Verizon Online LLC v. Horbal
293 Va. 176
| Va. | 2017Background
- Verizon Online LLC leased FiOS television set top boxes (converters/tuners) to customers in Chesterfield County and reported them as tangible personal property for tax years 2008–2010.
- Chesterfield County Commissioner of the Revenue (Horbal) assessed and refused Verizon’s local appeals, treating the boxes as taxable "machines"; Verizon sought refunds totaling about $1,003,657.
- Verizon appealed Horbal’s denial to the Virginia Tax Commissioner, who ruled the set top boxes are classified as "intangible personal property" under Code § 58.1-1101(A)(2a) and ordered refunds for 2008–2010.
- Horbal sought judicial review in the circuit court; the court affirmed the Tax Commissioner’s classification but held Verizon’s local appeals for 2008 and 2009 were untimely and thus denied refunds for those years.
- The Supreme Court affirmed that the set top boxes are intangible personal property (not taxable locally) but reversed the circuit court on the timeliness issue, holding the County waived timeliness by failing to raise it before the Tax Commissioner.
Issues
| Issue | Plaintiff's Argument (Horbal) | Defendant's Argument (Verizon) | Held |
|---|---|---|---|
| Whether Verizon's set top boxes are "machines" taxable locally under Code § 58.1-1101(A)(2a) | Boxes fit within the plain meaning of "machines" and thus fall into the local-taxable exception | Boxes are personal property used in a cable business and fall within the statutory classification of intangible personal property; legislative history (1984 Acts) shows tuners/converters removed from taxable list | Court held boxes are intangible personal property and not taxable locally; affirmed Tax Commissioner and circuit court on this point |
| Whether refunds for tax years 2008–2009 are barred because Verizon's local appeal was untimely under Code § 58.1-3983.1(B) | Timeliness is required and not met for 2008–2009; Tax Commissioner lacked jurisdiction to order refunds for those years | County failed to raise timeliness before the Tax Commissioner; timeliness is an "other jurisdictional" element that can be waived | Court held timeliness issue was not preserved (waived) because County did not raise it administratively; reversed circuit court and remanded for refunds for 2008–2009 |
Key Cases Cited
- City of Richmond v. Virginia Elec. & Power Co., 292 Va. 70 (presumption of validity for State Tax Commissioner determinations)
- Daily Press, Inc. v. City of Newport News, 265 Va. 304 (tax statutes construed against government and for taxpayer)
- City of Winchester v. American Woodmark Corp., 250 Va. 451 (same rule on tax statute construction)
- Eberhardt v. Fairfax County Emps. Ret. Sys. Bd. of Trs., 283 Va. 190 (Acts of Assembly may be consulted for enacted legislation)
- Board of Supervisors v. Board of Zoning Appeals, 271 Va. 336 (distinguishing subject matter jurisdiction from other waivable jurisdictional elements)