8.1 – Taxing Authorities of Towns in Virginia
A property owners association like MPOA can only levy fixed fees on property owners. Towns in Virginia may levy a variety of taxes on its property owners, citizens, businesses, and visitors, mostly pursuant to Title 58.1 of the VA Code entitled «Taxation». These taxes provide a broad base of revenues to help pay for the cost of town services. The town taxes are discussed below and can be broken down into various categories based on their relationship to similar taxes levied by the county in which the town is situated.
Currently, all Massanutten citizens and property owners pay various taxes to Rockingham County. Should Massanutten incorporate into a town, it is important that citizens and property owners understand that the VA Code requires them to continue paying most of these same County taxes. County taxes pay for many county services that still would be available to town citizens after any town incorporation. The town taxes that can be levied in addition to similar county taxes are shown in the following table:
| Tax Type | Authority | Remarks |
|---|---|---|
| Real Property | § 58.1-3200 | Also known as Real Estate Tax. Towns may conduct their own reassessments — but most towns rely on county assessments. |
| Tangible Personal Property | § 58.1-350 § 58.1-3523 |
Personal property such as motor vehicles. |
| Machinery and Tools | § 58.1-3507 | Rate may be higher than levied on tangible personal property. |
| Merchants Capital | § 58.1-3509 | Rate may not exceed the rate in effect on 1/1/78. Tax may not be levied on any class on which Business, Professional, & Occupational License Tax is levied. |
| Admissions | § 58.1-3818 § 58.1-3840 |
Taxes are levied on admissions to civic centers, stadiums and amphitheatres.Counties authorized to levy tax are limited to maximum of 10%. |
| Daily Rental Property | § 58.1-3510.1 | Similar to sales tax, limited to 1% of amount charged for rental property (not real estate). |
Additionally, there are taxes that can be levied by a town in lieu of county taxes. These taxes are shown in the following table:
| Tax Type | Authority | Remarks |
|---|---|---|
| Motor Vehicle License (Decals) | § 46.2-752 | Imposition of tax by town constitutes a credit for taxpayers on the county tax. The taxpayer is liable to the county for the difference between the town tax and the county tax. Tax may not exceed motor vehicle license tax imposed by State. |
| Alcohol License | § 4.1-205 § 4.1-233 |
Localities authorized to collect taxes from persons engaged in manufacturing, selling, or bottling alcoholic beverages and mixed beverages. Maximum taxes set by State law. |
| Bank Franchise | § 58.1-1208 § 58.1-1211 |
Limited to maximum of 80% of the State rate. Counties may tax only those banks located outside town corporate limits. |
| Communications Sales and Use Tax |
§ 58.1-662 | Tax collected and distributed by the State. |
Furthermore, there are taxes which can be levied by a town and, if the town council agrees, county taxes may be added to the town taxes. These taxes are shown in the following table:
| Tax Type | Authority | Remarks |
|---|---|---|
| Food and Beverage | § 58.1-3833 § 58.1-3840 |
Counties limited to maximum rate of 4% and may levy tax only after approved in referendum. There is no limit on towns and referendum not required. |
| Transient Occupancy | § 58.1-3819 § 58.1-3840 |
Counties limited to maximum rate of 2% with no limit on towns. |
| Business, Professional and Occupational License (BPOL) |
§ 58.1-3700, et seq. |
Commonly called «gross receipts tax». May be levied on almost any type of business or occupation. State law places variety of caps on rates that can be levied against particular types of businesses. All localities may impose a license fee in those instances in which the tax is not levied. The fee may range from $30 to $100, depending on the size of the locality. Any locality imposing a fee or tax must adopt a uniform ordinance. No category can be required to pay both merchants’ capital tax and BPOL tax to the same jurisdiction. |
Lastly, there are taxes which can be levied by a town, if there are no similar taxes levied by the county. These taxes are shown in the following table:
| Tax Type | Authority | Remarks |
|---|---|---|
| Sales and Use Tax | § 58.1-605 § 58.1-606 |
Tax limited to 1% of the gross sales price of an item. If County levies the tax, the town receives one-half of the county’s revenue based on school-age population in the town. |
| Utility Consumers | § 58.1-3812 § 58.1-3814 |
Rate not to exceed 20% and applicable only to first $15 of bill for residential customers. Rate on electricity or gas consumption based on number of consumed kilowatt hours or cubic feet. Tax does not apply to landline or wireless telephone service or cable television service. |
It should be noted that there are a few taxes currently levied by some towns which cannot be levied by a newly incorporated town. Associated laws have been either repealed or amended by the General Assembly allowing for grandfathering of existing town taxation policies. It should also be noted that there are several taxes that can only be levied by cities and counties, such as taxes on probate. They cannot be levied by a town.