Ezel / Tax Rulings / VA
VA P.D. 07-27 Retail Sales and Use Tax 2007-01-11

What did the Fairfax County Circuit Court order in Intersections Inc.'s tax case against Virginia?

Short answer: The court set aside as contrary to law the tax assessed on license fees Intersections paid to DMS from April 1999 through December 2001. It ordered Virginia to refund $222,848.74 plus statutory interest. The published order refers to a separate letter opinion but does not reproduce the reasoning, so it does not establish why the license fees were nontaxable.

Apply this to your situation

This page answers the general question as of 2007. Ezel answers yours, under current Virginia tax law, with citations.

Currency note: this ruling is from 2007
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a Fairfax County Circuit Court order published by the Virginia Department of Taxation, not a Tax Commissioner ruling. It binds the parties, but the referenced November 8, 2006 letter opinion is not reproduced, the order does not explain the substantive tax reasoning, and the page states no later appellate history. Trial-court orders are not statewide precedent like Supreme Court of Virginia decisions. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

The Fairfax County Circuit Court set aside Virginia's assessment on license fees that Intersections Inc. paid to DMS between April 1999 and December 2001. The court characterized the assessment as contrary to law.

Virginia was ordered to refund $222,848.74, plus interest from July 19, 2005. The order listed rates of 8%, 9%, and 10% for successive periods through December 31, 2006 and required the appropriate Department rate afterward if payment had not yet been made.

The order says the result rested on a November 8, 2006 letter opinion, but that opinion is not included in the official source. The published text therefore supports the outcome and refund amount, but not a broader explanation of why the license fees escaped tax.

What this means for you

  • Intersections won correction of the identified assessment and a refund with interest.
  • The official page does not provide the court's substantive legal analysis.
  • The result should not be generalized to other licensing arrangements without the missing opinion and current authority.

Common questions

How much did the court order Virginia to refund?

$222,848.74, plus statutory interest.

Which payments were covered?

License fees paid to DMS between April 1999 and December 2001.

Does the order explain why the assessment was unlawful?

No. It refers to a separate letter opinion that is absent from this official page.

Citations and references

  • Va. Code §§ 58.1-15(A) and 58.1-1833(A).
  • Virginia Tax Bulletin 06-6.
  • Intersections Inc. v. Virginia Department of Taxation, Law No. CL 2005 0004731 (Fairfax Cnty. Cir. Ct. Jan. 11, 2007).

Subject

Court Case Intersections Inc., vs Virginia Department of Taxation

Source

Original ruling text

VIRGINIA: IN THE CIRCUIT COURT FOR FAIR FAX COUNTY

INTERSECTIONS INC.,

Petitioner,

vs. Law No. CL 2005 0004731

VIRGINIA DEPARTMENT OF TAXATION,

Respondent.

ORDER

This cause came before the Court on the 27th day of September, 2006, on cross motions for Summary Judgment on a Stipulated Record filed by the Petitioner and Respondent pursuant to the Consent Order filed September 11, 2006. The Court has considered the Stipulated Record and the Cross Motions filed by the parties and as heard argument of counsel. Based upon the foregoing and for the reasons set forth in the Court's Letter Opinion dated November 8, 2006, it is this 11th day of January, 2007.

ORDERED that the tax assessed against Petitioner by Respondent for license fees paid by Petitioner to DMS between April 1999 and December 2001 is set aside as contrary to law; and it is FURTHER ORDERED that the above-captioned case be removed from the Court's docket, and it is

FURTHER ORDERED that Respondent shall refund to Petitioner the sum of $222,848.74, paid by Petitioner to Respondent on or about July 19th, 2005, with interest on the foregoing sum pursuant Va. Code Ann. §§ 58.1-15(A) and 58.1-1833(A) at varying rates, according to the following schedule based upon the interest rate on overpayments contained in Va. Tax Bulletin 06-6:

Period Rate

July 19, 2005 - September 30, 2005 8%

October 1, 2005 - June 30, 2006 9%

July 1, 2006 - December 31, 2006 (or date of payment, whichever is sooner) 10%

FURTHER ORDERED that Respondent shall pay additional interest on the refund for periods beyond December 31, 2006, if Respondent has not refunded the aforementioned sum to Petitioner by that time, at the appropriate rates) promulgated by the Virginia Department of Taxation.

BY THE COURT:

Kathleen H. MacKay, J

SEEN AND AGREED:

Lance S. Jacobs, Admitted Pro Hac Vice

William J. Bethune, VSB #21427

Pepper Hamilton LLP

600 Fourteenth Street, NW

Washington, DC 20005

Phone: 202-220-1201

Fax: 202-220-1665

SEEN AND ACCEPTED TO:

Flora T. Hezel, VSB #

Assistant Attorney General-I

Office of the Virginia Attorney General

900 East Main Street

Richmond, VA 23219

Phone: 804-786-3237

Fax: 804-786-1904

A COPT TESTE:

JOHN T. FREY, CLERK

BY:___

Deputy Clerk

Date: 2/2/07

Original retained in the Office of the Clerk of the Circuit Court Fairfax County, Virginia

Get today's answer for your situation

You just read a 2007 ruling on this question. Ezel checks current Virginia tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.