How does a Virginia commissioner of the revenue assess a farm when part of it sits inside an incorporated town, especially when the county has a use-value program for agriculture but the town doesn't?

Plain-English summary

Northampton County contains five incorporated towns. Some farms span the line between the county and a town, with the bulk of the farm in unincorporated county territory and a small portion inside the town. The county runs an Agricultural Forestal District Program (a use-value taxation program for qualifying farms). Towns inside the county do not necessarily have their own use-value ordinances. The County's Commissioner of the Revenue, Anne Sayers, asked how to properly enter these parcels on the land book and how to apply the use-value program when part of a farm sits inside a town.

Acting AG William Mims gave a four-part answer:

1. The commissioner must list the entire farm as being in the county. The farm is one parcel, and the county's land book records the whole.

2. The commissioner must also list the portion of the farm inside the town as a separate line item entry on the land book. Section 58.1-3302 requires the commissioner to enter town lots separately, with the owner's information, property description, value, and tax at the legal rate.

3. For the county's use-value program, the entire qualifying farm gets the use assessment for county tax purposes. The use-value classification under Va. Const. art. X, § 2 follows the parcel, not the county/town boundary, when the county has adopted the program.

4. For town tax purposes, the portion of the farm inside the town is subject to town taxation. The town does not have a use-value ordinance, so it cannot apply use-value to that portion. Virginia's constitutional uniformity requirement (Va. Const. art. X, § 1) bars exempting town property from town taxes. So the in-town portion is taxed by the town at fair market value (subject to whatever ordinance the town has), even while the same acreage gets county use-value treatment for county tax.

The result is that a single farm parcel produces two assessments on the land book: the whole farm at county use-value (for county tax), with the in-town portion separately listed and subject to additional town taxation.

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 real estate tax framework is constitutionally and statutorily structured.

Va. Const. art. X, § 1 (the uniformity clause): "All property ... shall be taxed. All taxes shall be levied and collected under general laws and shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax." The Supreme Court has long read this clause to require uniformity that is "co-extensive with the territory to which it applies." A county's tax must be uniform across the whole county; a town's tax must be uniform across the whole town. The clause forbids exempting town property from town taxes.

Va. Const. art. X, § 2: "All assessments of real estate and tangible personal property shall be at their fair market value, to be ascertained as prescribed by law." Section 2 also authorizes the General Assembly to classify real estate used for agricultural, horticultural, forest, or open space purposes and to authorize localities to allow deferral or relief from taxes that would otherwise apply. That is the constitutional anchor for use-value taxation.

Section 58.1-3229 to § 58.1-3244 implement the use-value taxation regime. A locality may adopt an ordinance providing that qualifying agricultural, horticultural, forest, or open-space land is assessed at a value reflecting its actual use, rather than fair market value. The General Assembly intends use value to be lower than fair market value. The purpose is to create a financial incentive to preserve land for those uses.

Section 58.1-3301(A) requires the Department of Taxation to prescribe the form of the land book. Section 58.1-3302 requires the commissioner to enter each town lot separately, with the owner's information, property description, value, and tax at the legal rate. Section 58.1-3310 requires the commissioner to retain the original land book and deliver copies to the Department of Taxation, the treasurer, and the clerk of the circuit court.

The Supreme Court has held that art. X, §§ 1 and 2 must be read together: fair market value plus uniformity are the twin principles of property taxation. Where the two cannot be reconciled, uniformity governs as the just and ultimate purpose of the law.

Common questions

Why does the entire farm get listed in the county land book?

Because the farm is a county parcel as a matter of physical location; it sits in the county's geographic territory. The commissioner's job is to list all real property in the county, and the farm is one of those parcels. The fact that part of it overlaps with an incorporated town's boundary does not remove it from the county land book.

Why is the in-town portion listed separately?

Section 58.1-3302 requires it. Town lots must be entered separately on the land book, with their own value and tax. The separate listing supports both the town's taxation of that portion and the proper accounting between county and town.

Why does the entire farm get county use-value treatment if part of it is in a town?

Because the qualifying classification under § 58.1-3229 et seq. and the county's ordinance attaches to the farm as a parcel. The county's program assesses the whole farm at use value for county tax purposes, including the portion that happens to overlap with town territory. The use-value classification does not stop at the town boundary as far as county tax is concerned.

Can the town also give the farm use-value treatment?

Only if the town has adopted its own use-value ordinance. Section 58.1-3231 (the operational counterpart in the use-value statutory framework) requires each locality that wants use value to adopt an ordinance. If the town has not done so, fair market value governs for town tax purposes. The county's ordinance is not transferable.

Doesn't the uniformity clause require the same treatment within the town?

Yes, the town's tax must be uniform across the town. If the town has no use-value ordinance, all qualifying land in the town is taxed at fair market value uniformly. The county's use-value treatment does not "spread" into the town to create an exemption for one parcel while neighboring town properties pay full freight.

What if the farm portion in the town is tiny? Does the town really need to assess it separately?

The statute does not have a de minimis rule. Section 58.1-3302 requires separate entry of town lots. The town can choose how aggressively to actually tax small slivers, but the land book entry obligation is statutory.

Citations

• Va. Const. art. X, § 1 (uniformity within territorial limits of taxing authority)
• Va. Const. art. X, § 2 (fair market value assessment; use-value classification authority)
• Va. Code Ann. §§ 58.1-3229 to 58.1-3244 (use-value taxation)
• Va. Code Ann. § 58.1-3301(A) (form of land book)
• Va. Code Ann. § 58.1-3302 (separate entry of town lots)
• Va. Code Ann. § 58.1-3310 (land book delivery and retention)
• Day v. Roberts, 101 Va. 248, 43 S.E. 362 (1903) (uniformity is co-extensive with taxing territory)
• Tuckahoe Women's Club v. City of Richmond, 199 Va. 734, 101 S.E.2d 571 (1958) (uniformity is paramount over fair market value when in conflict)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2009/09-064-Sayers.pdf

Original opinion text

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

October 20, 2009

The Honorable Anne G. Sayers
Northampton County Commissioner of the Revenue
P.O. Box 65
Eastville, Virginia 23347

Dear Ms. Sayers:

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, when preparing a land book, whether a commissioner of the revenue ("commissioner") is authorized to divide proportionally a farm that is situated in a county and in a town within the county and enter the farm as two separate line items. Further, when such county has a use value program for which the farm qualifies and the town does not have a use value ordinance, you ask whether the entire farm receives the use assessment or only the portion of the farm situated within the county.

Response

It is my opinion that, when preparing a land book, a commissioner of the revenue must assess the entire farm parcel as being in the county even though a portion of such farm is within an incorporated town. Further, the commissioner should assess that portion of the farm located within the town as a separate line item entry on the land book. It is my opinion that for purposes of the county's use value program for which such farm qualifies, the entire farm receives the use assessment for purposes of taxation by the county. Finally, when the town within such county does not have a use value ordinance, it is my opinion the portion of the farm that is within the town is subject to taxation by the town.

Background

You relate that Northampton County, which includes within its boundaries five incorporated towns, has an Agricultural Forest District Program.[1] You note that several tracts or parcels of land in the County have small portions that are also within the geographic boundaries of one of these towns. You relate that it has been the practice of Northampton County for purposes of real property taxation to assess separately the portion of such larger tracts of land that lie within an incorporated town.

You question whether the practice of assessing the parcel as two line items on the tax rolls is the correct way to handle these properties. Therefore, you seek guidance concerning whether the assessment of such a parcel as two entries on the tax rolls is appropriate and authorized by statute.

Applicable Law and Discussion

Section 58.1-3301(A) provides that "[t]he Department of Taxation shall prescribe the form of the land book to be used by the commissioner of the revenue" for a county. Under this authority, the Department of Taxation (the "Department") has prescribed forms that provide for the listing of basic information concerning each parcel of property, including the name and address of the owner, a description of the property, the value of land and improvements, and the amount of tax due.[2] Further § 58.1-3302 provides that the commissioner shall enter each town lot separately in the land book, and shall set forth, among other things, the name and address of the owner, a description of the property, its value and "the amount of tax at the legal rate." Section 58.1-3310 requires "[e]ach commissioner of the revenue [to] retain in his office the original land book" and to deliver a copy to the Department and to the treasurer and the clerk of the circuit court for his county.

Statutory language is ambiguous when it may be understood in more than one way.[3] An ambiguity also exists when statutory language lacks clarity and precision, or is difficult to comprehend.[4] "The province of [statutory] construction lies wholly within the domain of ambiguity, and that which is plain needs no interpretation."[5] When statutory language is clear and unambiguous, however, the plain meaning and intent of the enactment must be given to it.[6] It is my opinion that §§ 58.1-3301 and 58.1-3302 are free of any ambiguities. A commissioner is required as a part of his duties to prepare a land book which separately states the town property.[7]

Successive Virginia constitutions have contained provisions requiring "uniformity" in property taxation.[8] The Constitution of Virginia currently requires uniformity of taxation in Article X, § 1, which provides, in pertinent part, that:

All property, except as hereinafter provided, shall be taxed. All taxes shall be levied and collected under general laws and shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, except that the General Assembly may provide for differences in the rate of taxation to be imposed upon real estate by a city or town within all or parts of areas added to its territorial limits, or by a new unit of general government, within its area, created by or encompassing two or more, or parts of two or more, existing units of general government. [Emphasis added.]

The Supreme Court of Virginia has held that §§ 1 and 2 of Article X relating to property assessments must be construed together.[9] These sections constitute the twin principles of property taxation in the Commonwealth.[10] In pertinent part, § 2 provides that:

All assessments of real estate and tangible personal property shall be at their fair market value, to be ascertained as prescribed by law. The General Assembly may define and classify real estate devoted to agricultural, horticultural, forest, or open space uses, and may by general law authorize any county, city, town, or regional government to allow deferral of, or relief from, portions of taxes otherwise payable on such real estate if it were not so classified, provided the General Assembly shall first determine that classification of such real estate for such purpose is in the public interest for the preservation or conservation of real estate for such uses.

The net result of "these provisions is to distribute the burden of taxation, so far as is practical, evenly and equitably."[11] In addition, the Virginia Supreme Court has held that "where it is impossible to secure both the standard of the true value and the uniformity and equality required by law, the latter requirement is to be preferred as the just and ultimate purpose of the law."[12] Thus, uniformity is viewed as the paramount objective of the taxation of property.[13]

Pursuant to Article X, § 2 and Article 4, Chapter 32 of Title 58.1, §§ 58.1-3229 through 58.1-3244[14], localities may adopt an ordinance providing that land devoted to agricultural, horticultural, forest and open-space use be assessed at a lower value, based on its use.[15] The purpose of the land use assessment statutes is to create a financial incentive to encourage the preservation of land for preferred uses.[16]

The settled construction placed upon [Article X, § 1] is that uniform taxation requires uniformity not only in the rate of taxation, and in the mode of assessment upon the taxable valuation, but the uniformity must be co-extensive with the territory to which it applies. If a tax is imposed by the State, it must be uniform over the whole State; if by a county, city, town, or other subordinate district, the tax must be uniform throughout the territory to which it is applicable.[17]

As noted in a 1970 opinion of the Attorney General, the constitutional requirement of uniformity of taxation "forbids exemption from county taxes of property located in a town."[18] Property located in an incorporated town within a county is subject to taxation by both the county and town.[19] Consequently, the acreage of the entire farm, which qualifies for the Northampton County Agricultural Forestal District Program, must be listed on the county land book as exempt from county taxation. Although exempt from county taxation by the Program, the portion of that same property situate within the town must be listed as a separate line item entry in the land book and is subject to taxation by the town.

Conclusion

Accordingly, it is my opinion that, when preparing a land book, a commissioner of the revenue must include the entire farm parcel as being in the county even though a portion of such farm is within an incorporated town. Further, the commissioner should proportionally assess the portion of the farm located within the incorporated town for entry as a separate line item on the land book. It is my opinion that for purposes of the county's use value program for which such farm qualifies, the entire farm receives the use assessment for purposes of taxation by the county. Finally, when the town within such county does not have a use value ordinance, it is my opinion that the portion of the farm within the town is subject to taxation by the town.

Thank you for letting me be of service to you.

Sincerely,

William C. Mims

1. See NORTHAMPTON COUNTY, VA., CODE OF ORDINANCES § 33.010 (2009), Agricultural and Forestal Districts Program, available at http://www.amlegal.com/nxt/gateway.dll/Virginia/northampton_co_va/titleiiiadministration/chapter33financeandtaxation?f=templates$fn=altmain-nf.htm$3.0#JD_33.010.
2. 1992 Op. Va. Att'y Gen. 173, 174.
3. Supinger v. Stakes, 255 Va. 198, 205, 495 S.E.2d 813, 817 (1998); Va.-Am. Water Co. v. Prince William County Serv. Auth., 246 Va. 509, 514, 436 S.E.2d 618, 621 (1993); Va. Dep't of Labor & Indus. v. Westmoreland Coal Co., 233 Va. 97, 101, 353 S.E.2d 758, 762 (1987).
4. Supinger, 255 Va. at 205, 495 S.E.2d at 817; Lee-Warren v. Sch. Bd., 241 Va. 442, 445, 403 S.E.2d 691, 692 (1991).
5. Winston v. City of Richmond, 196 Va. 403, 408, 83 S.E.2d 728, 731 (1954).
6. Brown v. Lukhard, 229 Va. 316, 321, 330 S.E.2d 84, 87 (1985).
7. 1970-1971 Op. Va. Att'y Gen. 62, 62.
8. See 2 A.E. DICK HOWARD, COMMENTARIES ON THE CONSTITUTION OF VIRGINIA, 1037-40 (1974).
9. See, e.g., Bd. of Supvrs. v. Leasco Realty, Inc., 221 Va. 158, 166, 267 S.E.2d 608, 613 (1980) (noting that Article X, §§ 1 and 2 must be read and construed together); R. Cross, Inc. v. Newport News, 217 Va. 202, 207, 228 S.E.2d 113, 117 (1976) (noting that first two sections of Article X must be construed together); Smith v. City of Covington, 205 Va. 104, 108, 135 S.E.2d 220, 222 (1964) (construing Article XIII, §§ 168 and 169 of 1902 Virginia Constitution, predecessors to Article X, §§ 1 and 2 of 1971 Virginia Constitution); Tuckahoe Women's Club v. City of Richmond, 199 Va. 734, 738, 101 S.E.2d 571, 574 (1958) (noting that §§ 168 and 169 must be read together); Skyline Swannanoa, Inc. v. Nelson County, 186 Va. 878, 881, 44 S.E.2d 437, 439 (1947) (noting that §§ 168 and 169 must be construed together); Lehigh Portland Cement Co. v. Commonwealth, 146 Va. 146, 152, 135 S.E. 669, 671 (1926) (noting that §§ 168 and 169 must be construed together).
10. See R. Cross, 217 Va. at 207, 228 S.E.2d at 117 (noting that principles of taxation required by Virginia Constitution are fair market value and uniformity clauses of Article X).
11. See Skyline Swannanoa, 186 Va. at 881, 44 S.E.2d at 439 (construing Article XIII, §§ 168 and 169); see also S. Ry. Co. v. Commonwealth, 211 Va. 210, 214, 176 S.E.2d 578, 581 (1970) (noting that courts in resolving disputes regarding fair market value versus uniformity seek to enforce equality in burden of taxation by insisting upon uniformity in mode of assessment and rate of taxation).
12. See, e.g., Women's Club, 199 Va. at 738, 101 S.E.2d at 574.
13. Id.
14. Article 4 was enacted under the constitutional authority of Article X, § 2. Article 4 authorizes localities to enact ordinances providing for the use value assessment and taxation of constitutionally permitted classes of property and details the procedures for the assessment and taxation of such property. See 1997 Op. Va. Att'y Gen. 199, 199.
15. Id. at 199-00 (stating that General Assembly intended use value to be lower than fair market value).
16. Id. at 200.
17. Day v. Roberts, 101 Va. 248, 251, 43 S.E. 362, 363 (1903), quoted in Moss v. County of Tazewell, 112 Va. 878, 883, 72 S.E. 945, 946 (1911).
18. 1970-1971 Op. Va. Att'y Gen. 386, 386 (interpreting § 168 of 1902 Constitution.)
19. Id.