If a Virginia county treasurer used the wrong school census numbers to split local sales tax revenue between towns, can the county recover the overpayments through the state's error-correction process, or does the county have another way to claw it back?

Plain-English summary

Tazewell County's treasurer distributes a portion of the county's local sales tax revenue to incorporated towns each month under § 58.1-605(H). The split is supposed to be based on school-age population ratios from the latest statewide school census. The school division gave the treasurer outdated or incorrect census data, so one town was shortchanged while three other towns received more than they should have. The county attorney asked two related questions: (1) could the county recover the overpayments using the error-correction process in § 58.1-605(F), and (2) did wrong school census data even constitute an "error made in any such payment" under (F)?

Acting AG William Mims separated the two halves of the sales-tax payment flow. Section 58.1-605(F) governs payments made by the Comptroller of Virginia to counties, with a six-month correction window for "errors" or other necessary adjustments. Section 58.1-605(H) governs the downstream distribution by the county treasurer to towns within that county. The (F) error-correction process belongs to the Comptroller-to-county flow, and the county treasurer doesn't act as the Comptroller's agent when paying towns under (H). So (F) does not provide a refund mechanism for the county's overpayments to the towns, and the school census data error wasn't an "error" within (F)'s meaning.

But the county wasn't out of luck. Section 58.1-3133(A) was amended in 2001 to add "and other charges" to a treasurer's general setoff authority. The treasurer may, when paying a warrant lawfully drawn in favor of a party, deduct from that warrant any taxes "and other charges" the party owes. The AG concluded that the overpayments to the three towns counted as "other charges" the towns owed the county; the treasurer could deduct them from future § 58.1-605(H) warrants drawn for those towns. That gives the county a setoff route, even though the (F) correction route does not work.

The opinion is careful to note that § 58.1-605(F) does not authorize the county treasurer to act as an agent of the Comptroller of Virginia in making § 58.1-605(H) distributions to towns. The two payment streams are statutorily distinct, and the county attorney's stipulation to the contrary was rejected.

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.

Background and statutory framework

Virginia's state sales and use taxes are imposed by §§ 58.1-603 and 58.1-604. Local sales taxes piggyback under § 58.1-606. The state collects, then distributes the local portion through § 58.1-605.

The mechanics matter here:

• § 58.1-605(F) sets up the monthly payment from the Comptroller to each county or city of the local sales tax money that flowed into the state treasury. It also creates an error-correction process: if errors are made in those payments, or adjustments are otherwise necessary (refunds to taxpayers, dealer misallocations, etc.), the correction is spread across the next six months, with one-sixth of the total adjustment included in each month's payment. There's a three-year lookback for refunds of money erroneously not paid to the locality.
• § 58.1-605(H) is a separate downstream distribution. In a county where an incorporated town meets certain qualifications (separate special school district status, four-year compliance with charter election provisions before the sales tax ordinance was adopted, etc.), one-half of the county's payments are subject to a further split: the county treasurer pays each qualifying town "the proper proportionate amount received by him in the ratio that the school age population of each such town bears to the school age population of the entire county, based on the latest statewide school census."
• § 58.1-3133(A) is the treasurer's general setoff statute: "In the payment of any warrants lawfully drawn, the treasurer paying such warrants may first deduct all taxes and other charges due from the party in whose favor the warrant is drawn. If such warrant is insufficient to pay the entire amount due, then such treasurer shall credit the bill for such taxes or other charges by the amount of the warrant." The "and other charges" phrase was added by 2001 Va. Acts ch. 801.

A 1987 AG opinion had interpreted the pre-2001 version of § 58.1-3133 narrowly, allowing only delinquent county or city tax setoffs. The 2001 amendment broadened the setoff. The presumption is that the General Assembly amends with full knowledge of existing law and intends to change it; the AG treated "other charges" as a deliberate expansion that picks up debts beyond delinquent taxes.

Common questions

Why isn't a school census data error a § 58.1-605(F) 'error'?

Section 58.1-605(F) speaks to errors in the Comptroller's monthly payments to a county or city. The Comptroller did not make the error here. The county treasurer made the error after the Comptroller's payment reached the county, when distributing under (H). The two statutes describe distinct steps in the cash flow, and the (F) process is internal to the (F) step.

Could Tazewell County have just demanded the three overpaid towns return the money?

The AG's opinion notes that the towns "clearly were not entitled to receive such funds and did so without statutory authority." That suggests a common-law restitution claim might lie if a town did not voluntarily return the overage. But the practical statutory mechanism the opinion endorses is treasurer setoff under § 58.1-3133(A): no separate suit needed, the treasurer can deduct the overpayment from future warrants.

What's the limit on how much the treasurer can deduct in any given month?

Section 58.1-3133(A) does not impose a percentage cap; it says "the treasurer paying such warrants may first deduct all taxes and other charges due." If a warrant is too small to cover the full charges due, the statute says the treasurer "shall credit the bill for such taxes or other charges by the amount of the warrant," meaning the setoff continues across multiple warrants until the debt is satisfied. The opinion does not address whether the county owes additional process to the towns before exercising the setoff.

Who owes the shortchanged town the money it didn't get?

The opinion does not directly resolve that. The (F) three-year refund lookback applies to amounts "erroneously not paid to the city or county" by the Comptroller, not to amounts erroneously not paid by the county treasurer to a town. The shortchanged town's claim would presumably be a contract or restitution claim against the county (and possibly the school division for supplying the wrong data), but that question is outside the opinion's scope.

What kind of "other charges" can be set off under § 58.1-3133(A)?

The opinion concludes that mistaken sales-tax overpayments to towns qualify as "other charges due." The 2001 amendment intentionally broadened the setoff beyond delinquent local taxes, and the AG treated the broadening as covering any debt owed to the local government. The opinion does not catalogue every type of charge that would qualify.

Citations

• Va. Code Ann. § 58.1-605(F) (Comptroller payments to counties; six-month error correction)
• Va. Code Ann. § 58.1-605(H) (county treasurer payments to towns based on school census)
• Va. Code Ann. § 58.1-3133(A) (treasurer setoff for taxes and other charges)
• 2001 Va. Acts ch. 801 (amendment adding "and other charges" to § 58.1-3133)
• 1986-1987 Op. Va. Att'y Gen. 290 (narrow pre-amendment reading of § 58.1-3133)
• Wisniewski v. Johnson, 223 Va. 141, 286 S.E.2d 223 (1982) (presumption that amendment changes existing law)
• Cape Henry Towers, Inc. v. Nat'l Gypsum Co., 229 Va. 596, 331 S.E.2d 476 (1985) (same)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2009/09-040-Young.pdf

Original opinion text

COMMONWEALTH OF VIRGINIA
Office of the Attorney General
William C. Mims, Attorney General

September 1, 2009

C. Eric Young, Esq.
Tazewell County Attorney
108 East Main Street
Tazewell, Virginia 24651

Dear Mr. Young:

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

Issues Presented

You ask whether payments erroneously made to towns by the county treasurer under § 58.1-605(H) may be refunded to such county pursuant to § 58.1-605(F). You also ask whether the distribution by the county treasurer to a town based on incorrect school census data constitutes an "error made in any such payment" pursuant to § 58.1-605(F).

Response

It is my opinion that payments erroneously made to towns by the county treasurer under § 58.1-605(H) may not be refunded to Tazewell County pursuant to § 58.1-605(F). Further, it is my opinion that the distribution by the county treasurer to a town that was based on incorrect school census data does not constitute an "error made in any such payment" under § 58.1-605(F). However, it is my opinion that § 58.1-3133(A) permits the treasurer to deduct the overpayments as "other charges" to recoup those amounts.

Background

You advise that the treasurer of Tazewell County, as directed by § 58.1-605(H), has distributed sales tax revenues to the incorporated towns in the County based on the school age populations in each town. You advise that it appears the school division did not provide the treasurer with the correct or most recent school census data. Consequently, one town received less funds while three other towns received more funds than would have been due had the correct data been used to calculate the distributions.

You conclude that future allocations to the three towns may be decreased as a refund of amounts paid in error as provided in § 58.1-605(F), in which case you conclude the county treasurer would be acting as an agent of the Comptroller of Virginia.[1]

Applicable Law and Discussion

The power of a local governing body, unlike that of the General Assembly, "must be exercised pursuant to an express grant"[2] because the powers of a county "are limited to those conferred expressly or by necessary implication."[3] "If the power cannot be found, the inquiry is at an end."[4] The Dillon Rule requires a narrow interpretation of all powers conferred on local governments since they are delegated powers.[5] Therefore, any doubt as to the existence of power must be resolved against the locality.[6]

The Dillon Rule of strict construction is applicable to local constitutional officers.[7] Article VII, § 4 of the Constitution of Virginia creates the office of treasurer and provides that a treasurer's duties "shall be prescribed by general law or special act."[8] The powers and duties of a local treasurer are set out generally in Article 2, Chapters 31[9] and 39[10] of Title 58.1. A county treasurer is responsible for collecting taxes and other revenues payable into the treasury of the locality he serves.[11]

Sections 58.1-603 and 58.1-604 impose a tax on the retail sale or consumption of tangible personal property within the Commonwealth. Pursuant to § 58.1-606, cities and counties may also impose sales and use taxes to be collected with the state tax imposed under §§ 58.1-603 and 58.1-604.

In the context of the question that you present, § 58.1-605(F) provides that:

As soon as practicable after the local sales tax moneys have been paid into the state treasury in any month for the preceding month, the Comptroller shall draw his warrant on the Treasurer of Virginia in the proper amount in favor of each city or county entitled to the monthly return of its local sales tax moneys, and such payments shall be charged to the account of each such city or county under the special fund created by this section. If errors are made in any such payment, or adjustments are otherwise necessary, whether attributable to refunds to taxpayers, or to some other fact, the errors shall be corrected and adjustments made in the payments for the next six months as follows: one-sixth of the total adjustment shall be included in the payments for the next six months. In addition, the payment shall include a refund of amounts erroneously not paid to the city or county and not previously refunded during the three years preceding the discovery of the error. A correction and adjustment in payments described in this subsection due to the misallocation of funds by the dealer shall be made within three years of the date of the payment error.

Section 58.1-605(H) provides, in pertinent part, that:

One-half of such payments to counties are subject to the further qualification ..., that in any county wherein is situated any incorporated town not constituting a separate special school district which has complied with its charter provisions providing for the election of its council and mayor for a period of at least four years immediately prior to the adoption of the sales tax ordinance, the county treasurer shall pay into the town treasury of each such town for general governmental purposes the proper proportionate amount received by him in the ratio that the school age population of each such town bears to the school age population of the entire county, based on the latest statewide school census.

Generally, the object of statutory construction is the ascertainment of legislative intent.[12] Section 58.1-605(F) clearly provides that the Comptroller of Virginia is to pay over to the county the monthly return of its local sales tax moneys. Furthermore, the General Assembly provides that all errors are to be "corrected and adjustments made in the payments for the next six months."[13] The statutory reference to the Comptroller of Virginia making payments to the county and correction of errors made in such payments must be viewed within the context of the statutory provision, rather than isolated from the rest of the text of the statute.[14] Applying the plain language of the statute to mean that a county treasurer acts as an agent of the Comptroller when making payments into the town treasury under § 58.1-605(H) would be a result that is not supported by the plain language of the statute.[15]

Section 58.1-3133(A) relates to the duties of a local treasurer:

In the payment of any warrants lawfully drawn, the treasurer paying such warrants may first deduct all taxes and other charges due from the party in whose favor the warrant is drawn. If such warrant is insufficient to pay the entire amount due, then such treasurer shall credit the bill for such taxes or other charges by the amount of the warrant.

A 1987 opinion of the Attorney General ("1987 Opinion") interpreted the language of § 58.1-3133 in effect at that time as it related to the authority of a treasurer to deduct funds from the regular paycheck of a regional jail employee, a county resident who owed taxes to the county.[16] In 1987, the first sentence of § 58.1-3133 did not include the phrase "and other charges."[17] The 1987 Opinion concludes that § 58.1-3133 should be construed to permit only the setoff of delinquent county or city taxes against county or city warrants drawn in favor of the taxpayer.[18] The 2001 Session of the General Assembly amended the first sentence of § 58.1-3133(A) to add the phrase "and other charges."[19] When the General Assembly amends existing legislation by adding new provisions, a presumption arises that it "acted with full knowledge of, and in reference to, the existing law upon the same subject and the construction placed upon it by the courts."[20] Further, it is presumed that the General Assembly purposefully acted with the intent to change existing law.[21] The common or ordinary meaning of the term "party" is "[o]ne who takes part in a transaction."[22] The towns that you describe certainly are parties to the transaction of receiving payments made by the county treasurer pursuant to § 58.1-605(H). Therefore, it is my opinion that § 58.1-3133(A) authorizes a county treasurer to deduct "other charges due" from the towns from future warrants drawn by the county treasurer for payment into the town treasury of funds received from the Comptroller under § 58.1-605(F).

In conclusion, the treasurer relied on incorrect school census figures to make an incorrect deposit that was not authorized by law. Likewise, the towns receiving the amounts paid by the county treasurer clearly were not entitled to receive such funds and did so without statutory authority because the deposit was based upon the incorrect data. Accordingly, the towns receiving the incorrect amount must return the overages to the county. If they do not do so voluntarily, § 58.1-3133(A) permits the treasurer to deduct all "other charges" due from the party "in whose favor the warrant is drawn." Accordingly, the county treasurer may deduct such overages as "other charges" due from the towns in subsequent warrants drawn pursuant to § 58.1-605(H).

Conclusion

Accordingly, it is my opinion that payments erroneously made to towns by the county treasurer under § 58.1-605(H) may not be refunded to Tazewell County pursuant to § 58.1-605(F). Further, it is my opinion that the distribution by the county treasurer to a town that was based on incorrect school census data does not constitute an "error made in any such payment" under § 58.1-605(F). However, it is my opinion that § 58.1-3133(A) permits the treasurer to deduct the overpayments as "other charges" to recoup those amounts.

Thank you for letting me be of service to you.

Sincerely,

William C. Mims

1. Section 2.2-505(B) requires that an opinion request from a county attorney "shall itself be in the form of an opinion embodying a precise statement of all facts together with such attorney's legal conclusions."
2. Nat'l Realty Corp. v. Va. Beach, 209 Va. 172, 175, 163 S.E.2d 154, 156 (1968).
3. Bd. of Supvrs. v. Horne, 216 Va. 113, 117, 215 S.E.2d 453, 455 (1975) (noting corollary to Dillon Rule).
4. Commonwealth v. County Bd., 217 Va. 558, 575, 232 S.E.2d 30, 41 (1977).
5. See Bd. of Supvrs. v. Countryside Inv. Co., 258 Va. 497, 504-05, 522 S.E.2d 610, 613-14 (1999) (holding that county board of supervisors does not have unfettered authority to decide what matters to include in subdivision ordinance; must include requirements mandated by Land Subdivision and Development Act and may include optional provisions contained in act); Op. Va. Att'y Gen: 2002 at 77, 78; 1974-1975 at 403, 405.
6. 2A EUGENE MCQUILLEN, THE LAW OF MUNICIPAL CORPORATIONS § 10.19, at 369 (3d ed. 1996); see also Op. Va. Att'y Gen.: 2002 at 83, 84; 2000 at 75, 76.
7. See, e.g., Op. Va. Att'y Gen.: 2006 at 200, 201; 1984-1985 at 284, 284.
8. See also VA. CODE ANN. § 15.2-1600(A) (2008) (parallel statute).
9. VA. CODE ANN. §§ 58.1-3123 to 58.1-3172.1 (2004) (codified in scattered sections). For purposes of Chapter 31 of Title 58.1, the term "treasurer" applies to city, county, and town treasurers and to directors of finance and any other officers who perform the duties of a treasurer, unless the context indicates otherwise. See § 58.1-3123.
10. Sections 58.1-3910 to 58.1-3938 (2004 & Supp. 2008) (codified in scattered sections). Chapter 39 of Title 58.1, §§ 58.1-3900 through 58.1-3993, addresses the collection of local taxes. Chapter 39 does not define the term "treasurer." Some sections within Chapter 39 refer to "county and city treasurer" while others refer to "treasurer" without apparent distinction.
11. Sections 58.1-3127(A); 58.1-3910 (2004).
12. See Vollin v. Arlington County Electoral Bd., 216 Va. 674, 678-79, 222 S.E.2d 793, 797 (1976) ("It is the intention of the lawmaker that constitutes the law."); see also London Bros. v. Nat'l Exchange Bank, 121 Va. 460, 466-67, 93 S.E. 699, 700 (1917); Kain v. Ashworth, 119 Va. 605, 608, 89 S.E. 857, 858 (1916) (noting that legislative intent is to be gathered from words used unless literal interpretation leads to manifest absurdity). "The ascertainment of legislative intention involves appraisal of the subject matter, purposes, objects and effects of the statute, in addition to its express terms." Vollin, 216 Va. at 679, 222 S.E.2d at 797.
13. Section 58.1-605(F) (Supp. 2008).
14. Turner v. Commonwealth, 226 Va. 456, 460, 309 S.E.2d 337, 339 (1983) (noting that maxim, noscitur a sociis, provides that meaning of word must be determined in relation to surrounding language and must be read in harmony with its context). Furthermore, it is well established that statutes should not be read in isolation. See, e.g., 2B NORMAN J. SINGER & J.D. SHAMBIE SINGER, SUTHERLAND STATUTORY CONSTRUCTION § 51:2 (West 7th ed. 2008); Op. Va. Att'y Gen.: 2008 at 16, 18; 1999 at 22, 22; 1998 at 123, 124; 1996 at 197, 198; 1992 at 108, 112.
15. See London Brothers, 121 Va. at 466-67, 93 S.E. at 700; Kain, 119 Va. at 608, 89 S.E. at 858 (noting that legislative intent to be gathered from words used unless literal interpretation leads to manifest absurdity).
16. See 1986-1987 Op. Va. Att'y Gen. 290, 290.
17. See 2001 Va. Acts ch. 801, at 1094, 1094 (adding phrase "and other charges" to first sentence of § 58.1-3133); see also § 58.1-3133 (1984) (providing that "[i]n the payment of any warrants lawfully drawn, the treasurer paying such warrants may first deduct all taxes due from the party in whose favor the warrant is drawn").
18. See 1986-1987 Op. Va. Att'y Gen., supra note 16, at 292.
19. See supra note 17.
20. City of Richmond v. Sutherland, 114 Va. 688, 693, 77 S.E. 470, 472 (1913).
21. Cape Henry Towers, Inc. v. Nat'l Gypsum Co., 229 Va. 596, 600, 331 S.E.2d 476, 479 (1985); Wisniewski v. Johnson, 223 Va. 141, 144, 286 S.E.2d 223, 224-25 (1982); Sutherland, 114 Va. at 693, 77 S.E. at 472.
22. BLACK'S LAW DICTIONARY 1231 (9th ed. 2009). When a particular word in a statute is not defined therein, it must be given its ordinary meaning. See McKeon v. Commonwealth, 211 Va. 24, 27, 175 S.E.2d 282, 284 (1970).