Municipal sales tax can't be collected on purchases outside city, AG says

By Chris Dickerson | Aug 13, 2014

CHARLESTON – A municipal sales tax can't be collected on purchases made outside of city limits, according to the West Virginia Attorney General's office.

West Virginia Attorney General Patrick Morrisey said Wednesday his office sent an opinion letter to Ritchie County Prosecuting Attorney Steven A. Jones informing him that the sales tax imposed by the Town of Harrisville may not be levied on sales or services outside the municipality’s boundaries.

The AG's office said it has heard of similar issues occurring in other municipalities throughout the state, including South Charleston and St. Albans.

The opinion letter was a response to a letter Morrisey's office received from Jones which asked whether the municipality’s tax could apply to citizens and businesses located within the 26362 ZIP code but beyond Harrisville’s borders.  The request from Jones acknowledged that the Harrisville ordinance imposed the tax within the town’s borders, but asserted that the tax has been applied throughout the 26362 ZIP code.

“Based upon careful review of the West Virginia Constitution and the West Virginia Code, we believe that a municipality’s sales or use taxes may apply only to sales or services received within the municipality’s boundaries," Morrisey said. "As a result, such a tax may not be levied on transactions that occur within the same ZIP code as a town but beyond the town’s boundaries."

The opinion letter says the West Virginia Legislature granted municipalities the limited power to levy taxes on goods and services “sourced to [a] municipality.”  The letter further states that, consistent with case law from the state’s highest court, questions about such taxes must be construed in favor of the taxpayer.

“The tax ordinance in question is properly limited to business within the town’s municipal boundaries,” Morrisey said. “But if the tax is applied beyond those boundaries, it would violate both the Legislature’s limited grant of taxing authority and the plain text of the town’s own ordinance.

Morrisey said he was pleased to help the Ritchie County Prosecutor with this question and offer guidance.

“In a day and age when purchases can be made anywhere, even from the comfort of your own home, it is important to ensure that any taxes levied do not exceed what is allowed in state statute," he said. "We must always look out for taxpayers’ interests.”

The Attorney General’s Office is authorized under the law to provide written opinions advising county prosecuting attorneys in matters relating to the official duties of their office. The opinions are solely based upon facts provided by the county.

Morrisey's office has provided 20 written opinions since taking office in 2013.

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