Virginia’s high courtroom strikes down county tax reduction program as unconstitutional

The Supreme Court docket of Virginia lately upheld a circuit courtroom resolution invalidating a county’s plan to claw again tax refunds as a result of it violated the state structure’s uniform taxation requirement.

The Isle of Wight County modified the valuation methodology for its equipment and instruments tax (“M&T tax”), leading to roughly $5.6 million in refunds for tax years 2013-2015. In response to the numerous budgetary shortfall brought on by the refunds, the county enacted a big one-year hike of its M&T tax fee for 2017 coupled with a “M&T Tax Aid Program” that supplied “grants” to sure taxpayers. The grants had been for the differential between the 2016 and 2017 charges, minus any refund quantities {that a} taxpayer might have acquired for the 2013-2015 interval. The online impact of this strategy is that the one taxpayers who needed to pay the considerably elevated M&T tax fee had been those who acquired refunds, and the elevated quantities they owed had been restricted to the quantity of the M&T tax refund they’d acquired from the county.

Worldwide Paper, one of many affected taxpayers, challenged its tax evaluation for 2017. The Supreme Court docket held that the M&T Tax Aid Program operated successfully as a partial tax exemption, which made Worldwide Paper’s 2017 M&T tax evaluation non-uniform, invalid and unlawful. As a result of the M&T tax fee hike was enacted in tandem with the M&T Tax Aid Program, each had been invalidated. Moreover, the county procedurally defaulted on its argument that it was entitled to depend on 2016 charges, so the taxpayer was entitled to a full M&T tax refund for 2017.

County of Isle of Wight v. Worldwide Paper Firm, 881 S.E.second 776 (Va. 2022).

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