Could a town receive a Communications Sales and Use Tax Trust Fund share after missing the original 2006 certification deadline?

Plain-English summary

Virginia authorized the town to begin receiving a percentage share of the Communications Sales and Use Tax Trust Fund after it proved qualifying fiscal-year 2006 revenues. The town had received telecommunications and cable funds in 2006 but missed the original reporting deadline to the Auditor of Public Accounts, so no percentage share had been certified.

Later legislation created a correction process and, beginning July 1, 2010, allowed localities to request Department rulings adjusting fund shares within the aggregate redistribution limit. The town submitted communications-provider documents, its own records, and bank statements showing the qualifying receipts.

The Department approved a share beginning with the first distribution after the town's July 5, 2012 request. It also authorized an added amount representing the town's share of distributions made after that date while the request was pending.

What this means for you

• A locality seeking a fund-share correction needed records proving eligible fiscal-year 2006 revenues from rates adopted by January 1, 2006.
• Missing the original certification did not necessarily end relief after the statutory correction process was enacted.
• The effective date of the written ruling request determined which prior distributions were included here.
• This is a historical local-government distribution ruling; current procedures may differ.

Common questions

Q: Why had the town received no fund distributions?
A: Its fiscal-year 2006 revenues were not timely submitted for certification.

Q: What evidence supported the correction?
A: Provider documentation, town records, and bank statements.

Q: When did the town's share begin?
A: With the first distribution after July 5, 2012, plus an amount for distributions made after that date.

Citations and references

• Va. Code § 58.1-662.
• House Bill 568, 2006 Va. Acts ch. 780.

Subject

Communications Sales and Use Tax Trust Fund.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 13-70

Original ruling text

May 10, 2013

Re: Ruling Request: Communications Sales and Use Tax

Dear *:

This is in response to your request for a ruling dated July 5, 2012, authorizing the * (the "Town") to receive a percentage share of the distribution from the Communications Sales and Use Tax Trust Fund.

FACTS

During Fiscal Year 2006, the Town received * in telecommunications and television cable funds. 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 ("Telecommunications and Television Cable Funds"). 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 the Department of Taxation ("Department") any Telecommunications and Television Cable Funds collected in Fiscal Year 2006 from local tax rates adopted on or before January 1, 2006 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 and Television Cable Funds to the Department by either an audited financial statement or a statement of receipts verified in writing by an independent certified public accountant.

Legislation enacted in the 2010 Session of the General Assembly amended Va. Code § 58.1-662 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 the Department 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 the Department that it collected Telecommunications and Television Cable Funds in Fiscal Year 2006 from local tax rates adopted on or before January 1, 2006 before obtaining a ruling from the Department.

The Town has provided documentation from a communications service provider, town records, and bank statements as evidence that it collected Telecommunications and Television Cable Funds in the amount of * in Fiscal Year 2006 from local tax rates adopted on or before January 1, 2006. Accordingly, it is my determination that the Town is authorized to receive a percentage share of the distribution from the Fund beginning with the first distribution after July 5, 2012. As soon as the Department has made the appropriate systems changes, the Town will receive its percentage share of the current distribution from the Fund. The Town will also receive an additional amount representing its share of prior distributions made after July 5, 2012.

CONCLUSION

The Va. Code sections and regulations cited, along with other reference documents, are available on-line in the Laws, Rules, & Decisions section of the Department's web site, located at www.tax.virginia.gov/policy . 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/1-5195162331