970 at 255, 256 (predecessor statute to § 58.1-3814 did not authorize tax on consumers of bottled gas because sale of bottled gas is not utility service).
The State Corporation Commission (the "Commission") is the agency responsible for administering state taxes on public service corporations under Chapter 26. The Commission's Office of General Counsel advises me that an unincorporated water system serving a private subdivision would not be treated as a public service corporation subject to the annual state license tax imposed by § 58.1-2626. Under the Commission's long-standing administrative interpretation, the filing of articles of incorporation with the clerk of the Commission pursuant to §§ 13.1-620(G) and 13.1-626 triggers taxation under § 58.1-2626.
The administrative interpretation of tax statutes is entitled to great weight. See, e.g., Commonwealth v. General Electric Co., 236 Va. at 64, 372 S.E.2d at 605; Commonwealth v. Stringfellow, 173 Va. 284, 289, 4 S.E.2d 357, 359 (1939); 3A Norman J. Singer, Sutherland Statutory Construction § 66.04 (Sands 4th ed. 1986). The General Assembly is also presumed to be aware of long-standing administrative interpretations. See 17 M.J. Statutes § 58, at 345 & n.3 (1979) (collecting cases).
Section 58.1-3814(A) links authority for local consumer utility taxes to whether the private entity providing the service also is taxable by the Commonwealth under Chapter 26. Under the Commission's administrative interpretation, a privately owned water system that is not required to incorporate as a public service corporation under §§ 13.1-620(G) and 13.1-626 is not subject to state taxation under § 58.1-2626.
In my opinion, therefore, a county may only impose a consumer utility tax under § 58.1-3814 on consumers of water service provided by a privately owned water system if that system also is subject to state taxation as a public service corporation under § 58.1-2626.1
1 The fact that not all consumers are subject to tax does not alter this conclusion. Differing tax treatment of utility consumers has been approved in prior Opinions of this Office. See, e.g., Att'y Gen. Ann. Rep.: 1981-1982 at 350; 1971-1972 at 419. These Opinions implicitly reject a prior Opinion reaching a contrary conclusion. See 1969-1970 Att'y Gen. Ann. Rep. 294.
Attorney General's Opinion