Could a Virginia town obtain a Communications Sales and Use Tax Trust Fund share for qualifying 2006 revenue that it had not timely reported?

Subject

Communications Sales and Use Tax Trust Fund

Plain-English summary

Virginia authorized the town to receive a percentage share of the Communications Sales and Use Tax Trust Fund. The town had missed the original reporting process, so its fiscal-year 2006 telecommunications and cable revenue had not been included in the allocation certified by the Auditor of Public Accounts.

By 2010, Va. Code § 58.1-662 allowed a locality to request an adjustment by ruling, subject to the statutory redistribution limit, if it proved qualifying 2006 receipts. An independent certified public accountant and the town treasurer verified the town's amount. The Department found the evidence sufficient and authorized distributions beginning with the first payment after October 18, 2010, plus any necessary share of distributions made after that date.

What this means for you

• This ruling concerned allocation among Virginia local governments, not the amount charged to a communications customer.
• The town had to prove qualifying fiscal-year 2006 revenue from repealed local communications taxes and fees.
• Independent CPA verification and town-treasurer documentation satisfied the Department under these facts.
• The procedure and dates are historical and depend on the 2010 version of Va. Code § 58.1-662.

Common questions

Why had the town received no Trust Fund distribution before the ruling?

Its 2006 revenue had not been timely submitted to the Auditor of Public Accounts and therefore was not included in the original certified allocation.

Did the ruling award a stated dollar amount?

No public amount appears in the redacted ruling. It authorized a percentage share based on the verified qualifying revenue.

Citations and references

• Va. Code § 58.1-662.
• House Bill 568, Acts of Assembly 2006, Chapter 780.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-253

Original ruling text

November 10, 2010

Re: Ruling Request: Communications Sales and Use Tax

Dear *:

This is in response to your request for a ruling authorizing the * (the "Town") to receive a percentage share of the distribution from the Communications Sales and Use Tax Trust Fund (the "Fund").

FACTS

During Fiscal Year 2006, the Town received * in telecommunications and television cable funds. This has been verified in writing by an independent certified public accountant and through documentation provided by the town treasurer. However, the Town has never received a distribution from the Fund as these revenues were not certified by the Auditor of Public Accounts ("APA") because the amount was not submitted to the APA in a timely fashion as required by Va. Code § 58.1-662. The Town requests a ruling to authorize it to receive a percentage share of distribution from the Fund based on these revenues.

DETERMINATION

Effective January 1, 2007, House Bill 568 ( Acts of Assembly 2006, Chapter 780) replaced many of the state and local communications taxes and fees with a centrally administered state Communications Sales and Use Tax, a Landline E-911 Tax, and a Cable Rights-of-Way Use Fee. Revenues from these new taxes and fees are deposited into the Fund and, after the deduction of administrative costs and the costs of the Virginia Relay Center, are distributed to local governments to replace the revenues from the repealed taxes and fees.

House Bill 568 provided that the percentage share of the net revenue that each locality receives is determined by the APA. Each locality's percentage share is based on the percentage of telecommunications and television cable funds the locality received in Fiscal Year 2006 based on local tax rates adopted on or before January 1, 2006. The formula included local funds from any consumer utility tax on landline and wireless telephone service; E-911 tax on landline telephone service; portion of the local BPOL tax on public service companies exceeding .5% currently billed to customers in some grandfathered localities; cable television franchise fees; local consumer utility tax on cable television; and video programming excise tax on cable television services. Localities were required to report these revenues to the APA by October 1, 2006.

Beginning July 1, 2009, legislation enacted in the 2009 Session of the General Assembly amended Va. Code § 58.1-662 to allow localities to report to TAX any telecommunications or television cable funds collected in Fiscal Year 2006 from repealed local communications taxes and fees that were not submitted, or were incorrectly submitted, to the APA in order to receive, or correct, monthly distributions from the Fund. The locality could report such telecommunications or television cable funds to TAX by either an audited financial statement or a statement of receipts verified in writing by an independent certified public accountant.

Effective July 1, 2010, Va. Code § 58.1-662 has been amended to change the procedures for a locality to request an adjustment of its percentage share of distribution from the Fund. Beginning July 1, 2010, a locality may request a ruling from TAX adjusting its distribution from the Fund so long as the aggregate redistribution from all other localities does not exceed $100,000. A locality is required to present evidence to TAX that it had collected telecommunications or television cable funds in Fiscal Year 2006 from repealed local communications taxes and fees before obtaining a ruling from TAX.

Based on the correspondence with the independent certified public accountant and the town treasurer, the Town has shown to my satisfaction that it collected telecommunications or television cable funds in the amount of * in Fiscal Year 2006 from repealed local communications taxes and fees. The Town is authorized to receive a percentage share of the distribution from the Fund beginning with the first distribution after October 18, 2010. As soon as TAX has made the appropriate systems changes, the Town will receive its percentage share of the current distribution from the Fund and, if necessary, its percentage share of any prior distributions that occurred after October 18, 2010.

CONCLUSION

The Va. Code sections and regulations cited, along with other reference documents, are available on-line in the Tax Policy Library section of TAX's web site, located at www.policylibrary.tax.virginia.gov. If you have any questions about this determination, you may contact * in the Office of Tax Policy, Policy Development Division, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

PD/1-4581568875