CITY OF LYNCHBURG v. ENGLISH CONSTRUCTION COMPANY, INCORPORATED, ET AL.
Record No. 081344
Supreme Court of Virginia
April 17, 2009
Senior Justice CHARLES S. RUSSELL
Prеsent: Hassell, C.J., Keenan, Koontz, Lemons, Goodwyn, and Millette, JJ., and Russell, S.J. FROM THE CIRCUIT COURT OF THE CITY OF LYNCHBURG Mosby G. Perrow, III, Judge
This appeal involves the power of a city to impose business license taxes on the gross receipts of a contractor, whose principal place of business is within the city, from business done outside the city. Thе city contends that it is entitled to impose taxes on all the contractor‘s gross receipts from work done anywhere in the Commonwealth, subject only to the contractor‘s right to deduct taxes actually paid to other localities on those receipts. The contractor contends that the city has the power to tax only those extraterritorial receipts derived from business done in localities in which the contractor has no definite place of business. This issue arises because some localities, although authorized by law to impose business license taxes on the gross reсeipts of contractors for work done locally, nevertheless decline to impose such taxes. The city contends that it has the authority to tax such extraterritorial receipts which would otherwise remain untaxed.
The parties filed a written stipulation of facts in the circuit court and agree that the case presents a pure question of law. English Construction Company, Incorporated, and W.C. English, Inc. (collectively, English) are “contractors” as defined by
In 2004, pursuant to an audit of English‘s records by the City‘s Commissioner of the Revenue, the City identified gross receipts in excess of $115,000,000 that English had received from work done in localities outside the City in the tax years 2001 through 2004, which had not been reported to the City. English contended that the City was not authorized to tax those recеipts, but after some adjustments for taxes paid to other localities, English paid the taxes assessed by the City on the receipts at issue. English maintained a “definite
English filed, on behalf of the two English corporations, applications for relief from erroneous assessments, pursuant to
In lеtter opinions, the court ruled that the City had no statutory authority to assess license taxes on the gross receipts of contractors derived from business done within any Virginia locality outside the City, when the contractor had a definite place of business in such a locality. The court entered summary judgments in favor of the two English corporations, denied the City‘s motions for summary judgment,
Analysis
For the purposes of this appeal, it is useful to divide the categories of cоntractors’ gross receipts affected by the business license tax statutes into several classifications:
- Receipts from work done within the locality in which the principal office is located;
- Receipts from work done in another locality in which the contractor has a definite place of business but which are not taxed by that other locality;
- Receipts from work done in another locality in which the contractor has a definite place of business and which are taxed by that other locality;
- Receipts amounting to $25,000 or less in any year from work done in another locality in which thе contractor has no definite place of business; and
- Receipts amounting to more than $25,000 in any year from work done in another locality in which the contractor has no definite place of business.
The controversy between the City and English involves only receipts of the second class desсribed above, but consideration must be given to all of them in order to determine the legislative intent and give the applicable statutes harmonious effect.
The provisions of
§ 58.1-3703.1. Uniform ordinance provisions.
A. Every ordinance levying a license tax pursuant to this chapter shall include provisions substantially similar to this subsection. As they apply to licensе taxes, the provisions required by this section shall override any limitations or requirements in Chapter 39 (§ 58.1-3900 et seq.) of this title to the extent that they are in conflict.
. . . .
3. Situs of gross receipts.
a. General rule. Whenever the tax imposed by this ordinance is measured by gross receipts, the gross receipts included in the taxable measure shall be only those gross receipts attributed to the
exercise of a privilege subject to licensure at a definite place of business within this jurisdiction. In the case of activities conducted outside of a definite place of business, such as during a visit to a customer location, the gross receipts shаll be attributed to the definite place of business from which such activities are initiated, directed, or controlled. The situs of gross receipts for different classifications of business shall be attributed to one or more definite places of business or offices as follows: (1) The gross receipts of a contractor shall be attributed to the definite place of business at which his services are performed, or if his services are not performed at any definite place of business, then the definite place of business from which his services are directed or controlled, unless the contractor is subject to the provisions of § 58.1-3715; . . . .
§ 58.1-3715. License requirements for contractors.
A. When a contractor has paid any local license tax required by the county, city or town in which his principal office and any branch office or offices may be located, no further license or license tax shall be required by any other county, city or town fоr conducting any such business within the confines of this Commonwealth. However, when the amount of business done by any such contractor in any other county, city or town exceeds the sum of $25,000 in any year, such other county, city or town may require of such contractor a local license, and the amount of business done in such other county, city or town in which a license tax is paid may be deducted by the contractor from the gross revenue reported to the county, city or town in which the principal office or any branch office of the contractor is located.
In harmonizing the foregoing sections, thе circuit court necessarily considered the effect of the last clause of
Applying that rule to the “unless” clause, the court held thаt it applied only to the clause immediately preceding it: “if his services are not performed at any definite place of business, then the definite place of business from which his services are directed or controlled.”
The City argues on appeal that this was error, that the “unless” clause qualifies the entire subsection, that
It is true that exemption and deduction provisions are strictly construed against the taxpayer, but those rules only apply when a local governing body has the cleаr statutory authority to impose a tax in the first place. In Commonwealth v. Carter, 198 Va. 141, 147, 92 S.E.2d 369, 373 (1956), we said that there was a “well-established principle that statutes imposing taxes are to be construed most strongly against the government and are not to be extended beyond the clear import of the language used . . . and the official who seeks to enforce a tax must be able to put his finger on the statute which confers such authority.” More recently, we said: “Taxing statutes must be construed strongly in the
The statutes applicable tо this appeal are contained in Chapter 37 (“License Taxes“) of Title 58.1 of the Code of Virginia (§§ 58.1-3700 through -3735).
That section goes on to provide:
The situs of gross receipts for differеnt classifications of business shall be attributed to one or more definite places of business or offices as follows:
(1) The gross receipts of a contractor shall be attributed to the definite place of business at which his services are performed.
It is the duty of the courts to construe statutory enactments so as to avoid rеpugnance and conflict between them and, if possible, to give force and effect to each of them. Sexton v. Cornett, 271 Va. 251, 257, 623 S.E.2d 898, 901 (2006). Statutes should be construed as a whole, and the courts should adopt that interpretation that will carry out the legislative intent. Garrison v. First Federal Sav. & Loan, 241 Va. 335, 340, 402 S.E.2d 25, 28 (1991). No part of an act should be treated as meaningless unless absolutely necessary. Id. The City‘s interpretation renders meaningless
Application of the familiar principles of statutory construction cited above makes clear the propriety of the circuit court‘s reasoning in applying the “last antecedent” rule when construing
Conclusion
Because the circuit court correctly construed and applied the applicable tax laws, we will affirm the judgments from which these appeals were taken.
Affirmed.