Can a Virginia commissioner of the revenue compel a public utility to disclose contractor information for business-license tax purposes?

Plain-English summary

The Campbell County Commissioner of the Revenue asked whether public utilities have to cooperate with two of his core investigative tools. Section 58.1-3109(6) lets a commissioner require any "person ... or corporation" to furnish information needed to assess license taxes. Section 58.1-3110(A) lets the commissioner summon a taxpayer or other person to appear under oath and produce documents about a specifically identified taxpayer's tax liability. The question: can a public utility, or its employees, refuse to comply on the theory that utilities are somehow exempt?

Attorney General Mark R. Herring said no. A public utility is a public service corporation, and corporations are "persons" under the statutory definition in § 1-230. Section 58.1-3109(6) reaches "any person ... or corporation," with no carve-out for utilities. Utility personnel are "persons" who can be summoned under § 58.1-3110(A). The one statutory limit on the summons is that the commissioner cannot summon someone in connection with the tax liability of a taxpayer when that liability is the subject of pending litigation.

The opinion also handled a finer point. The commissioner had asked about a contractor that may be subject to local business license ordinances. One could argue that until the contractor is established as actually subject to the ordinance, the contractor is not a "taxpayer" within the commissioner's reach. The AG rejected that reading. Section 58.1-3109(6) authorizes the commissioner to gather "the information necessary to make a complete assessment" of license taxes. Determining whether a particular contractor is subject to the ordinance is exactly the kind of information needed for that complete assessment; the inquiry is within the statute's scope.

The commissioner's authority is geographically bounded under § 58.1-3102: "[t]he jurisdiction, powers, and duties of commissioners do not extend beyond the bounds of their respective counties or cities." Within those bounds, however, the commissioner has both statutory and inherent authority to obtain information from utilities and their employees about contractors subject to local business license ordinances.

Currency note

This opinion was issued in 2016. 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.

Title 58.1's business license provisions are routinely amended, and the BPOL framework has been the subject of ongoing legislative attention. Before relying on the specific section numbers and authority cited here, check current text.

Background and statutory framework

Commissioners of the revenue are constitutional officers under Va. Const. art. VII, § 4 and § 15.2-1636, elected by the qualified voters of each city and county. Their primary duty is to assess the fair market value of "all subjects of taxation" in their jurisdiction (§ 58.1-3103). They also assess local business, professional, and occupational license taxes (BPOL) under § 58.1-3109. Localities may require contractors to pay BPOL taxes (§§ 58.1-3700, 58.1-3715), and the term "contractor" is defined at § 58.1-3714(O). A contractor is generally subject to local BPOL of the locality of its principal or branch office and of any other locality where business volume exceeds $25,000 for the license year (§ 58.1-3715(B)).

As a constitutional officer, a commissioner has broad discretion in administering the office, subject to statutory and constitutional limits (1984-1985 Op. Va. Att'y Gen. 284). McGinnis v. Nelson Cty., 146 Va. 170, 172 (1926), confirms that the commissioner's duties are defined by statute.

Section 58.1-3109(6) empowers the commissioner to require "any person ... or corporation to furnish information relating to [the] ... license taxes of any and all taxpayers ...." It also requires the addressee to "furnish access to books of account or other papers and records for the purpose of ... procuring the information necessary to make a complete assessment of any taxpayer's ... license taxes for the current tax year and the three preceding tax years."

Section 58.1-3110(A) authorizes the commissioner to "summon the taxpayer or any other person to appear before him at his office, to answer, under oath, questions touching the tax liability of any and all specifically identified taxpayers and to produce documents relating to such tax liability." The single explicit limit: the commissioner "shall not ... summon a taxpayer or other person for the tax liability of the taxpayer which is the subject of litigation."

Public utilities operate as public service corporations and qualify as "corporations" under § 58.1-3109(6). Corporations are treated as persons under § 1-230, which defines "person" to include "any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or any other legal or commercial entity and any successor, representative, agent, agency, or instrumentality thereof." Utility personnel are individuals and therefore "persons" under § 58.1-3110(A).

Nothing in the BPOL chapter exempts public service corporations from these provisions. The AG also addressed the threshold question of whether a contractor counts as a "taxpayer" before the commissioner has determined the contractor is subject to the ordinance. He concluded that ascertaining whether the contractor is subject to the ordinance is part of the "complete assessment" that § 58.1-3109(6) authorizes, so the inquiry falls within the statute.

The territorial limit in § 58.1-3102 still applies: the commissioner's authority extends only to the bounds of his or her county or city. Inquiries directed at out-of-jurisdiction taxpayers would not be authorized.

Common questions

Q: Can my electric utility refuse to provide information about a contractor doing work in our locality?
A: The AG concluded no. Section 58.1-3109(6) reaches "any person ... or corporation," and public utilities are corporations. Utilities must provide information related to license tax assessments.

Q: Can the commissioner of the revenue summon utility employees to testify under oath?
A: Yes, under § 58.1-3110(A), so long as the matter is not the subject of pending litigation involving the specific taxpayer in question.

Q: What if we're not sure the contractor is actually subject to a local business license ordinance?
A: The AG concluded that determining whether the contractor is subject to the ordinance is part of the "complete assessment" the commissioner is authorized to make. The information request is within scope.

Q: Are there limits on what the commissioner can ask for?
A: Yes. The summons authority cannot be used when the tax liability of the taxpayer in question is the subject of litigation (§ 58.1-3110(A)). And the commissioner's authority only extends within the boundaries of his or her county or city (§ 58.1-3102).

Q: What records does § 58.1-3109(6) reach?
A: Books of account or other papers and records needed for a complete assessment of license taxes for the current tax year and the three preceding tax years.

Q: What happens if a utility or employee refuses to comply?
A: This opinion does not address enforcement procedures. The commissioner has the statutory authority; the remedy for noncompliance would be sought through the appropriate court process.

Citations and references

Virginia statutes:

• Va. Code Ann. § 1-230 (definition of "person")
• Va. Code Ann. § 15.2-1636 (election of commissioner of revenue)
• Va. Code Ann. § 58.1-3102 (territorial limits of commissioner's authority)
• Va. Code Ann. § 58.1-3103 (assessment of subjects of taxation)
• Va. Code Ann. § 58.1-3109 (commissioner's information-gathering authority)
• Va. Code Ann. § 58.1-3110 (administrative summons)
• Va. Code Ann. § 58.1-3700 (license tax requirement)
• Va. Code Ann. § 58.1-3703 (local authority to levy BPOL)
• Va. Code Ann. § 58.1-3714 (definition of "contractor")
• Va. Code Ann. § 58.1-3715 (contractor BPOL)
• Va. Code Ann. § 2.2-505 (AG advisory opinion authority)

Virginia Constitution:

• Va. Const. art. VII, § 4 (constitutional officers)

Cases:

• McGinnis v. Nelson Cty., 146 Va. 170 (1926)

Prior AG opinions:

• 1984-1985 Op. Va. Att'y Gen. 284

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2016/16-041-Massie-for-issue---Cmr-of-Revenue-summoning-public-utility.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Mark R. Herring
Attorney General

December 21, 2016

The Honorable Calvin C. Massie, Jr.
Campbell County Commissioner of the Revenue
Post Office Box 66
Rustburg, Virginia 24588

Dear Mr. Massie:

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 public utilities are exempt from providing information requested pursuant to § 58.1-3109(6) of the Code of Virginia by a Commissioner of the Revenue pertaining to contractors that may be subject to a local business license ordinance. You further ask whether public utility personnel are exempt from being summoned by a Commissioner of the Revenue in accordance with § 58.1-3110(A) for the purpose of answering, under oath, questions about contractors that may be subject to a local business license ordinance.

Applicable Law and Discussion

Commissioners of the Revenue are constitutional officers elected by citizens within the locality that they serve. [1] The Code of Virginia provides that they "shall exercise all the powers conferred and perform all the duties imposed ... by general law." [2] Their primary duty is to assess the fair market value of "all subjects of taxation in [the] county or city." [3] In addition, they are tasked with the duty to assess local business, professional and occupational license taxes. [4] With some statutory limitations, localities may require contractors to pay local business license fees and taxes. [5]

As a constitutional officer, a Commissioner of the Revenue possesses complete discretion in the manner in which he administers his office and carries out his prescribed duties, unless limited by constitutional provision or statute. [6]

Section 58.1-3109(6) enables Commissioners of the Revenue to require "any person ... or corporation to furnish information relating to [the] ... license taxes of any and all taxpayers ...." This section further "require[s] such persons to furnish access to books of account or other papers and records for the purpose of ... procuring the information necessary to make a complete assessment of any taxpayer's ... license taxes for the current tax year and the three preceding tax years." [7] Contractors subject to local business license ordinances must pay local business license taxes. [8] Such contractors would therefore constitute "taxpayers" pursuant to § 58.1-3109(6).

As a public service corporation, the public utility referenced in your request would qualify as a "corporation" required to furnish information relating to the assessment of business license tax liability of a contractor under § 58.1-3109(6). Further, because corporations are treated as persons under the law, a public utility qualifying as a public service corporation likewise constitutes a "person" subject to this section. [9] Public utility personnel may additionally be deemed "persons" that are obligated to provide information requested by Commissioners of the Revenue under the statute. Accordingly, I conclude that public utilities are not exempt from providing information requested by Commissioners of the Revenue pursuant to § 58.1-3109(6) when it relates to contractors that may be subject to a local business license ordinance.

Section 58.1-3110 additionally empowers a Commissioner of the Revenue to "summon the taxpayer or any other person to appear before him at his office, to answer, under oath, questions touching the tax liability of any and all specifically identified taxpayers and to produce documents relating to such tax liability, either or both." [10] However, he "shall not ... summon a taxpayer or other person for the tax liability of the taxpayer which is the subject of litigation." [11] Public utility personnel constitute "persons" under § 58.1-3110(A). So long as the tax liability of the person summoned or the public utility is not the subject of pending litigation, a Commissioner of the Revenue may therefore summon public utility personnel to appear, answer questions under oath, and produce documents for the purpose of assessing the business license taxes of a contractor.

Your opinion request mentions that the contractor at issue may be subject to a local business license ordinance. One could argue that a contractor does not constitute a "taxpayer" over which a commissioner has authority for the purposes of §§ 58.1-3109(6) and 58.1-3110(A) unless the contractor is actually subject to a local business license ordinance and therefore liable for local business license taxes. However, § 58.1-3109(6) enables Commissioners of the Revenue to obtain "the information necessary to make a complete assessment of any taxpayer's ... license taxes." [12] Ascertaining whether a contractor is subject to a business license ordinance is necessary in order to make a "complete assessment" of license taxes, and it is therefore within the scope of authority under the statute.

In the absence of any provision exempting public service corporations from the scope of a Commissioner of the Revenue's authority under §§ 58.1-3109(6) and 58.1-3110(A), I conclude that Commissioners of the Revenue possess both statutory and inherent authority to obtain from public utilities and their employees information needed to determine whether a contractor is subject to a business license ordinance. [13]

Conclusion

Accordingly, it is my opinion that public utilities are not exempt from providing information requested by Commissioners of the Revenue pursuant to § 58.1-3109(6) and that public utility personnel are likewise not exempt from appearing at the request of a Commissioner of the Revenue pursuant to a summons issued in accordance with § 58.1-3110(A).

With kindest regards, I am

Very truly yours,

Mark R. Herring
Attorney General

[1] VA. CONST. art. VII, § 4 ("There shall be elected by the qualified voters of each county and city ... a commissioner of revenue."); VA. CODE ANN. § 15.2-1636 (2012) ("The voters in every county and city shall elect a commissioner of the revenue, unless otherwise provided by general law or special act.").

[2] Section 15.2-1636; see also VA. CONST. art. VII, § 4 (providing that the duties of the Commissioner "shall be prescribed by general law or special act"); § 58.1-3103 (2013); McGinnis v. Nelson Cty., 146 Va. 170, 172 (1926) (noting that the duties of commissioners "are regulated and defined by statute").

[3] Section 58.1-3103.

[4] See § 58.1-3109 (2013). Local governing bodies "may levy and provide for the assessment and collection of county, city or town license taxes on businesses, trades, professions, occupations and callings and upon the persons, firms and corporations engaged therein within the county, city or town ...." Section 58.1-3703(A) (Supp. 2016).

[5] Section 58.1-3715 (2013). See § 58.1-3714(O) (2013) for a definition of the term "contractor." Contractors are generally subject to local business license ordinances of the locality in which their principal office or any branch office is located as well as any other locality in which "the amount of business done by the contractor in such county, city or town exceeds or will exceed the sum of $25,000 for the license year." Section 58.1-3715(B).

[6] 1984-1985 Op. Va. Att'y Gen. 284, 284 (noting that a commissioner possesses "general authority and discretion to organize and manage his operations"). "While the powers and duties of a constitutional officer are those prescribed by statute ... except as limited by law, the constitutional officer is free to discharge his prescribed powers and duties in the manner in which he deems appropriate." Id.

[7] Section 58.1-3109(6).

[8] Section 58.1-3700 (2013). "Whenever a license is required by ordinance ... and whenever the local governing body shall ... levy a license tax on any business ... it shall be unlawful to engage in such business ... without first obtaining the required license." Id. Further, "[a]ny person who engages in a business without obtaining a required local license, or after being refused a license, shall not be relieved of the tax imposed by the ordinance." Id.

[9] Section 1-230 (2014) (defining "person" as "any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or any other legal or commercial entity and any successor, representative, agent, agency, or instrumentality thereof").

[10] Section 58.1-3110(A) (Supp. 2016).

[11] Id.

[12] Section 58.1-3109(6).

[13] A commissioner may only exercise authority under these statutes in order to assess the taxes of taxpayers within his jurisdiction. Section 58.1-3102 (2013) ("The jurisdiction, powers, and duties of commissioners do not extend beyond the bounds of their respective counties or cities.").