December 13, 2017
Dear *****:
This is in response to your ruling request regarding ***** ability to recover cable franchise fees that were under-reported by a local cable television provider. The corrected total amount of the cable franchise fees is less than the percentage distribution due to the locality from the Communications Sales and Use Tax Trust Fund (“the Fund”) for the period.
Public Document (P.D.) 17-27 (March 17, 2017) explained that a cable provider's obligation to pay a monetary franchise fee based on gross revenues is fulfilled with its filing of Form CT-75, Virginia Communications Taxes Return and Form CT-75B, Virginia Cable Franchise Fee Schedule with the Department.
Code of Virginia § 58.1-662 ensures that every locality receives the full cable franchise fee due from its cable providers before any locality receives a distribution based on its percentage share of the revenues deposited in the Fund.
In the situation you describe, where a cable provider has under-reported its franchise fee, the distribution provision can only result in an increased distribution to the locality when the franchise fee owed to the locality exceeds its percentage distribution from the Fund. See the Guidelines and Rules for the Virginia Communications Taxes, P.D. 06-138 (November 1, 2006) for examples of Fund distributions.
I hope the above information responds to your inquiry. The Code of Virginia section cited is available online at www.law.lis.virginia.gov. The public documents cited are available online in the Department's Laws, Rules and Decisions library at www.tax.virginia.gov/laws-rules-decisions.
If you should have any additional questions about this ruling, please contact ***** at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
PD/1-6554259693.sk