Tax Type
Local Taxes
Description
Churches, Authority of Cities to Levy Consumer Utility Taxes on Churches
Topic
Local Power to Tax
Local Taxes Discussion
Taxability of Persons and Transactions
Date Issued
11-19-1985
[Opinion - Virginia Attorney General: 1985 at 273]
REQUEST BY: Honorable Madison E. Marye Member, Senate of Virginia
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
This is in reply to your request for my opinion whether cities have the authority to levy consumer utility taxes on churches.
A locality's authority to impose utility taxes on consumers of certain utility services is found in §§ 58.1-3812, 58.1-3813 and 58.1-3814 of the Code of Virginia. §58.1-3812 states that
"[a]ny county, city or town may impose a tax on the consumers of the utility service or services provided by telegraph and telephone companies or other corporations coming within the provisions of Chapter 26 (§ 58.1-2600 et seq.)."
Section 58.1-3813 provides that
"any county, city or town which has, singly or by joint agreement, established or will establish an enhanced 911 emergency telephone system, hereinafter referred to as E-911, as defined herein, may impose a special tax on the consumers of the telephone service or services provided by any corporation coming within the provisions of Chapter 26 (§ 58.1-2600 et seq.), except that no such taxes shall be imposed on federal, state and local government agencies."
Finally, § 58.1-3814 states that
"[a]ny county, city or town may impose a tax on the consumers of the utility service or services provided by any water or heat, light and power company or other corporations coming within the provisions of Chapter 26 (§ 58.1-2600 et seq.) . . . ."
I am not aware of any constitutional or statutory provision which would operate to exempt churches from the preceding statutes if a consumer utility tax is imposed by local ordinance.1 §58.1-3813 contains a specific exemption for federal, state and local government agencies; however, churches are not specifically exempted from any of the three consumer utility taxes.
Churches do enjoy an exemption from real and personal property taxes if certain constitutional and statutory conditions are satisfied. As the clear language of Art. X, § 6(a) of the Constitution of Virginia (1971) and §§ 58.1-3606(A), 58.1-3609(A) and 58.1-3617 of the Code indicate, however, the exemption applies only to direct taxes on property.2 Utility taxes are not direct taxes on property. See 1971-1972 Report of the Attorney General at 419. The exemptions from property tax allowed to churches under the Constitution and Code of Virginia, therefore, do not apply to utility taxes imposed under §§ 58.1-3812, 58.1-3813 and 58.1-3814.
Based on the foregoing, it is my opinion that cities have the authority to levy the consumer utility taxes authorized by §§ 58.1-3812, 58.1-3813 and 58.1-3814 on churches. See also 1948-1949 Report of the Attorney General at 235 (consumers' tax on utility bills).
1 Localities have the option to exempt churches from the utility taxes if they so desire. See 1972-1973 Report of the Attorney General at 391.
2 Article X, § 6(a) provides that "the following property and no other shall be exempt from taxation, State and local, including inheritance taxes:
"(2) Real estate and personal property owned and exclusively occupied or used by churches or religious bodies for religious worship or for the residences of their ministers.
"(6) Property used by its owner for religious . . . purposes, as may be provided by classification or designation by a three-fourths vote of the members elected to each house of the General Assembly and subject to such restrictions and conditions as may be prescribed." (Emphasis added.)
Section 58.1-3606(A) states:
"Pursuant to the authority granted in Art. X, § 6(a)(6) of the Constitution of Virginia to exempt property from taxation by classification, the following classes of real and personal property shall be exempt from taxation:
"(2) Buildings with land they actually occupy, and the furniture and furnishings therein owned by churches or religious bodies and exclusively occupied or used for religious worship or for the residence of the minister of any church or religious body, and such additional adjacent land reasonably necessary for the convenient use of any such building." (Emphasis added.)
Section 58.1-3609(A) states:
"The real personal property of an organization classified in §§ 58.1-3610 through 58.1-3620 and used by such organization for a religious . . . purpose as set forth in Article X, § 6(a)(6) of the Constitution of Virginia, the particular purpose for which such organization is classified being specifically set forth within each section, shall be exempt from taxation, so long as such organization is operated not for profit and the property so exempt is used in accordance with the purpose for which the organization is classified." (Emphasis added.)
Section 58.1-3617 states, in pertinent part:
"Any church, religious association or religious denomination operated exclusively on a nonprofit basis for charitable, religious or educational purposes is hereby classified as a religious and charitable organization. Notwithstanding § 58.1-3609, only property of such association or denomination used exclusively for charitable, religious or educational purposes shall be so exempt from taxation." (Emphasis added.)
Attorney General's Opinion