Can a Virginia local treasurer charge a delinquent state taxpayer an extra 20% commission for collecting unpaid state taxes?

Plain-English summary

Arlington County Treasurer Francis O'Leary asked AG William Mims about a proposed arrangement. The Virginia Department of Taxation and local treasurers wanted to enter agreements under which the treasurers would collect delinquent state tax debt and earn a 20% commission, which would be added on top of what the taxpayer already owed. So a $1,000 state tax debt would become a $1,200 bill: $1,000 to the state and $200 retained by the treasurer's locality.

The AG split the question into two parts. First, may the Department compensate a treasurer for collecting state taxes at all? The State and Local Government Conflict of Interest Act forbids a local officer from accepting "money or other thing of value for services performed within the scope of his official duties," and § 58.1-1803(A) says collecting state taxes when appointed by the Department is part of the treasurer's "official duties." The AG harmonized those provisions by reading them to permit payment to the locality (not the treasurer personally) for the treasurer's collection work. That was fine.

The second part, however, was where the proposal failed. Section 58.1-3916 lets a locality adopt an ordinance to recover "reasonable attorney's fees or collection agency's fees actually contracted for, not to exceed 20 percent of the delinquent taxes." That permits the locality to charge a delinquent taxpayer fees it actually incurred to collect, capped at 20%. It does not authorize a flat 20% commission tacked onto every collection. Under Virginia's Dillon Rule, localities have only the powers expressly granted, fairly implied, or essential and indispensable. A blanket surcharge was not among them. So a treasurer collecting state taxes could not pass that 20% through to the taxpayer; whatever commission the Department paid the locality had to come out of the state's recovery, not be added on top of it.

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.

Common questions

Q: Could the Department of Taxation pay a treasurer's office for collecting delinquent state taxes?
A: Yes, but only to the locality, not to the treasurer personally. The AG read § 58.1-1803(A) and the Conflict of Interest Act together to require that route.

Q: What about § 58.1-3916's "20 percent" reference?
A: That statute lets a locality, by ordinance, recover from a delinquent taxpayer the attorney's fees or collection agency's fees the locality actually incurred, capped at 20%. It does not let the locality charge a flat 20% commission regardless of actual cost.

Q: Why does the Dillon Rule matter here?
A: Virginia treats local governments as having only those powers the General Assembly has granted. The AG found no express or implied grant of a flat-percentage surcharge authority. Without that grant, the proposal failed.

Q: Could the Department instead absorb the commission out of the 100% it recovered?
A: The opinion implied yes. The defect was passing the cost through to the taxpayer as an added charge, not the existence of a percentage-based compensation arrangement between the Department and the locality.

Background and statutory framework

Virginia's Conflict of Interest Act, Va. Code §§ 2.2-3100 to 2.2-3131, exists to keep officials' private economic interests from inappropriately influencing official conduct. Section 2.2-3103(1) bars officials from taking compensation for work within their official duties beyond what their employing agency pays. Section 58.1-1803 authorizes the Department of Taxation to appoint local treasurers as collectors of delinquent state taxes and to set their compensation. The Code's local-tax-collection authority in §§ 58.1-3910 through 58.1-3938 supplied the procedural framework, and § 58.1-3916 was the one provision that let localities recover collection-related fees from delinquent taxpayers, subject to its express limits.

The opinion's larger principle is that statutory grants of locality power are read closely. A locality cannot generalize a specific fee-recovery authority into a blanket surcharge.

Citations

• Va. Code Ann. § 2.2-3103(1) (Conflict of Interest Act prohibition)
• Va. Code Ann. § 58.1-1803(A) (appointment of local collectors of state taxes)
• Va. Code Ann. § 58.1-3916 (recovery of fees from delinquent local taxpayers)
• Temple v. Petersburg, 182 Va. 418 (1944) (plain meaning of statute)
• Viking Enter. v. County of Chesterfield, 277 Va. 104 (2009) (harmonizing seemingly inconsistent statutes)
• Logan v. City Council, 275 Va. 483 (2008) (Dillon Rule)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2009/09-067-O'Leary.pdf

Original opinion text

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

900 East Main Street
Richmond, Virginia 23219
804-786-2071

Attorney General

November 3, 2009

The Honorable Francis X. O'Leary
Arlington County Treasurer

1 Courthouse Plaza, Suite 201

Arlington, Virginia 22216-7436

Dear Mr. O'Leary:

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 a local treasurer and the Department of Taxation (the "Department") may lawfully enter into an agreement whereby the treasurer would collect delinquent taxes owed to the Commonwealth of Virginia in exchange for a commission of twenty percent of the state taxes so collected, which the treasurer would recover from state taxpayers in addition to their past due state taxes.

Response

It is my opinion that a local treasurer collecting delinquent state taxes pursuant to an agreement with the Department of Taxation is not authorized to recover from the taxpayer a twenty-percent commission in addition to the delinquent state taxes collected on behalf of the Department.

Background

You indicate that the Department and local treasurers may seek to enter into an agreement whereby local treasurers would collect past due tax debt owed the Commonwealth and receive a twenty-percent commission for their services, which fee would be added to the delinquent amounts collected. You assert that an agreement pursuant to these terms would be mutually beneficial to the Department and local treasurers; it would accelerate collection of delinquent state tax liabilities without committing additional state resources, and localities would derive additional revenues.

Applicable Law and Discussion

A threshold question raised by your request is whether the Department may compensate local treasurers for their efforts in collecting delinquent state taxes. Section 58.1-1803(A) provides that:

The Department of Taxation may appoint a collector in any county or city, including the treasurer thereof, to collect delinquent state taxes that were assessed at least 90 days previously therein, or elsewhere in the Commonwealth, and may allow him a reasonable compensation, to be agreed on before the service is commenced. Where the appointed collector is a local government treasurer, any actions taken pursuant to this section shall be considered part of the official duties of such treasurer.

In the first sentence of § 58.1-1803(A), the General Assembly expressly authorizes the Department to compensate local treasurers for services that they perform in collecting delinquent state taxes and associated liabilities.[1] However, the second sentence of § 58.1-1803(A) specifically provides that a treasurer's actions to collect taxes and related charges on behalf of the Commonwealth constitute "part of the official duties of such treasurer." When the language of a statute is plain and unambiguous and its meaning is clear and definite, it must be given effect.[2] In addition, the State and Local Government Conflict of Interest Act (the "Conflict Act")[3] clearly provides that it is unlawful for a local government official to "accept money or other thing of value for services performed within the scope of his official duties, except the compensation, expenses or other remuneration paid by the agency of which he is an officer or employee."[4]

Consequently, a plain reading of § 58.1-1803(A) in conjunction with § 2.2-3103(1) of the Conflict Act yields an apparent inconsistency between these provisions that requires the application of certain principles of statutory construction.[5] The Supreme Court of Virginia has held that "'when two statutes seemingly conflict, they should be harmonized, if at all possible, to give effect to both.'"[6] In my opinion, the apparent inconsistency between the authority the General Assembly has granted to the Department in § 58.1-1803(A) to compensate local treasurers and the Conflict Act's prohibition against a local constitutional officer accepting remuneration for carrying out his official duties[7] may be reconciled by construing § 58.1-1803(A) to allow that such compensation be paid to the treasurer's locality, rather than to the treasurer personally. Such an interpretation comports with the purpose of the Conflict Act, which prohibits the private economic interests of governmental officers and employees from inappropriately influencing their official conduct.[8]

Applying this reasoning to your inquiry, the Department may compensate a locality for actions taken by its treasurer to collect state taxes pursuant to § 58.1-1803(A), provided the compensation is: (a) reasonable; (b) determined prior to the treasurer's undertaking of such actions; and (c) paid directly to the locality and not to the treasurer personally. Further, I am not aware of any provision of Virginia law that would prohibit the Department from allowing compensation to an appointed collector in the form of a percentage commission based on the amount of state taxes and associated charges collected. Therefore, a local treasurer's office may recoup a reasonable percentage commission for its collections on behalf of the Department.

The remaining question is whether a local treasurer may recover such commission from the delinquent taxpayers against whom the treasurer pursues such collection actions on behalf of the Department. You appear to suggest that this mode of collection is permissible under § 58.1-3916, which provides that "[t]he governing body [of any county, city, or town] … by ordinance … may provide for the recovery of reasonable attorney's fees or collection agency's fees actually contracted for, not to exceed 20 percent of the delinquent taxes and other charges so collected."

Section 58.1-1803(C) permits a local treasurer appointed by the Department to collect delinquent state taxes pursuant to Article 2,[9] which sets forth local treasurers' authority to enforce and collect local taxes. Therefore, if the governing body has exercised its authority to enact an ordinance to recover attorney's or collections agency's fees from delinquent local taxpayers, such locality would be authorized to recover such fees incurred in the collection of delinquent state taxes. However, § 58.1-3916 does not authorize a local treasurer to recover from the delinquent state taxpayers the flat twenty-percent commission about which you inquire. You propose that the Department and local treasurers would pursue collection of 120 percent of a delinquent state taxpayer's past due state taxes. In other words, the local treasurer would tender 100 percent of the taxpayer's debt to the Commonwealth and retain 20 percent for the treasurer's locality. Such a collection scheme is not the "reasonable attorney's or collection agency's fees actually contracted" permitted under § 58.1-3916 to be recovered from a delinquent taxpayer. Thus, it is my opinion that a treasurer may not lawfully recover a uniform twenty-percent commission on state taxes because Virginia law does not permit the treasurer to do so in conjunction with the collection of local taxes.

Virginia adheres to the Dillon Rule that "municipal corporations and counties possess and may exercise only those powers expressly granted by the General Assembly, powers necessarily or fairly implied from such express powers, and those powers that are essential and indispensable."[10] Section 58.1-3916 grants a locality the authority to adopt an ordinance to recover reasonable attorney's fees or collection agency's fees that the locality actually expends in pursuit of the taxpayer's debt to the locality; it does not, either expressly or impliedly, allow a locality to levy a flat, twenty-percent surcharge on delinquent local tax liabilities. Therefore, because a local treasurer's statutory authority in collecting delinquent state taxes pursuant to an appointment from the Department is derivative of that applicable to the treasurer's collection of local taxes,[11] such recovery is just as impermissible with respect to state taxes as it is in the context of local tax collections.

Conclusion

Accordingly, it is my opinion that a local treasurer collecting delinquent state taxes pursuant to an agreement with the Department of Taxation is not authorized to recover from the taxpayer a twenty-percent commission in addition to the delinquent state taxes collected on behalf of the Department.

Thank you for letting me be of service to you.

Sincerely,

William C. Mims

1. Section 58.1-1803(C) defines "the term 'state taxes' [to] include any penalty and interest" applicable to a state tax assessment, as well as "the local sales and use tax imposed under the authority of §§ 58.1-605 and 58.1-606 and any penalty and interest applicable thereto."
2. Temple v. Petersburg, 182 Va. 418, 423, 29 S.E.2d 357, 358 (1944); 1997 Op. Va. Att'y Gen. 16, 17.
3. See VA. CODE ANN. §§ 2.2-3100 to 2.2-3131 (2008 & Supp. 2009).
4. Section 2.2-3103(1) (2008).
5. See Boynton v. Kilgore, 271 Va. 220, 228, 228 n.11, 623 S.E.2d 922, 926, 926 n.11 (2006).
6. Viking Enter. v. County of Chesterfield, 277 Va. 104, 110, 670 S.E.2d 741, 744 (2009) (quoting Commonwealth v. Zamani, 256 Va. 391, 395, 507 S.E.2d 608, 609 (1998) (alteration omitted)).
7. See § 2.2-3103(1).
8. See § 2.2-3100 (2008); § 2.2-3103.
9. See VA. CODE ANN. tit. 58.1, ch. 39, art. 2, §§ 58.1-3910 to 58.1-3938 (2009) (codified in scattered sections).
10. Logan v. City Council, 275 Va. 483, 494, 659 S.E.2d 296, 302 (2008).
11. See § 58.1-1803(C).