Can a small business owner choose to pay personal property tax on a company car in the county where the employee parks it overnight, instead of the county where the business is based?

Plain-English summary

Virginia's tangible personal property tax (the "car tax") is normally based on where you keep your car: it's taxed by the locality where the vehicle is "normally garaged, docked, or parked." That works fine for personal vehicles. But what about a small business with one or two cars, like a plumbing service or a contractor, where the company's vehicles get driven home overnight by employees who live in different localities than the business?

Section 58.1-3511(A)(ii) addresses exactly that. For business vehicles weighing 10,000 pounds or less, it sends the tax situs to the locality where the business is "directed or controlled" and has a definite place of business, not where the employee parks the company car at home. Arlington County's Commissioner of the Revenue, Ingrid Morroy, applied that rule to tax those business vehicles in Arlington when the business was headquartered there, over objections from owners who said the car was kept in another county.

The drafting question Morroy raised was whether § 58.1-3511(A)(ii) was mandatory or whether it gave the business owner an election. The trailing "provided" clause about the owner showing evidence of having paid personal property tax in the business locality could be read as making the alternative situs conditional on the owner's choice to file there.

Attorney General Bob McDonnell ruled that the alternative situs is mandatory. The trailing "provided" clause is the documentation requirement, not an opt-out. If you have a business vehicle weighing 10,000 pounds or less and you operate a definite place of business in a Virginia locality, your vehicle is taxed there, period. Commissioners of the revenue in business-headquarters localities can require business owners to pay there, and commissioners in employee-home localities should expect the business vehicle to be classified to the business location.

Currency note

This opinion was issued in 2009. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. Personal property tax statutes in Virginia are amended regularly; check the current Va. Code § 58.1-3511 before relying on the specifics.

Background and statutory framework

Virginia's tangible personal property tax on motor vehicles is administered at the local level, but the statutes that say which locality gets to tax which vehicle are state law. Section 58.1-3511 contains the situs rules.

Subsection (A) starts with the default rule: a vehicle is taxed in the locality where it is normally garaged, docked, or parked. That works for personal vehicles. Subsection (A)(ii) carves out an alternative for business vehicles weighing 10,000 pounds or less: the situs is "the locality from which the use of such vehicle is directed or controlled and in which the owner's business has a definite place of business, as defined in § 58.1-3700.1." A "definite place of business" under § 58.1-3700.1 is, broadly, an office or location at which a regular and continuous course of dealing for thirty consecutive days or more occurs. A person's residence can be a definite place of business under specified conditions.

The "provided" clause at the end of § 58.1-3511(A)(ii) reads: "provided such owner has sufficient evidence that he has paid the personal property tax on the business vehicles to such locality." That language created the ambiguity. Was it a condition precedent (the alternative situs applies only if the owner has chosen to pay there)? Or a documentation requirement (the alternative situs applies and the owner must show evidence of paying in the business locality)?

What the AG concluded, point by point

The statute is mandatory, not optional. "The statutory language mandates that the situs for business vehicles with a weight of 10,000 pounds or less registered in Virginia and used in a business shall be the jurisdiction" where the business operates and is directed or controlled. The word "shall" generally signals a mandatory procedure, citing Andrews v. Shepherd and a string of older AG opinions.

The trailing "provided" clause is a documentation requirement. The owner must have evidence of having paid personal property tax in the business locality. That's the evidentiary standard, not an opt-out. The opinion does not let the owner choose to skip the business locality and pay in the employee's residence locality instead.

The rule serves a clear anti-avoidance purpose. Without § 58.1-3511(A)(ii), a business could escape local taxation in the jurisdiction where it actually operates simply by having employees drive vehicles home to other counties. The General Assembly closed that loophole by tying the situs to the business location.

The General Assembly used plain language and the AG must respect it. Citing Britt Construction, Williams v. Commonwealth, and Industrial Dev. Auth., the opinion repeats that when the General Assembly uses words of plain and definite import, the AG cannot construe them otherwise.

What this meant at the time

For small business owners (as of 2009)

If you operated a definite place of business in one Virginia locality and your business vehicle was driven home by an employee to another, your tax bill went to the business locality. You could not move that tax bill to the employee's home locality, even if the employee preferred that. The "you choose" theory does not work.

For commissioners of revenue in business-headquarters localities (as of 2009)

You could assess business vehicles even if owners objected that the vehicle was actually garaged elsewhere overnight. The statute gave you the authority and the AG opinion endorsed your reading. Documentation: keep records that show the vehicle is owned by a business with a definite place of business in your jurisdiction.

For commissioners of revenue in employee-home localities (as of 2009)

If a taxpayer tried to register a business vehicle for taxation in your locality (the employee's home locality), you had AG support for declining. The vehicle should be assessed in the business locality instead.

For fleet managers (as of 2009)

Make sure your local property tax filings reflect the business-headquarters locality for vehicles weighing 10,000 pounds or less. Misallocations can trigger double assessment if two localities both try to tax.

Common questions

Q: Does this rule apply to heavy trucks (over 10,000 pounds)?
A: No. Section 58.1-3511(A)(ii)'s alternative situs is limited by weight. Vehicles over 10,000 pounds are governed by the general "garaged, docked, or parked" rule of § 58.1-3511(A), with other special rules for certain commercial fleets.

Q: What counts as a "definite place of business"?
A: Section 58.1-3700.1 defines it as an office or location at which a regular and continuous course of dealing happens for at least 30 consecutive days. A residence qualifies if there is no other definite place of business and the person is not subject to peddler or itinerant merchant licensing.

Q: What if a sole proprietor's business and home are in the same locality?
A: There's no conflict. The vehicle is taxed in the locality both for business situs and ordinary garaged-here purposes.

Q: How does this interact with vehicle registration?
A: Virginia's DMV-registration location and the personal property tax situs are different concepts. A business vehicle's tax situs follows § 58.1-3511(A)(ii); its DMV registration is a separate matter.

Citations and references

Statutes:

• Va. Code Ann. § 2.2-505
• Va. Code Ann. § 58.1-3511 (situs of vehicles for personal property tax)
• Va. Code Ann. § 58.1-3518 (annual return)
• Va. Code Ann. § 58.1-3700.1 (definite place of business)
• Va. Code Ann. § 58.1-3916 (alternative filing date)

Cases:

• Britt Constr., Inc. v. Magazzine Clean, LLC, 271 Va. 58 (2006), plain-meaning rule
• Williams v. Commonwealth, 265 Va. 268 (2003)
• Woods v. Mendez, 265 Va. 68 (2003)
• Industrial Dev. Auth. v. Bd. of Supvrs., 263 Va. 349 (2002)
• Alliance to Save the Mattaponi v. Commonwealth, 270 Va. 423 (2005)
• W. Lewinsville Heights Citizens Ass'n v. Bd. of Supvrs., 270 Va. 259 (2005)
• Mozley v. Prestwould Bd. of Dirs., 264 Va. 549 (2002)
• Andrews v. Shepherd, 201 Va. 412 (1959), "shall" generally mandatory

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2009/08-086-Morroy_2.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Robert F. McDonnell, Attorney General

January 26, 2009

The Honorable Ingrid H. Morroy
Arlington County Commissioner of Revenue

Dear Ms. Morroy:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether the alternative situs provision of § 58.1-3511(A)(ii) is mandatory or creates a voluntary taxpayer election.

Response

It is my opinion that the alternative situs provision of § 58.1-3511(A)(ii) is mandatory.

Background

You advise that § 58.1-3511(A)(ii), absent the phrase in the last sentence beginning with "provided," clearly establishes the situs for vehicles with a weight of 10,000 pounds or less and used in a business. Such situs is the locality from which it is "directed or controlled and in which the owner's business has a definite place of business." However, you note that the final phrase of the last sentence appears to place a duty on the owner to show that he paid property taxes in such business locality. You observe that this phrase implies that the owner could choose not to file in the business locality and keep the situs of the vehicle in the jurisdiction where the vehicle normally is garaged.

You advise that at least one neighboring locality, Arlington County, interprets the situs provision to be mandatory. You state Arlington taxes vehicles garaged at the business location over the objections of the owners. Consequently, you ask for guidance.

Applicable Law and Discussion

Section 58.1-3511(A)(ii) provides that

if the owner of a business files a return pursuant to § 58.1-3518[1] for any vehicle with a weight of 10,000 pounds or less registered in Virginia and used in the business with the locality from which the use of such vehicle is directed or controlled and in which the owner's business has a definite place of business, as defined in § 58.1-3700.1,[2] the situs for such vehicles shall be such locality, provided such owner has sufficient evidence that he has paid the personal property tax on the business vehicles to such locality.

Under basic rules of statutory construction, the General Assembly's intent is determined from the plain and natural meaning of the words used.[3] When the language of a statute is unambiguous, the plain meaning of that language is controlling.[4] Thus, when the General Assembly has used words of a plain and definite import, I may not assign to them a construction that would amount to holding that the General Assembly meant something other than that which it actually expressed.[5]

The statutory language at issue is clear and unambiguous. For purposes of the local tangible personal property tax, all vehicles are assessed by the jurisdiction in which the vehicles normally are garaged, docked, or parked, whether they are personal vehicles or vehicles belonging to a business.[6] However, in some cases, a vehicle owned by and used for business may be kept by employees or owners in their own garages. These garages may be located in another jurisdiction having no nexus with the business. Section 58.1-3511(A)(ii) ensures that vehicles which are the property of a business are taxed by the jurisdiction in which the business is located and not where the employee or owner garages the vehicle. The statutory language mandates that the situs for business vehicles with a weight of 10,000 pounds or less registered in Virginia and used in a business shall be the jurisdiction in which the owner of such business: (1) is required to file a tangible personal property tax return for any vehicle used in the business, and (2) has a definite place of business from which the use of the business vehicle is directed or controlled.[7] In addition, the owner must have sufficient evidence that he has paid the personal property tax to such jurisdiction. The use of the word "shall" in statutes generally indicates that the procedures are[8] intended to be mandatory.

Conclusion

Accordingly, it is my opinion that the alternative situs provision of § 58.1-3511(A)(ii) is mandatory.

Thank you for letting me be of service to you.

Sincerely,

Robert F. McDonnell
Attorney General

1. Section 58.1-3518 requires: "Every taxpayer owning any of the property subject to taxation under [Chapter 35 (Tangible Personal Property)] on January 1 of any year shall file a return thereof with the commissioner of the revenue for his county or city on the appropriate forms; however, the commissioner of the revenue may elect not to require such a return from any taxpayer who owns such property which does not have sufficient value to generate a tax assessment. Every person who leases any of such property from the owner thereof on such date shall file a return with the commissioner of the revenue of the county or city wherein such property is located giving the name and address of the owner, except any person leasing a motor vehicle which is subject to the tax imposed under § 58.1-2402. Such returns shall be filed on or before May 1 of each year, except as otherwise provided by ordinance authorized by § 58.1-3916. Every fiduciary shall file the returns mentioned in [Chapter 35] with the commissioner of revenue having jurisdiction. Every taxpayer owning machinery and tools or business personal property, if requested by the commissioner of the revenue, shall include on his annual return of such property information as to the total of original cost by year of purchase. The cost should be the original capitalized cost or the cost that would have been capitalized if the expense deduction in lieu of depreciation was elected under § 179 of the Internal Revenue Code."
2. Pursuant to § 58.1-3700.1, a "definite place of business" means "an office or a location at which occurs a regular and continuous course of dealing for thirty consecutive days or more. A definite place of business for a person engaged in business may include a location leased or otherwise obtained from another person on a temporary or seasonal basis and real property leased to another. A person's residence shall be deemed to be a definite place of business if there is no definite place of business maintained elsewhere and the person is not subject to licensure as a peddler or itinerant merchant."
3. Britt Constr., Inc. v. Magazzine Clean, LLC, 271 Va. 58, 62, 623 S.E.2d 886, 888 (2006); W. Lewinsville Heights Citizens Ass'n v. Bd. of Supvrs., 270 Va. 259, 265, 618 S.E.2d 311, 314 (2005); Mozley v. Prestwould Bd. of Dirs., 264 Va. 549, 554, 570 S.E.2d 817, 820 (2002).
4. Williams v. Commonwealth, 265 Va. 268, 271, 576 S.E.2d 468, 470 (2003); Woods v. Mendez, 265 Va. 68, 74-75, 574 S.E.2d 263, 266 (2003); Industrial Dev. Auth. v. Bd. of Supvrs., 263 Va. 349, 353, 559 S.E.2d 621, 623 (2002).
5. Britt Construction, 271 Va. at 62-63, 623 S.E.2d at 888; Alliance to Save the Mattaponi v. Commonwealth, 270 Va. 423, 439, 621 S.E.2d 78, 87 (2005); Williams, 265 Va. at 271, 576 S.E.2d at 470.
6. See VA. CODE ANN. § 58.1-3511(A) (2004).
7. Id.
8. See Andrews v. Shepherd, 201 Va. 412, 414, 111 S.E.2d 279, 281-82 (1959); Op. Va. Att'y Gen.: 2004 at 168, 169; 1994 at 64, 68.