When did certified pollution-control equipment become exempt from Virginia local business property tax?

Plain-English summary

Virginia advised that certified pollution-control equipment and facilities were exempt from local property tax for tax years beginning on or after January 1, 2011. Before that date, a locality could choose by ordinance whether to grant a full or partial exemption.

The appropriate environmental authority—not the Department of Taxation—determined whether property qualified and the effective date of its certification. DEQ administered certifications for several state boards. Virginia Tax's role was limited mainly to issuing the related sales-tax exemption certificate after receiving a proper certification.

For pre-2011 years, the county's own ordinance controlled any refund. If the locality had no ordinance granting an exemption, no local property-tax refund was required. For 2011 and later, the Department would defer to the certifying agency on the certification's effective date.

What this means for you

• Separate environmental certification from local tax administration.
• For 2011 and later years covered by this opinion, proper certification triggered the statutory local exemption.
• Earlier years required a supporting local ordinance.
• Refund timing depends on the certification effective date, tax year, and local procedures.

Common questions

Q: Who certifies pollution-control property?
A: The appropriate state environmental authority, with DEQ administering certification for specified boards.

Q: Did the statewide exemption apply before 2011?
A: No. Pre-2011 exemption depended on local ordinance.

Q: Who determines the certification effective date?
A: The certifying agency, not the Department of Taxation.

Citations and references

• Va. Code §§ 58.1-3660, 58.1-3983.1 J 2, and 58.1-609.3 9 i.
• 23 VAC 10-210-280 C.
• 2009 Va. Acts ch. 671.
• Virginia Public Documents 04-28, 96-324, and 07-173.

Subject

Certification of pollution control equipment and facility by Department of Environmental Quality

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 13-62

Original ruling text

May 9, 2013

Re: Request for Advisory Opinion

Business Tangible Personal Property Tax

Dear *:

This is in response to your letter in which the * (the "County") requests an advisory opinion regarding the certification of pollution control equipment by the Department of Environmental Quality.

The business tangible personal property (BTPP) tax is imposed and administered by local officials. Virginia Code § 58.1-3983.1 J 2 authorizes the Department to issue advisory opinions on local business tax matters. The following opinion has been issued subject to the facts presented to the Department summarized below. Any change in facts or the introduction of new facts may lead to a different result.

The Code of Virginia sections, regulation, and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department's web site.

FACTS

A taxpayer, who has a definite place of business in the County, has applied to the Department of Environmental Quality (DEQ) to have certain business tangible personal property certified as pollution control equipment. According to the County, the taxpayer would file refund claims for property tax paid based on the certification. The County is requesting guidance concerning the effective date of such certification.

OPINION

Under Va. Code § 58.1-3660, certified pollution control equipment and facilities are defined to be a separate class of real or personal property for purposes of local taxation. For tax years beginning on or after January 1, 2011, Va. Code § 58.1-3660 A exempts such property from local taxation. See Chapter 671, 2009 Acts of Assembly . Prior to the legislative change, the governing body of any locality was authorized to exempt or partially exempt certified pollution control equipment and facilities from local taxation.

In order for the pollution control equipment or facilities to be certified, the appropriate state certifying authority must certify such equipment or facilities to the Department as having been constructed, reconstructed, erected, or acquired in conformity with the state program or requirements for abatement or control of water or atmospheric pollution or contamination. Virginia's certifying authorities include the State Water Control Board (SWCB), the State Air Pollution Control Board (SAPCB), the Department of Mines, Minerals and Energy (DMME), the Virginia Waste Management Board (VAWMD), and any interstate agency authorized to act in place of a certifying authority of the Commonwealth. DEQ administers the certification process on behalf of SWCB, SAPCB and VAWMD.

The Department's role in the certification process is limited to the administration of the retail sales and use tax exemption under Va. Code § 58.1-609.3 9 i. Once certification is forwarded from an appropriate certifying authority, the Department automatically mails an exemption certificate to the entity seeking the certification. See Title 23 of the Virginia Administrative Code (VAC) 10-210-280 C. Further, the Department relies solely on a proper pollution control certification issued by the appropriate certifying authority before granting the sales and use tax exemption. See Public Document (P. D.) 96-324 (11/8/1996) and P.D. 07-173 (11/14/2007).

Although the Department is authorized to interpret local ordinances, it is not required to do so. See the Guidelines for Appealing Local Business Taxes , issued as P.D. 04-28 (6/25/2004). Even where the Department does offer its opinion with regard to a local ordinance, the interpretation, application and administration of a locality's ordinance remains the responsibility of the local assessing official.

For tax years prior to January 1, 2011, pollution control equipment was only exempt to the extent permitted by local ordinance. Such ordinances would govern how a locality would respond to a refund request by a taxpayer for tax years both before and after the effective date of the General Assembly's amendment to Va. Code § 58.1-3660.

If a locality did not have an ordinance exempting or partially exempting pollution control equipment property from local taxation, no exemption would be granted and no refund of property tax would be required for tax years prior to January 1, 2011. For tax years beginning on or after January 1, 2011, the Department, for the reasons indicated above, would defer to the certifying agency as to the effective date of any pollution control equipment and facility certification.

If you have any questions regarding this opinion, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-5356380757.o