Ezel / Tax Rulings / VA
VA P.D. 17-205 Communications Sales and Use Tax 2017-12-13

Does underreported cable franchise fee revenue increase a locality's Trust Fund distribution when the corrected fee remains below its percentage share?

Short answer: No. An underreported cable franchise fee increases a locality's Communications Sales and Use Tax Trust Fund distribution only when the franchise fee owed exceeds the locality's ordinary percentage distribution. Here, the corrected fee was lower than that percentage share.

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This page answers the general question as of 2017. Ezel answers yours, under current Virginia tax law, with citations.

Currency note: this ruling is from 2017
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 an official published ruling of the Virginia Tax Commissioner responding to a redacted locality's request about Communications Sales and Use Tax Trust Fund distributions. It is based on the locality's stated facts and the law in effect when issued; another locality or a different reporting period should not assume the same result. This summary is informational only and is not legal or tax advice. Consult a licensed Virginia tax professional about your specific situation.
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)

Subject

Cable Franchise Fee Underreporting and Trust Fund Distribution

Plain-English summary

Virginia told a locality that correcting a cable provider's underreported franchise fee would not increase the locality's Trust Fund distribution when the corrected fee remained below the locality's normal percentage share.

Va. Code § 58.1-662 gives each locality its full cable franchise fee before percentage-based distributions are made. But an underreporting correction produces an increase only when the franchise fee owed to that locality exceeds the amount it already receives through its percentage distribution.

What this means for you

A locality does not automatically receive an extra distribution whenever a provider corrects an underreported franchise fee. The comparison is between the full corrected fee and the locality's percentage share from the Fund.

Citations and references

  • Va. Code § 58.1-662 — cable franchise fee and percentage distributions.
  • P.D. 17-27 — provider filing obligation cited in the ruling.
  • P.D. 06-138 — Communications Taxes distribution examples cited in the ruling.

Source

Original ruling text

December 13, 2017

Dear *:

This is in response to your ruling request regarding * ability to recover cable franchise fees that were under-reported by a local cable television provider. The corrected total amount of the cable franchise fees is less than the percentage distribution due to the locality from the Communications Sales and Use Tax Trust Fund (“the Fund”) for the period.

Public Document (P.D.) 17-27 (March 17, 2017) explained that a cable provider's obligation to pay a monetary franchise fee based on gross revenues is fulfilled with its filing of Form CT-75, Virginia Communications Taxes Return and Form CT-75B, Virginia Cable Franchise Fee Schedule with the Department.

Code of Virginia § 58.1-662 ensures that every locality receives the full cable franchise fee due from its cable providers before any locality receives a distribution based on its percentage share of the revenues deposited in the Fund.

In the situation you describe, where a cable provider has under-reported its franchise fee, the distribution provision can only result in an increased distribution to the locality when the franchise fee owed to the locality exceeds its percentage distribution from the Fund. See the Guidelines and Rules for the Virginia Communications Taxes, P.D. 06-138 (November 1, 2006) for examples of Fund distributions.

I hope the above information responds to your inquiry. The Code of Virginia section cited is available online at www.law.lis.virginia.gov . The public documents cited are available online in the Department's Laws, Rules and Decisions library at www.tax.virginia.gov/laws-rules-decisions .

If you should have any additional questions about this ruling, please contact * at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

PD/1-6554259693.sk

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