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Internet Tax Freedom Act Applies to Virginia Business, Professional, and Occupational License Tax

Tax Development Jul 29, 2022

Internet Tax Freedom Act Applies to Virginia Business, Professional, and Occupational License Tax

The Virginia Supreme Court reversed the judgment of the Circuit Court that denied a refund of Business, Professional, and Occupational License (BPOL) taxes Coxcom, LLC (“Cox”) paid to Fairfax County, on the grounds that the Internet Tax Freedom Act’s (ITFA’s)1 grandfather clause permitted the county to impose the tax.

Beginning in 2000, Cox had provided internet access service to customers in Fairfax County, Virginia. In 2016, Cox filed a request for a BPOL tax refund for the tax years 2013 through 2015, claiming that the federal ITFA preempted the county from imposing the BPOL tax on internet access service revenues. The Circuit Court concluded that although the ITFA did apply to the BPOL tax, the tax qualified for the grandfather clause exemption and denied the refund request. Cox had maintained that the grandfather exception did not apply because the county did not notify Cox that it was subject to the tax, as required by the exception. For the exception to apply, an “appropriate administrative agency” must issue a “rule or other public proclamation” that it planned to apply the tax to internet access services. 

On July 14, 2022, the Supreme Court reversed the Circuit Court finding, holding that the Circuit Court correctly found that the ITFA applied to the county’s BPOL tax but that the grandfather clause did not grant a reprieve for the county’s imposition of a tax on internet access services. The Court unanimously decided that the county and board of supervisors were not an administrative agency and that publishing the ordinance did not qualify as a proclamation. Based on these facts, the grandfather exception did not apply to the BPOL tax.

This case was remanded to the Circuit Court to determine the amount of the refund to be issued to Cox. 

1 Internet Tax Freedom Act, Public Law 105-277, 112 Stat. 2681 (1998), codified at 47 USC § 151.


Mark L. Nachbar

Duane Dobson

Mary Bernard

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