Municipalities cannot collect sales tax on purchases made outsid - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Municipalities cannot collect sales tax on purchases made outside their corporate boundaries, WV Attorney General says

Posted: Updated:
Patrick Morrisey Patrick Morrisey

A municipal sales tax may not be collected outside the municipality's boundaries, Attorney General Patrick Morrisey said.

Morrisey said his office was asked by Ritchie County Prosecuting Attorney Steven A. Jones if a sales tax imposed by Harrisville could be levied on sales or services purchased in the 26362 zip code but outside the town's boundaries.

In the request, 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.”

Morrisey said they've heard of similar issues occurring in other municipalities, including South Charleston and St. Albans.

His opinion letter points out the West Virginia Legislature granted municipalities the limited power to levy taxes on goods and services “sourced to [a] municipality” and 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 his office was pleased to provide guidance to the Ritchie County prosecutor.

“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 added. “We must always look out for taxpayers' interests.”

The Attorney General's Office is authorized by 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 has provided 20 such written opinions since taking office in 2013.