PRESENT: Hassell, C.J., Keenan, Koontz, Lemons, Agee, ∗ and
Goodwyn, JJ., and Russell, S.J.
VIRGINIA CELLULAR LLC
v. Record No. 071895 OPINION BY
JUSTICE S. BERNARD GOODWYN
VIRGINIA DEPARTMENT OF TAXATION September 12, 2008
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Margaret P. Spencer, Judge
In this appeal, we consider whether the minimum tax
imposed upon telecommunications companies pursuant to Code
§ 58.1-400.1 is applicable to noncorporate
telecommunications companies.
The Virginia Department of Taxation (the “Department”)
determined that Virginia Cellular LLC (“Virginia Cellular”),
a limited liability company, was subject to the minimum tax
imposed upon telecommunications companies pursuant to Code
§ 58.1-400.1. Virginia Cellular filed an administrative
appeal of the Department’s determination with the Tax
Commissioner pursuant to Code § 58.1-1821. The Tax
Commissioner upheld the Department’s assessment against
Virginia Cellular. Pursuant to Code § 58.1-1825(D),
Virginia Cellular subsequently filed an application for
relief with the Circuit Court of the City of Richmond. The
∗
Justice Agee participated in the hearing and decision
of this case prior to his retirement from the Court on June
30, 2008.
circuit court found that the minimum tax applied to Virginia
Cellular. Virginia Cellular appeals.
FACTS
Virginia Cellular is a telecommunications company with
a limited liability company business structure. During the
years 2001, 2002, 2003, and 2004, Virginia Cellular filed a
Virginia Telecommunications Companies Minimum Tax and Credit
Schedule, Form 500-T. Based upon its status as a pass-
through tax entity, Virginia Cellular did not, however,
report any tax liability under Code § 58.1-400.1, claiming
an exemption from that minimum tax.
The Department performed an audit of Virginia
Cellular’s returns and concluded that Virginia Cellular was
subject to the minimum tax imposed by Code § 58.1-400.1.
The Department assessed Virginia Cellular with the minimum
tax, along with penalties and interest, for all four years.
Challenging the applicability of the minimum tax
imposed by Code § 58.1-400.1 to pass-through entities such
as itself, Virginia Cellular filed an administrative appeal
with the Tax Commissioner. The Tax Commissioner upheld the
Department’s tax assessment, finding that pursuant to 23 VAC
§ 10-120-89, a regulation promulgated by the Department,
Code § 58.1-400.1 imposes a minimum tax on all
2
telecommunications companies, corporations and pass-through
tax entities alike.
Virginia Cellular filed an “Application for Correction
of Erroneous Assessment on Telecommunications Companies” in
the Circuit Court of the City of Richmond. In the circuit
court proceedings, Virginia Cellular and the Department
agreed that, during the relevant time period, Virginia
Cellular was a telecommunications company as defined by Code
§ 58.1-400.1(D) and that it was not a corporation, but
rather a limited liability company taxed as a partnership
and pass-through entity pursuant to Virginia income taxation
laws. Because there were no facts in dispute and the issues
were purely legal, the parties agreed to resolve the matter
by summary judgment.
After hearing argument on the motion for summary
judgment, the circuit court found that “[t]he minimum tax
provision [was] applicable to all telecommunications
companies, whether such telecommunications companies are
corporations or limited liability companies taxed as
partnerships or pass-through entities.” Additionally, the
circuit court found that “[t]he Department’s regulation, 23
VAC § 10-120-89 (2006), [was] valid.”
3
ANALYSIS
Virginia Cellular argues that the plain meaning of Code
§ 58.1-400.1 is that pass-through entities are not subject to
the minimum tax on telecommunications companies imposed
pursuant to Code § 58.1-400.1. It further contends that 23
VAC § 10-120-89 is invalid because it is contrary to the
plain language of Code § 58.1-400.1 and thus is “plainly
inconsistent with applicable provisions of law,” empowering
the court to invalidate the provision under Code § 58.1-205.
We agree.
Because statutory interpretation presents a pure
question of law, it is subject to de novo review by this
Court. Ainslie v. Inman, 265 Va. 347, 352, 577 S.E.2d 246,
248 (2003). It is the Court’s duty to construe the law as
written in the Virginia Code. Hampton Roads Sanitation Dist.
Comm’n v. City of Chesapeake, 218 Va. 696, 702, 240 S.E.2d
819, 823 (1978). When interpreting statutes, courts
“ascertain and give effect to the intention of the
legislature.” Chase v. DaimlerChrysler Corp., 266 Va. 544,
547, 587 S.E.2d 521, 522 (2003). That intent is usually
self-evident from the words used in the statute. See id.
Therefore, courts must apply the plain language of a statute
unless the terms are ambiguous or applying the plain language
4
would lead to an absurdity. Boynton v. Kilgore, 271 Va. 220,
227, 623 S.E.2d 922, 926 (2006).
The General Assembly has established the framework for
assessing and collecting taxes in Virginia through the
enactment of Title 58.1 of the Code of Virginia (“Tax Code”).
Chapter 3 of Title 58.1 addresses the manner in which income
of various entities may be taxed by the Commonwealth
(“Chapter 3” or “Income Tax Code”). Chapter 3, through
distinct statutory articles, identifies a variety of entities
subject to income tax, including but not limited to
individuals (Code §§ 58.1-320 through 58.1-326 (“Article
2”)), partnerships/pass-through entities (Code §§ 58.1-390
through 58.1-395 (“Article 9”)), and corporations (Code
§§ 58.1-400 through 58.1-421 (“Article 10”)).
Code § 58.1-400, contained in Article 10, states as
follows:
A tax at the rate of six percent is hereby
annually imposed on the Virginia taxable income
for each taxable year of every corporation
organized under the laws of the Commonwealth and
every foreign corporation having income from
Virginia sources.
Code § 58.1-400.1(A), also contained in Article 10,
states the following:
A telecommunications company shall be subject
to a minimum tax, instead of the corporate income
tax imposed by § 58.1-400, at the applicable rate
on its gross receipts for the calendar year which
5
ends during the taxable year if the tax imposed by
§ 58.1-400 is less than the minimum tax imposed by
this section.
The Department promulgated a regulation, 23 VAC § 10-
120-89, related to the interpretation and enforcement of Code
§ 58.1-400.1; 23 VAC § 10-120-89 states the following:
Unless specifically exempt under § 58.1-401 of the
Code of Virginia, every telecommunications company
certified as such by the SCC is subject to the
minimum tax even though it may be exempt from, or
not subject to, the corporate income tax under
§ 58.1-400 of the Code of Virginia.
Code § 58.1-400 and Code § 58.1-400.1 are contained in
Article 10 of Chapter 3 in Title 58.1. Article 10 is
entitled, “Taxation of Corporations.” The income tax imposed
by Code § 58.1-400 is an income tax for corporations only; it
is not an income tax on partnerships or pass-through
entities. Code § 58.1-400.1 states that telecommunications
companies shall be subject to a minimum tax instead of the
corporate tax imposed by Code § 58.1-400; the minimum tax
imposed by Code § 58.1-400.1 must be calculated in relation
to and as an alternative to the regular corporate income tax
imposed by Code § 58.1-400. Because the minimum tax is to be
paid instead of the corporate tax, it is implied that the
minimum tax imposed by Code § 58.1-400.1 only applies to
corporations. Reading Code §§ 58.1-400 and 58.1-400.1
together, the plain language of those statutes indicates that
6
the minimum tax was not intended to apply to entities such as
Virginia Cellular, which are not required to pay a corporate
tax.
A construction of Code § 58.1-400.1 as imposing a tax
upon pass-through entities would conflict with Code § 58.1-
390.2. Code § 58.1-390.2, contained in Article 9, provides:
Except as provided for in this article,
owners of pass-through entities shall be liable
for tax under this chapter only in their separate
or individual capacities.
Courts employ rules of statutory construction when the
plain language of two or more statutes conflict. See, e.g.,
Wertz v. Grubbs, 245 Va. 67, 70, 425 S.E.2d 500, 501 (1993).
Whenever “a given controversy involves a number of related
statutes, they should be read and construed together in order
to give full meaning, force, and effect to each.” Ainslie,
265 Va. at 353, 577 S.E.2d at 249; see also Ragan v.
Woodcroft Village Apts., 255 Va. 322, 325, 497 S.E.2d 740,
742 (1998) (statutes will be accorded “a meaning that does
not conflict with any other statute”).
Code § 58.1-390.2 clearly states that the Department may
only tax the owners of a pass-through entity in a manner
consistent with Article 9. The minimum tax imposed by Code
§ 58.1-400.1 is located within Article 10, not within Article
9. Nothing in Article 9 mentions the minimum tax, and
7
nothing in Code § 58.1-400.1 specifically applies the minimum
tax to noncorporate telecommunications companies. Thus, even
if Code § 58.1-400.1 were ambiguous concerning its
applicability to telecommunications companies organized as
pass-through entities, harmonizing Code § 58.1-390.2 with
Code § 58.1-400.1 dictates excluding pass-through
telecommunications companies such as Virginia Cellular from
the minimum tax. We hold that the trial court erred in
finding that the tax imposed by Code § 58.1-400.1 is
applicable to all telecommunications companies whether such
companies are corporations or pass-through entities.
If the language of a statute is clear and unambiguous,
this Court will not sustain a regulatory interpretation that
is inconsistent with the statute. General Motors Corp. v.
Dep’t of Taxation, 268 Va. 289, 293, 602 S.E.2d 123, 125
(2004). Code § 58.1-205 states that this Court should
sustain regulations unless those regulations are unreasonable
or plainly inconsistent with applicable provisions of the
law. We hold that 23 VAC § 10-120-89 is inconsistent with
Code § 58.1-400.1 to the extent that it imposes the minimum
tax provided for under Code § 58.1-400.1 upon pass-through
entities. Therefore, the circuit court erred in upholding
the validity of 23 VAC § 10-120-89.
8
For the foregoing reasons, we reverse the judgment of
the trial court and enter final judgment for Virginia
Cellular LLC.
Reversed and final judgment.
9