Can a Virginia locality use a federal income threshold (or any extra criterion) to decide whether a homeowner is 'permanently and totally disabled' for property tax relief, and must its rules be in the published ordinance?

Plain-English summary

Arlington County administers a real estate tax relief program for elderly and disabled homeowners. The county denied an application because the homeowner reported more than $11,600 in earned income, which is the federal Social Security threshold for "substantial gainful activity." The county had used that federal number to decide that the applicant was not permanently and totally disabled. But the criterion was not published in the county code or in the regulations.

The treasurer asked the AG three questions. The AG answered each:

1. Can the county use a bright-line income test to decide whether someone is permanently and totally disabled?
No. Section 58.1-3213(D) sets out three exclusive ways to prove "permanently and totally disabled": certification by the Social Security Administration, VA, or Railroad Retirement Board; SSA certification under 42 U.S.C. § 423(d); or two doctor affidavits. None of those paths involves an income test administered by the locality. The Dillon Rule (Marble Techs., Inc. v. City of Hampton, 279 Va. 409 (2010)) bars the locality from adding a fourth path or substituting its own.

2. Can the county use a federal disability standard as an income limit for relief?
Yes, for income limits (not for the disability determination itself). The General Assembly gave localities flexibility to set income ceilings within statutory bounds, and a federal disability income threshold is a rational basis for an income cap. Fed. Commc'ns Comm'n v. Beach Commc'ns, Inc., 508 U.S. 307 (1993) (deferential review of legislative classifications that don't implicate suspect classes).

3. Must the criteria be published in the ordinance?
Yes. The Code requires that exemptions be set "by ordinance" "upon such conditions and in such amount as the ordinance may prescribe." A locality cannot impose qualifications or conditions outside the text of the ordinance. The Arlington denial based on an unpublished federal threshold did not satisfy that requirement.

Currency note

This opinion was issued in 2010. 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.

In November 2010, Virginia voters considered (and approved) a constitutional amendment that loosened the income-and-net-worth restrictions on the elderly and disabled exemption, giving localities broader authority. The statutory framework for this exemption has been amended several times since. Anyone applying for or administering this kind of tax relief today should check current law.

Common questions

How is someone in Virginia legally classified as "permanently and totally disabled" for property tax relief?
At the time of this opinion, by one of three statutory paths under § 58.1-3213(D):

1. Certification by the Social Security Administration, the Department of Veterans Affairs, or the Railroad Retirement Board.
2. SSA certification regarding eligibility for benefits under 42 U.S.C. § 423(d).
3. Sworn affidavits from two qualified medical doctors attesting that the applicant is "permanently and totally disabled."

What's wrong with using the federal "substantial gainful activity" income threshold as a shortcut?
Two things. First, the General Assembly already specified the three paths, and the Dillon Rule says localities cannot add to that list. Second, the federal threshold is an income metric, not a medical disability determination. If a doctor says the applicant is permanently and totally disabled, that satisfies the statute regardless of whether the applicant earns above some federal threshold.

So can a county use the federal threshold for anything?
Yes, as the income ceiling for the tax relief program. The General Assembly gives localities choices about setting income limits, and lets them use lower income limits than the statutory defaults. If a locality publishes a rule that says "applicants with household income above $X are not eligible," that's permissible, even if X happens to equal the federal substantial gainful activity threshold. The key is that it's an income ceiling, not a disability test.

What does "the criteria must be in the ordinance" actually require?
The literal text. Internal staff guidance, FAQs on a county website, and unpublished thresholds don't count. Anything the locality wants to use as a rule must appear in the ordinance itself. The Arlington applicant complied with everything that was published (provided medical documentation), so denial based on an unpublished income threshold was improper.

Does this affect anything beyond tax relief?
The reasoning (Dillon Rule plus the requirement that conditions appear in the ordinance) extends to any local program where the locality is exercising delegated authority. It is not a property-tax-specific principle.

Background and statutory framework

Section 58.1-3210 authorizes localities to exempt or defer real estate taxes for homeowners at least 65 years old or, if the ordinance so provides, anyone permanently and totally disabled. Exemptions under § 58.1-3210 must be strictly construed, but the General Assembly gave localities some flexibility. The Code imposes three considerations for tax relief:

1. Age or disability. Both the Code and Arlington County define "permanently and totally disabled" as being "unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment . . . expected to result in death or to last for the duration of such person's life."
2. Income. The locality picks between specified income ceilings, with discretion to go lower. Certain localities including Arlington can raise the ceiling to $75,000.
3. Net worth, with statutory ceilings (not at issue in this opinion).

Three ways to prove disability under § 58.1-3213(D): SSA/VA/RRB certification; SSA certification under 42 U.S.C. § 423(d); or two doctor affidavits.

The Dillon Rule: localities have only those powers expressly granted, fairly implied, or essential and indispensable. Marble Techs., Inc. v. City of Hampton, 279 Va. 409 (2010). Without express authority, a locality cannot impose additional qualifications on disability. A federal income standard used as an income limit, however, easily passes rational-basis scrutiny. Beach Communications, 508 U.S. 307 (1993).

Citations

• Va. Code § 2.2-505
• Va. Code Ann. § 58.1-3210
• Va. Code Ann. § 58.1-3213(D)
• 42 U.S.C. § 423(d)
• Marble Techs., Inc. v. City of Hampton, 279 Va. 409, 417, 690 S.E.2d 84, 88 (2010)
• Fed. Commc'ns Comm'n v. Beach Commc'ns, Inc., 508 U.S. 307, 313 (1993)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2010/10-057-O'Leary.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Kenneth T. Cuccinelli, II
Attorney General

August 9, 2010

The Honorable Francis X. O'Leary
Treasurer, Arlington County
Office of the County Treasurer
2100 Clarendon Boulevard, Suite 217
Arlington, Virginia 22201

900 East Main Street
Richmond, Virginia 23219
804-786-2071
FAX 804-786-1991
Virginia Relay Services
800-828-1120
7-1-1

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.

Issues Presented

You inquire whether a county can rely on a bright line income standard in determining whether an individual is "permanently and totally disabled" and, therefore, eligible for relief from the real estate tax, or whether the locality must consider the totality of the circumstances. You further inquire whether a federal disability standard constitutes a rational guide for determining whether a taxpayer is "unable to engage in substantial gainful activity" when that standard is employed without any reference to what may be "substantial" in any given locality. Finally, you ask whether the County may adopt a bright line legal standard that is not advertised to the public and is not published as part of the regulations governing the tax relief program.

Response

It is my opinion that localities may use neither a bright line test, a totality of the circumstances review, nor a federal disability guideline to determine whether a taxpayer is "permanently and totally disabled." It further is my opinion that a locality may employ a federal disability guideline in determining the maximum income level for tax relief eligibility, and that considering such a guideline would not be irrational. Finally, it is my opinion that the criteria used by a locality must be set forth in the text of an ordinance.

Background

You relate that the Arlington County Department of Human Services ("Department"), which administers the County's elderly and disabled tax relief program, denied a homeowner's application for real estate tax relief. The reason for denying the application was that the taxpayer reported more than $11,600 in earned income for that year. You report that the Department based its decision on the federal guidelines for receiving disability benefits, which set the threshold for being engaged in "substantial gainful activity" at $11,600 per year in income. You also note that this income criterion is not set forth in the County Code or published regulations. You state that the applicant, however, did comply with the eligibility requirements described on the county's website and in other printed materials by providing the required documentation demonstrating his disability.

Applicable Law and Discussion

Section 58.1-3210 of the Code of Virginia authorizes localities to "provide for the exemption from, deferral of, or a combination program of exemptions from and deferrals of taxation of real estate . . . owned by and occupied as the sole dwelling of anyone at least 65 years of age, or if provided in the ordinance, anyone found to be permanently and totally disabled." Although exemptions under § 58.1-3210 must be strictly construed, the General Assembly has provided localities with some flexibility with respect to the scope of the exemptions. The Code imposes three considerations for tax relief: (1) age or disability; (2) income; and (3) net worth. Net worth is immaterial to your inquiry, so this opinion considers only the first two criteria.

First, as to disability, both the Code of Virginia and Arlington County define "[p]ermanently and totally disabled" as being "unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment or deformity which can be expected to result in death or can be expected to last for the duration of such person's life." The Virginia Code does not define further what constitutes "substantial gainful activity."

Section 58.1-3213(D) details three ways for a taxpayer to demonstrate permanent disability: 1) certification by the Social Security Administration, the Department of Veteran Affairs, or the Railroad Retirement Board; 2) Social Security Administration certification regarding eligibility for benefits pursuant to 42 U.S.C. § 423(d); or 3) sworn affidavits by two qualified medical doctors attesting that the applicant is "permanently and totally disabled." Notably, no reference is made to a taxpayer's financial circumstances. Although the County "shall also make any other reasonably necessary inquiry of persons seeking such exemption, . . . including qualification as permanently disabled," the Code does not authorize a locality to impose any additional qualifications with respect to the disability determination. I therefore conclude that a locality may not rely on federal guidelines in determining an applicant's disability status. Similarly, it is my opinion that local characteristics, such as median income and cost of living, are not to be considered when determining an applicant's disability status.

A second, distinct criterion for tax relief turns on the taxpayer's income. The General Assembly has provided that a locality may choose between two options in determining the maximum income allowed to qualify for its tax relief program: 1) the greater of $50,000 total combined income per year, or the income limits based upon family size for the respective metropolitan statistical area, as published by the United States Department of Housing and Urban Development, or 2) the locality's median adjusted gross income of its married residents, as published by the University of Virginia.

In spite of these income specifications, the General Assembly specifically has authorized certain localities, including Arlington County, to raise the income limit to $75,000 per year. Furthermore, the General Assembly has authorized all localities to depart from the income levels specified in the Code if the locality wishes to provide lower income limits. In adopting such income limits, localities can fashion a tax relief program that is adapted to their particular economic circumstances.

Although the federal disability standard is not a proper guideline for determining a taxpayer's disability, it may serve as a basis for establishing income limitations on eligibility, should a locality adopt it as the income limit for eligibility. Were a locality to rely on this federal standard, such an income standard easily would survive "rational basis" scrutiny if challenged in court.

Finally, although localities have discretion in fashioning aspects of a tax relief program, the criteria adopted by a locality must be specified in an ordinance. The Code provides that, "the governing body . . . may, by ordinance, provide for the exemption . . . upon such conditions and in such amount as the ordinance may prescribe;" and "the governing body . . . may by ordinance specify lower . . . figures." Consequently, a locality may not impose any qualifications or other conditions that are not included in the text of the ordinance.

Conclusion

Accordingly, it is my opinion that localities may not use a bright line test, a totality of the circumstances review, or a federal disability guideline in determining whether a taxpayer is "permanently and totally disabled." It further is my opinion that a locality may employ a federal disability guideline in determining the income level for tax relief eligibility, and that considering such a guideline would not be irrational. Finally, it is my opinion that the criteria used by a locality must be set forth in the text of an ordinance.

With warmest regards, I am

Very truly yours,

Kenneth T. Cuccinelli, II
Attorney General