The Supreme Court of Virginia issued an opinion in Emmanuel Worship Center, et al. v. City of Petersburg, Record No. 201322 (January 6, 2022). This case originated with Petersburg attempting to conduct a tax sale of Emmanuel Worship Center’s property to collect delinquent taxes, penalties, interest, and costs. Emmanuel Worship Center filed a bill of review to effectively stop the sale. The Circuit Court dismissed the bill of review. However, the Supreme Court of Virginia agreed with the Emmanuel Worship Center and remanded the case back to circuit court for consideration of the bill of review as it should not have been dismissed. Since the exemption claimed by Emmanuel Worship Center was a self-executing, Virginia constitutional exemption, whether Emmanuel Worship Center owed the taxes in dispute was a question that should have been considered under the bill of review. As Petersburg was not attempting an action at law in selling the property but rather an equitable action, the Court remanded the case back to circuit court for a determination of specifically whether the exemption claimed by Emmanuel Worship Center applies.
This case likely has little effect on most taxpayers. The exemption claimed by Emmanuel Worship Center is guaranteed by the Constitution of Virginia. Furthermore, this case involved a tax sale of property rather than attempts to collect money. What the Supreme Court of Virginia did was clarify that the rules of equity apply to such a tax sale.
Christian Tennant is a Virginia tax attorney and former employee of the Virginia Department of Taxation. Mr. Tennant regularly speaks and writes on Virginia taxation. In his private practice he advises and represents businesses and individuals on a range of tax matters.