Title: City of Lynchburg v. English Construction Co.
Citation: N/A
Docket Number: 081344
State: Virginia
Issuer: Virginia Supreme Court
Date: April 17, 2009

Present:  Hassell, C.J., Keenan, Koontz, Lemons, Goodwyn, and 
Millette, JJ., and Russell, S.J. 
 
CITY OF LYNCHBURG 
 
 
 
            OPINION BY 
v.  Record No. 081344  
  SENIOR JUSTICE CHARLES S. RUSSELL 
                                      April 17, 2009 
ENGLISH CONSTRUCTION COMPANY, 
INCORPORATED, ET AL. 
 
FROM THE CIRCUIT COURT OF THE CITY OF LYNCHBURG 
Mosby G. Perrow, III, Judge 
 
 
This appeal involves the power of a city to impose 
business license taxes on the gross receipts of a contractor, 
whose principal place of business is within the city, from 
business done outside the city.  The city contends that it is 
entitled to impose taxes on all the contractor’s gross 
receipts from work done anywhere in the Commonwealth, subject 
only to the contractor’s right to deduct taxes actually paid 
to other localities on those receipts.  The contractor 
contends that the city has the power to tax only those 
extraterritorial receipts derived from business done in 
localities in which the contractor has no definite place of 
business.  This issue arises because some localities, although 
authorized by law to impose business license taxes on the 
gross receipts of contractors for work done locally, 
nevertheless decline to impose such taxes.  The city contends 
that it has the authority to tax such extraterritorial 
receipts which would otherwise remain untaxed. 
Facts and Proceedings 
 
The parties filed a written stipulation of facts in the 
circuit court and agree that the case presents a pure question 
of law.  English Construction Company, Incorporated, and W.C. 
English, Inc. (collectively, English) are “contractors” as 
defined by Code § 58.1-3714(D) and have their headquarters and 
principal offices in the City of Lynchburg (the City).  The 
City has, for many years, assessed business license taxes on 
the gross receipts of general contractors having their 
principal offices in the City, including receipts from 
construction projects in other localities, subject to a 
deduction for license taxes the contractor has actually paid 
to other localities on the same receipts. 
 
In 2004, pursuant to an audit of English’s records by the 
City’s Commissioner of the Revenue, the City identified gross 
receipts in excess of $115,000,000 that English had received 
from work done in localities outside the City in the tax years 
2001 through 2004, which had not been reported to the City.  
English contended that the City was not authorized to tax 
those receipts, but after some adjustments for taxes paid to 
other localities, English paid the taxes assessed by the City 
on the receipts at issue.  English maintained a “definite 
 
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place of business,” as defined by Code § 58.1-3700.1,1 in each 
of the localities in which it engaged in the construction 
projects that generated the disputed receipts, but those 
localities had imposed no license taxes on them. 
 
English filed, on behalf of the two English corporations, 
applications for relief from erroneous assessments, pursuant 
to Code § 58.1-3984, against the City.  The parties stipulated 
the facts and submitted the cases together to the circuit 
court on cross-motions for summary judgment.2 
 
In letter opinions, the court ruled that the City had no 
statutory authority to assess license taxes on the gross 
receipts of contractors derived from business done within any 
Virginia locality outside the City, when the contractor had a 
definite place of business in such a locality.  The court 
entered summary judgments in favor of the two English 
corporations, denied the City’s motions for summary judgment, 
                     
1 “ ‘Definite place of business’ means an office or a 
location at which occurs a regular and continuous course of 
dealing for thirty consecutive days or more.”  Code § 58.1-
3700.1.  The statutory definition includes rented property and 
even a person’s personal residence in certain circumstances.  
Id. 
 
2 Although the parties agreed that the case was 
appropriate for summary judgment, the City was permitted to 
present limited evidence concerning the prevailing 
administrative practices in other Virginia cities and counties 
relating to the taxation of contractors’ extraterritorial 
gross receipts. 
 
 
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ordered an abatement of the challenged assessments and ordered 
a refund of the disputed taxes.  We awarded the City an 
appeal.3 
Analysis 
 
For the purposes of this appeal, it is useful to divide 
the categories of contractors’ gross receipts affected by the 
business license tax statutes into several classifications: 
(1) Receipts from work done within the locality in 
which the principal office is located;  
(2) Receipts from work done in another locality in 
which the contractor has a definite place of 
business but which are not taxed by that other 
locality;  
(3) Receipts from work done in another locality in 
which the contractor has a definite place of 
business and which are taxed by that other locality; 
(4) Receipts amounting to $25,000 or less in any 
year from work done in another locality in which the 
contractor has no definite place of business; and  
(5) Receipts amounting to more than $25,000 in any 
year from work done in another locality in which the 
contractor has no definite place of business.  
 
 
The controversy between the City and English 
involves only receipts of the second class described 
above, but consideration must be given to all of them in 
order to determine the legislative intent and give the 
applicable statutes harmonious effect.  
                     
3 By leave of this Court, briefs amici curiae were filed 
by the Local Government Attorneys of Virginia, the 
Commissioners of the Revenue Association of Virginia, the 
Treasurers Association of Virginia and the Virginia Municipal 
League, in support of the City, and by the Virginia Chamber of 
Commerce, in support of English. 
 
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Code § 58.1-3703(A) authorizes the governing bodies 
of counties, cities and towns to levy local license taxes 
on “businesses, trades, professions, occupations and 
callings and upon the persons, firms and corporations 
engaged therein within the county, city or town.” 
(Emphasis added.)  Code § 58.1-3706 imposes limitations 
upon the tax rates that the localities may levy on the 
gross receipts of the various businesses subject to such 
license taxes.  Code § 58.1-3703(A) provides that every 
local ordinance imposing license taxes must include the 
uniform provisions set forth in Code § 58.1-3703.1.  The 
City’s local license tax ordinance contains those uniform 
provisions. 
 
The provisions of Code § 58.1-3703.1 applicable to the 
City’s appeal are: 
§ 58.1-3703.1.  Uniform ordinance provisions. 
 
A.  Every ordinance levying a license tax 
pursuant to this chapter shall include provisions 
substantially similar to this subsection.  As they 
apply to license taxes, the provisions required by 
this section shall override any limitations or 
requirements in Chapter 39 (§ 58.1-3900 et seq.) of 
this title to the extent that they are in conflict. 
 
. . . . 
 
3.  Situs of gross receipts. 
a.  General rule.  Whenever the tax imposed by 
this ordinance is measured by gross receipts, the 
gross receipts included in the taxable measure shall 
be only those gross receipts attributed to the 
 
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exercise of a privilege subject to licensure at a 
definite place of business within this jurisdiction. 
In the case of activities conducted outside of a 
definite place of business, such as during a visit 
to a customer location, the gross receipts shall be 
attributed to the definite place of business from 
which such activities are initiated, directed, or 
controlled.  The situs of gross receipts for 
different classifications of business shall be 
attributed to one or more definite places of 
business or offices as follows: 
 
(1)  The gross receipts of a contractor shall 
be attributed to the definite place of business at 
which his services are performed, or if his services 
are not performed at any definite place of business, 
then the definite place of business from which his 
services are directed or controlled, unless the 
contractor is subject to the provisions of § 58.1-
3715; . . . . 
 
Code § 58.1-3715(A) provides as follows: 
 
§ 58.1-3715.  License requirements for contractors. 
 
A.  When a contractor has paid any local 
license tax required by the county, city or town in 
which his principal office and any branch office or 
offices may be located, no further license or 
license tax shall be required by any other county, 
city or town for conducting any such business within 
the confines of this Commonwealth.  However, when 
the amount of business done by any such contractor 
in any other county, city or town exceeds the sum of 
$25,000 in any year, such other county, city or town 
may require of such contractor a local license, and 
the amount of business done in such other county, 
city or town in which a license tax is paid may be 
deducted by the contractor from the gross revenue 
reported to the county, city or town in which the 
principal office or any branch office of the 
contractor is located. 
 
 
In harmonizing the foregoing sections, the circuit court 
necessarily considered the effect of the last clause of Code 
 
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§ 58.1-3703.1(A)(3)(a)(1):  “unless the contractor is subject 
to the provisions of § 58.1-3715.”  Citing our decision in 
Alger v. Commonwealth, 267 Va. 255, 259-60, 590 S.E.2d 563, 
565-66 (2004), the court applied the “last antecedent” rule of 
statutory construction, whereby “[r]eferential and qualifying 
words and phrases, where no contrary intention appears, refer 
solely to the last antecedent.”  Id.  The “last antecedent” is 
the immediately preceding word, phrase or clause “that can be 
made an antecedent without impairing the meaning of the 
sentence.”  Id. 
 
Applying that rule to the “unless” clause, the court held 
that it applied only to the clause immediately preceding it: 
“if his services are not performed at any definite place of 
business, then the definite place of business from which his 
services are directed or controlled.”  Code § 58.1-
3703.1(A)(3)(a)(1).  It follows from that holding that the 
“unless” clause has no effect upon the present case, because 
it is stipulated that all the gross receipts in issue were 
derived from English’s work done in localities in which it had 
a definite place of business, and Code § 58.1-3715 would apply 
only to receipts from localities in which the contractor had 
no definite place of business.  For the reasons stated below, 
we agree with the circuit court’s reasoning. 
 
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The City argues on appeal that this was error, that the 
“unless” clause qualifies the entire subsection, that Code 
§ 58.1-3715 is a specific statute applicable to contractors 
that prevails over any general statutory rules, and that it 
makes no distinctions based upon the existence of a “definite 
place of business.”  The City contends that Code § 58.1-3715 
permits the contractor only to deduct license taxes actually 
paid to other jurisdictions.  The City further contends that 
English actually seeks an exemption from taxes on gross 
receipts derived from work done outside the City and points 
out that exemption provisions, like deduction provisions, are 
construed strictly against the taxpayer. 
 
It is true that exemption and deduction provisions are 
strictly construed against the taxpayer, but those rules only 
apply when a local governing body has the clear statutory 
authority to impose a tax in the first place.  In Commonwealth 
v. Carter, 198 Va. 141, 147, 92 S.E.2d 369, 373 (1956), we 
said that there was a “well-established principle that 
statutes imposing taxes are to be construed most strongly 
against the government and are not to be extended beyond the 
clear import of the language used . . . and the official who 
seeks to enforce a tax must be able to put his finger on the 
statute which confers such authority.”  More recently, we 
said:  “Taxing statutes must be construed strongly in the 
 
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taxpayer’s favor, and will not be extended by implication 
beyond the clear import of the statutory language.”  Shelor 
Motor Co. v. Miller, 261 Va. 473, 478, 544 S.E.2d 345, 348 
(2001).  Our analysis is guided by those principles. 
 
The statutes applicable to this appeal are contained in 
Chapter 37 (“License Taxes”) of Title 58.1 of the Code of 
Virginia (§§ 58.1-3700 through -3735).  Code § 58.1-3702 
provides:  “The provisions of this chapter shall be the sole 
authority for counties, cities and towns for the levying of 
the license taxes described herein” (emphasis added).  As 
quoted above, the uniform ordinance provisions required by 
Code § 58.1-3703.1(A)(3) specify as a general rule that the 
gross receipts to be included in the taxable measure shall be 
only those attributable to “the exercise of a privilege 
subject to licensure at a definite place of business within 
[the City].” 
That section goes on to provide: 
The situs of gross receipts for different 
classifications of business shall be attributed to 
one or more definite places of business or offices 
as follows: 
 
(1)  The gross receipts of a contractor shall 
be attributed to the definite place of business at 
which his services are performed.  
 
Code § 58.1-3703.1(A)(3)(a) (emphasis added). 
 
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Code § 58.1-3715, upon which the City relies, contains no 
language granting the City authority to levy a tax on gross 
receipts from services performed by a contractor in other 
localities in which he has a definite place of business.  The 
City, however, seeks such authority by implication.  Our 
holding in Shelor precludes that construction. 
It is the duty of the courts to construe statutory 
enactments so as to avoid repugnance and conflict between them 
and, if possible, to give force and effect to each of them.  
Sexton v. Cornett, 271 Va. 251, 257, 623 S.E.2d 898, 901 
(2006).  Statutes should be construed as a whole, and the 
courts should adopt that interpretation that will carry out 
the legislative intent.  Garrison v. First Federal Sav. & 
Loan, 241 Va. 335, 340, 402 S.E.2d 25, 28 (1991).  No part of 
an act should be treated as meaningless unless absolutely 
necessary.  Id.  The City’s interpretation renders meaningless 
Code § 58.1-3703.1(A)(3)(a)(1) and ignores the clear 
legislative intent underlying the General Assembly’s 1996 
revision of the business license tax laws, of which that 
section is a part.  That revision relies strongly on the 
importance of a “definite place of business” in determining 
 
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the taxable situs of gross receipts.  See 1996 Acts chs. 715, 
720.4  
Application of the familiar principles of statutory 
construction cited above makes clear the propriety of the 
circuit court’s reasoning in applying the “last antecedent" 
rule when construing Code § 58.1-3703.1(A)(3)(a)(1).  So 
construed, the applicable statutes operate in harmony and each 
is given effect.  Thus, a locality may tax a contractor’s 
gross receipts from services performed in that locality if the 
contractor has a definite place of business there, and no 
other locality has authority to tax those receipts.  If the 
contractor’s services are performed in a locality in which he 
has no definite place of business, gross receipts therefrom 
are attributed to the definite place of business from which 
the services were directed or controlled.  If, however, the 
contractor received gross receipts in excess of $25,000 in any 
year from services performed in a locality in which he has no 
definite place of business, that locality may tax those 
receipts despite the lack of a definite place of business 
there, and the contractor may deduct those receipts from those 
                     
4 The City presented the testimony of two Commissioners of 
the Revenue of other Virginia jurisdictions, both of whom 
testified that their practice was to tax the extraterritorial 
gross receipts of contractors whose principal office was 
located in their jurisdiction without any regard to whether 
 
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reported to the locality from which the services were directed 
or controlled. 
Conclusion 
 
Because the circuit court correctly construed and applied 
the applicable tax laws, we will affirm the judgments from 
which these appeals were taken. 
Affirmed. 
                                                                
the contractors had a definite place of business in the 
locality in which the work was done. 
 
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