Document Number
05-77
Tax Type
Motor Vehicle Fuel Sales Tax
Description
Transportation district imposing the two percent motor vehicle fuel tax
Topic
Exemptions
Date Issued
05-26-2005



May 26, 2005



Dear *********************:

This letter responds to your e-mail correspondence and discussions with members of my staff addressing the question whether there is any exemption from the two percent motor vehicle fuel sales tax imposed in certain transportation districts. You indicate that the county in which your business is located is considering joining a transportation district and that such an action would have a detrimental effect on your business and its employees as it competes for motor vehicle fuel sales with other similar businesses located elsewhere outside of a transportation district. You also expressed your belief that, in years past, an exemption had been granted by the Department of Taxation to a business similar to yours located in another county.

The Code of Virginia charges the Department of Taxation with the administration of the two percent motor vehicle fuel sales tax imposed in transportation districts. Va. Code § 58.1-1719 et seq. There is no statutory authority that would allow the Department to exempt businesses from collecting the tax on sales of motor vehicle fuels, for any reason. Va. Code § 58.1-1720. As noted in Title 23 of the Virginia Administrative Code, § 10-240-220, the tax is imposed on all retail sales of motor vehicle fuel whereby delivery is made within a transportation district except when such retail sales are specifically exempt from the Virginia Retail Sales and Use Tax Act.

To the extent that Public Document 86-188, which addresses motor fuel sold to common carriers and contract carriers, may be read as having some effect on the question of exempt sales, it is no longer applicable. The exemption from the retail sales and use tax for common carriers of property or passengers by motor vehicle was repealed by the 2004 General Assembly, effective September 1, 2004. See Chapter 3, 2004 Acts of Assembly, Special Session I. Accordingly, any business located in a transportation district imposing the two percent motor vehicle fuel sales tax must collect the tax on all sales, in accordance with Va. Code § 58.1-1719, et seq. We are aware of no exceptions.

We have completed our investigation into your suggestion that the Department of Taxation granted an exemption from collecting the two percent sales tax on motor vehicle fuel to another business similar to yours located in another county. I can say unequivocally that, for the reasons set forth above, the Department never granted such an exemption.

We understand that county officials are conducting their own investigation into the matter. There is an unconfirmed allegation that either a past board of supervisors in that county, or one or more members thereof acting on behalf of the board of supervisors, may have attempted to grant an exemption from the transportation district two percent motor vehicle fuel sales tax to a specific business in the county. Upon these very limited facts, it is my opinion that such an attempt would be an unlawful act that had no legal effect. Neither the board of supervisors nor any local official has the authority to grant an exemption from the tax. First, there is no exemption in the law or regulation, and second, it is a transportation district tax imposed, enforced and collected by state authority for which local government has no say whatsoever, except to decide whether to join the transportation district. Va. Code §§ 15.2-4515 C, 15.2-4529 and 58.1-1720. The local government may not decide to join the transportation district on a selective basis that covers some businesses in the area of the transportation district, but not others.

If the county and the transportation district commission take the appropriate action to enlarge the district into the new county, or part thereof, the two percent motor vehicle fuel tax applies to all retailers of motor fuels in the county, or part thereof, included in the transportation district, with no exception. Va. Code §§ 15.2-4529 and 58.1-1720. While it is possible for a new jurisdiction to join an existing transportation district with territory constituting less than the entire jurisdiction, such a move can only occur with the mutual agreement of the transportation district commission. Va. Code § 15.2-4529.

This letter is a public document and may be disclosed to other private and governmental entities.
                • Sincerely,

                    • Kenneth W. Thorson
                      Tax Commissioner


AR/55650


Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46