Tax Type
General Provisions
Description
Interest on overpayments
Topic
Local Power to Tax
Local Taxes Discussion
Penalties and Interest
Date Issued
03-14-2000
| The Honorable Ray A. Conner Commissioner of the Revenue for the City of Chesapeake |
You ask whether a locality must pay interest on a refund arising from overpayment of an assessment that was taxed erroneously because the taxpayer failed to provide accurate and sufficient information.
You also ask for guidance regarding the effective date of the payment of interest on the overpayment of taxes resulting from the correction of an erroneous assessment.1 Finally, you ask whether interest is to be paid on any penalty and interest that had been assessed on the payment.
Prior to July 1, 1999, and pursuant to § 58.1-3991 of the Code of Virginia,2 interest on a refund of local taxes was awarded only if provision for the payment of interest was contained in an ordinance adopted by the affected local government.3 The 1999 Session of the General Assembly repealed this section4 but amended other related sections to include the payment of interest on the overpayment of taxes to the taxpayer,5 such repeal and amendments made effective July 1, 1999.6 Specifically, § 58.1-3916 mandates that ``[a] locality that provides for payment of interest on delinquent taxes shall provide for interest at the same rate on overpayments due to erroneously assessed taxes to be paid to the taxpayer.' Additionally, the section mandates a court to award interest on the overpayment of taxes.7 Furthermore, interest on overpayments is also incorporated in § 58.1-3918 for localities that have no ordinance regulating interest, and in § 58.1-3981, which provides for the correction of erroneous assessments by the commissioner of the revenue.
A primary goal of statutory interpretation is to ascertain the intent of the legislature.8 Reading these statutes together,9 it is clear that the repeal of § 58.1-3991, coupled with the inclusion of interest on overpayments in the other statutes noted above, indicates that the General Assembly intended to make mandatory the payment of interest on the overpayment of taxes by a taxpayer. This Office has previously concluded that taxpayer mistakes do not abrogate the duty of the commissioner of the revenue to correct an erroneous assessment,10 and that a commissioner of the revenue may not deny a correction ``based on equitable factors such as the taxpayer's mistake.'11 For example, where a taxpayer files a tangible personal property return based on a method of valuing property that results in a higher valuation than the commissioner of the revenue had determined the valuation, this Office has concluded that the commissioner was obliged to correct the assessment and refund the overpayment of taxes with interest accordingly.12 Similarly, it is my opinion that the award of interest on an overpayment is not tied to equitable factors such as the taxpayer's mistake or fault. Therefore, where there is statutory authority allowing payment of such interest, it is ``recoverable from the government upon refund of taxes erroneously assessed, collected and ordered refunded.'13
You next inquire as to the effective date of the payment of interest on overpayments. Generally, amendments are not retroactively applied unless the legislature evinces the intent to do so.14 Nothing in the language of these amendments suggests that the General Assembly intended for interest awarded on overpayments to be applied prior to July 1, 1999. Thus, with respect to assessments made prior to such date, it is my opinion that interest on the overpayment of taxes arising from the correction of an erroneous assessment is effective as of July 1, 1999, and computed from that day forward.
Lastly, you inquire as to whether interest on an overpayment includes interest on any penalty and interest that had been imposed due to late payment of the tax. Prior opinions of the Attorney General consistently conclude that taxpayers are responsible for the timely payment of the taxes due on their properties.15 Governing bodies have the authority to impose penalty and interest on delinquent taxes.16 To the extent, however, that such penalty and interest is calculated on a part of the payment that later is determined not to have been owed, such amounts should be refunded with interest.
1 I assume from the facts presented that there is no ordinance regarding the payment of interest on the overpayment of taxes.
2 See 1984 Va. Acts ch. 675, at 1178, 1462.
3 See City of Winchester v. American Woodmark Corp., 250 Va. 451, 460, 464 S.E.2d 148, 153 (1995).
4 See 1999 Va. Acts ch. 631, cl. 2, at 980, 982.
5 See id. at 980-82 (amending and reenacting, among others, §§.58.1-3916, 58.13918, 58.1-3981).
6 See § 1-12(A) (requiring that laws enacted at regular session of General Assembly take effect on July 1 following adjournment of session).
7 See also § 58.1-3984 (allowing aggrieved taxpayer or commissioner of revenue to apply to appropriate circuit court for correction of erroneous assessment); § 58.1-3987 (mandating interest on court ordered refund of taxes).
8 See Turner v. Commonwealth, 226 Va. 456, 459, 309 S.E.2d 337, 338 (1983).
9 See Prillaman v. Commonwealth, 199 Va. 401, 405-06, 100 S.E.2d 4, 7-8 (1957); 1996 Op. Va. Att'y Gen. 134, 135 (statutes relating to same subject should be considered in pari materia).
10 1983-1984 Op. Va. Att'y Gen. 346, 347.
11 1991 Op. Va. Att'y Gen. 282, 284.
12 Id.
13 Railway Express v. Commonwealth, 196 Va. 1069, 1072, 87 S.E.2d 188, 190 (1955); accord Board of Sup. v. FCS Building Association, 254 Va. 464, 466, 492 S.E.2d 634, 636 (1997); City of Winchester v. American Woodmark, 250 Va. at 459, 464 S.E.2d at 153.
14 1991 Op. Va. Att'y Gen., supra, at 284.
15 See Op. Va. Att'y Gen.: 1987-1988 at 536, 537-38; 1981-
1982 at 350, 351; 1971-1972 at 382.
16 See, e.g., § 58.1-3916.
Attorney General's Opinion