Does Virginia need a constitutional amendment to extend the military property-tax exemption to a vehicle jointly titled with a nonmilitary spouse?

Plain-English summary

Delegate Scott Lingamfelter brought a recurring problem to AG William Mims. Servicemembers stationed in Virginia who are not Virginia domiciliaries get a federal personal-property tax exemption under the Servicemembers Civil Relief Act. To use that exemption, the servicemember has historically had to title the family vehicle solely in their own name. That creates two practical headaches. First, when servicemembers buy cars on credit, lenders often refuse to remove the spouse's name from the title while the lien exists. Second, advising servicemembers to title vehicles solely in their own name creates probate problems if the servicemember dies in service. Did Virginia need a state constitutional amendment to extend the exemption to jointly titled vehicles? And to vehicles jointly leased?

The AG answered no on both counts, but for different reasons.

For jointly titled vehicles, Congress had already amended the SCRA in 2003 to add 50 U.S.C. app. § 561(e), which extends the protections of § 571(c)(1) to "property described in subsection (a) owned individually by a servicemember or jointly by a servicemember and a dependent or dependents." The House Report explicitly identified the joint-title automobile problem as the reason for the amendment. Under the Supremacy Clause, the federal exemption preempts conflicting state tax law without needing any state-law authorization. Virginia's preexisting AG opinions had already held that localities could not tax vehicles owned solely by nondomiciliary servicemembers; the 2003 federal amendment extended that protection to joint titles, and Virginia courts and localities were bound to honor it.

For jointly leased vehicles, the analysis was different. Virginia Code § 46.2-100 defines the lessor (the finance company) as the owner of a leased vehicle for tax purposes. A 1967-68 AG opinion had said the same thing under the predecessor statute. Because the servicemember and spouse are not the legal "owners" of the leased vehicle, the SCRA's owner-based exemption does not reach the lease tax. No constitutional amendment was needed because no exemption applied to begin with.

Currency note

This opinion was issued in 2009. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Congress amended and recodified the SCRA in 2018 (Pub. L. No. 115-407), moving these provisions to 50 U.S.C. §§ 3901-4043. Virginia's vehicle-tax framework has also been amended. Treat this page as historical context, not current legal advice. Verify current SCRA and § 46.2-100 text before relying on any specific rule.

Common questions

Q: Why were servicemembers titling vehicles solely in their own name?
A: To preserve the SCRA personal property tax exemption. Before the 2003 amendment, federal law was read to require sole ownership to qualify. The workaround had downstream consequences for probate and lender requirements.

Q: What did § 561(e) change?
A: It extended the SCRA's personal-property-tax protection to joint ownership between a servicemember and a dependent. The House Report (108-81) called out the automobile-titling problem by name.

Q: Why doesn't the joint-lease analysis come out the same way?
A: Virginia defines vehicle ownership for tax purposes by who holds the title. A leased vehicle's title is in the lessor's (finance company's) name. The SCRA exempts the servicemember's property, not the lessor's, so the analysis turns on who Virginia treats as the owner.

Q: Could the legislature still address the lease problem by statute?
A: The opinion did not address that. It answered the constitutional-amendment question. A statutory fix would not require an amendment, but Virginia would have to decide whether to extend a state-law exemption to lessees independent of the SCRA.

Background and statutory framework

The Supremacy Clause makes federal law supreme over conflicting state law. The Servicemembers Civil Relief Act exists "to provide for, strengthen, and expedite the national defense through protection extended by this Act … to servicemembers of the United States." 50 U.S.C. app. § 502(1). Sections 561 and 571 protect a servicemember's tax situs and property from the local taxing authority of the state where the servicemember is stationed under military orders. Virginia's vehicle-ownership definition in § 46.2-100 makes the lessor the "owner" for personal property tax purposes.

The opinion is a clean example of how federal preemption can directly answer a state constitutional question: when federal law occupies the field, the state cannot tax even if state law would otherwise permit it.

Citations

• 50 U.S.C. app. § 561(e) (joint ownership protection added in 2003)
• 50 U.S.C. app. § 571(c)(1) (personal property tax situs)
• Va. Code Ann. § 46.2-100 (lessor is owner of leased vehicle)
• U.S. Const. art. VI, cl. 2 (Supremacy Clause)
• Hines v. Davidowitz, 312 U.S. 52 (1941) (obstacle preemption)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2009/09-077-Lingamfelter.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 16, 2009

The Honorable L. Scott Lingamfelter
Member, House of Delegates
5420 Lomax Way
Woodbridge, Virginia 22193

Dear Delegate Lingamfelter:

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 a constitutional amendment is required to provide a personal property tax exemption for the nonmilitary spouse of a nonresident military servicemember for a motor vehicle that is jointly titled in both names. You also ask whether a constitutional amendment is necessary to provide such an exemption for a vehicle leased by the nonmilitary spouse and the nonresident servicemember.

Response

It is my opinion that a constitutional amendment is not required to authorize the federal exemption for a jointly owned motor vehicle of a nonresident military servicemember and his nonmilitary spouse. It further is my opinion that a constitutional amendment is not required for a vehicle that is leased jointly by such servicemember and his spouse because they are not considered to be the owners of a leased vehicle.

Background

You relate that servicemembers are advised to title motor vehicles jointly with their spouses to avoid probate issues in the event of the servicemember's death. You note that this practice permits easier renewal of annual registrations. In addition, you advise that most servicemembers purchase vehicles on credit and title them jointly with their nonmilitary spouses. Once titled jointly, you note that numerous families discover that financial institutions will not remove the name of the nonmilitary spouse from the title as long as a lien exists and is noted on the vehicle's title. As a result, the vehicle is not titled solely in the servicemember's name, and the servicemember is unable to take advantage of the personal property tax exemption in Virginia.

Applicable Law and Discussion

Under 50 U.S.C. app. § 571(c)(1) of the Servicemembers Civil Relief Act of 2003[1] ("Servicemembers Act") "[t]he personal property of a servicemember shall not be deemed to be located or present in, or to have a situs for taxation in, the tax jurisdiction in which the servicemember is serving in compliance with military orders." Attorneys General consistently have concluded that a Virginia locality cannot tax motor vehicles owned by nondomiciliary servicemembers who are stationed by the military in the Commonwealth.[2] Further, 50 U.S.C. app. § 561(e) of the Servicemembers Act provides that it applies to all forms of "property described in subsection (a)[3] owned individually by a servicemember or jointly by a servicemember and a dependent or dependents." I note that a primary reason for Congress enacting § 561(e) was to "add an additional subsection clearly stating that this section applies to joint ownership of all forms of personal and real property by a servicemember and his or her dependents."[4] Furthermore, Congress has stated the purpose of § 561(e):

This would relieve servicemembers from having to title property solely in their own name to ensure the protections of this section in a state where they live pursuant to military orders but are not state residents. Titling property solely in the servicemember's name for tax purposes also may create probate difficulties for servicemembers or their heirs if property is not jointly titled upon death. However, the most common difficulty is in the area of automobile titling. Separate titling of automobiles by servicemembers to avail themselves of the protections of the current provision, when they would prefer joint titling, undercuts the overall SSCRA policy objective of protecting the civil legal rights of servicemembers and their dependents.[5]

The Supremacy Clause of the Constitution of the United States provides that federal laws and treaties "shall be the supreme Law of the Land."[6] By virtue of this clause, federal law supersedes conflicting state law.[7] The preemption of state law by federal law may occur by express statutory language or other clear indication that Congress intended to legislate exclusively in the area.[8] Even if Congress does not intend the enactment of a federal statutory scheme to preempt state law completely, congressional enactments in the same field override state laws with which they conflict.[9] It is necessary "to determine whether, under the circumstances of this particular case, [the State's] law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."[10] This inquiry requires consideration of the relationship between state and federal laws as they are interpreted and applied, not merely as they are written.[11]

Congress has expressed that its purpose in enacting the Servicemembers Act is "to provide for, strengthen, and expedite the national defense through protection extended by this Act … to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the Nation."[12] Therefore, it is my opinion that the federal exemption, as expressed in 50 U.S.C. app. §§ 561(e) and 571(c)(1) of the Servicemembers Act, preempts the laws of the Commonwealth related to taxation of motor vehicles owned by nonresident servicemembers and their nonmilitary spouses.

You also ask about vehicles jointly leased by a nonresident servicemember and his nonmilitary spouse. Under the definitions set forth in § 46.2-100 of the Virginia Code, the lessor of a motor vehicle is deemed to be the owner of a leased motor vehicle, and as such, is liable for the payment of personal property tax thereon. A prior opinion setting forth this conclusion remains valid.[13] Therefore, a constitutional amendment is not required since the lessor, i.e., the owner of a leased vehicle, is not the servicemember or his nonmilitary spouse.

Conclusion

Accordingly, it is my opinion that a constitutional amendment is not required to authorize the federal exemption for a jointly owned motor vehicle of a nonresident military servicemember and his nonmilitary spouse. It further is my opinion that a constitutional amendment is not required for a vehicle that is leased jointly by such servicemember and his spouse because they are not considered to be the owners of a leased vehicle.

Thank you for letting me be of service to you.

Sincerely,

William C. Mims

1. See Pub. L. No. 108-109, 117 Stat. 2835.
2. Op. Va. Att'y Gen: 1983-1984 at 393, 393; 1965-1966 at 196 (interpreting 50 U.S.C. app. § 574, predecessor to 50 U.S.C. app. § 571(c)(1)); see also 1981-1982 Op. Va. Att'y Gen. 370 (interpreting 50 U.S.C. app. § 574 and concluding that mobile home belonging to nondomiciliary serviceman is not subject to personal property tax).
3. Subsection (a) of § 561 lists a servicemember's "personal property (including motor vehicles)."
4. See H.R. REP. NO. 108-81, at 42, as reprinted in 2004 U.S.C.C.A.N. 2367, 2385.
5. Id.
6. U.S. Const. art. VI, cl. 2.
7. See Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 210-11 (1824); see also Savage v. Jones, 225 U.S. 501, 533 (1912) (noting that state law that conflicts with federal law must yield to federal law).
8. See Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977); Op. Va. Att'y Gen.: 1984-1985 at 280, 282; 1973-1974 at 284, 285.
9. See Jones, 430 U.S. at 525-26 (citing U.S. CONST. art. VI).
10. Hines v. Davidowitz, 312 U.S. 52, 67 (1941); accord De Canas v. Bica, 424 U.S. 351, 363 (1976); Perez v. Campbell, 402 U.S. 637, 649 (1971).
11. De Canas, 424 U.S. at 363-65; Swift & Co. v. Wickham, 230 F. Supp. 398, 408 (S.D.N.Y. 1964), appeal dismissed, 382 U.S. 111 (1965), aff'd on further consideration, 364 F.2d 241 (2d Cir. 1966), cert. denied, 385 U.S. 1036 (1967).
12. 50 U.S.C.S. app. § 502(1) (LexisNexis Supp. 2009).
13. 1967-1968 Op. Va. Att'y Gen. 274, 274 (interpreting § 46.1-1, predecessor to § 46.2-100). "Lessor (owner): The person or entity offering the use of a vehicle for twelve months or more in exchange for compensation." Va. Dep't of Motor Vehicles, Leasing a Vehicle, http://www.dmv.virginia.gov/webdoc/citizen/vehicles/leased.asp (last visited Nov. 9, 2009). "The leased vehicle will be titled in the name of the lessor (owner)." Id.