Was AMG National Trust Bank subject to Virginia bank franchise tax rather than corporate income tax?

Plain-English summary

The Norfolk Circuit Court held that AMG National Trust Bank was a “bank” for Virginia tax purposes. It granted AMG summary judgment and denied both the Department's summary-judgment motion and motion to reconsider.

As a bank, AMG was subject to Virginia's bank franchise tax and exempt from corporate income tax. The court ordered the Department to refund all corporate income tax AMG paid for 2004 through 2010, plus interest.

For years after 2010, the order required Virginia to continue treating AMG as a bank unless it ceased being a national or state banking association or the statutory bank definition changed.

The court denied AMG's request for attorney fees and costs.

What this means for you

• Entity classification can determine which Virginia business tax applies.
• Bank-franchise-tax status can exclude corporate income tax.
• The order's prospective treatment was tied to AMG's banking status and unchanged statutory definition.
• Check later history before relying on a trial-court order.

Common questions

Q: Which tax applied to AMG?
A: Virginia bank franchise tax.

Q: What happened to corporate income tax paid for 2004-2010?
A: The court ordered refunds with interest.

Q: Did AMG receive attorney fees?
A: No.

Citations and references

• Va. Code § 58.1-1200 et seq.
• AMG National Trust Bank v. Commonwealth of Virginia, Department of Taxation, Norfolk Circuit Court, Case No. CL10-3031, final order entered July 26, 2011.

Subject

AMG National Trust Bank v. Commonwealth of Virginia, Department of Taxation

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 11-153

Original ruling text

VIRGINIA: IN THE CIRCUIT COURT FOR THE CITY OF NORFOLK

AMG NATIONAL TRUST BANK,

Plaintiff,

v. Case No. CL10-3031

COMMONWEALTH OF VIRGINIA,

DEPARTMENT OF TAXATION,

Defendant.

ORDER

THIS CAUSE came on cross-motions for summary judgment by the parties, and on the Defendant's Motion to Reconsider. Argument was held before the Court on March 28, 2011 and on June 7, 2011;

UPON CONSIDERATION of the Agreed Stipulation of Facts presented by the parties, the pleadings, briefs and the arguments of counsel, the Memorandum filed by the Defendant, and for the reasons stated in the Court's letter opinions dated April 7, 2011 and July 6, 2011;

The Court FINDS that the Plaintiff is a "bank" for purposes of the Virginia Bank Franchise Tax Act, Va. Code § 58.1-1200, et seq. The Court therefore GRANTS Plaintiff's Motion for Summary Judgment and DENIES Defendant's Motion for Summary Judgment.

The Court FURTHER FINDS that the Plaintiff is subject to the Bank Franchise Tax and is exempt from the Virginia corporate income tax. The Court therefore DENIES the Defendant's Motion to Reconsider.

In Accordance with these rulings, the Court also GRANTS the further relief requested by the Plaintiff as follows:

The Defendant is ORDERED to promptly refund all corporate income taxes paid by the Plaintiff from 2004-2010, plus interest;

IT IS FURTHER ORDERED that for tax years after 2010, the Plaintiff shall be deemed a bank for purposes of assessing Virginia taxes unless Plaintiff is no longer a national or state banking association or unless the definition of "bank" under the Virginia Bank Franchise Tax Act is changed.

The Plaintiff's request for attorney's fees and costs is DENIED.

Enter: 26, July 2011

Mary Jane Hall

Circuit Court Judge

[Endorsements ]

COPY TESTE:

GEORGE E. SCHAEFER, CLERK

NORFOLK CIRCUIT COURT

BY: Janice O'Hern, Deputy Clerk

Authorized to sign on behalf

of George E. Schaefer

Date: 8-1-11

I ASK FOR THIS:

Jeffrey T. Talbert (VSB # 18068)

Andrew M. Hendrick (VSB # 42852)

Shuttleworth, Ruloff, Swain, Haddad & Morecock., P.C.

4525 South Blvd., Ste. 300

Virginia Beach, VA 23452

757-671-6000

757-671-6004 (fax)

[email protected]

Counsel for the Plaintiff

SEEN AND OBJECTED, FOR THE REASONS STATED ON THE RECORD:

Elizabeth Myers, Esq. (VSB # 80739)

Assistant Attorney General

Office of the Attorney General of Virginia

900 East Main Street

Richmond, Virginia 23219

804-786-9516

804-692-1647(fax)

Counsel for the Commonwealth of Virginia Department of Taxation