Background
CoreSite, LLC operates four data centers in Reston, Virginia, serving approximately 300 customers who access servers, cloud storage, or lease space to store their own equipment. During earlier litigation, Fairfax County learned that many entities stored equipment at CoreSite’s facilities. Beginning in 2021, the County sought a complete list of CoreSite’s customers to determine which customers owed personal property taxes on equipment kept at the data centers. CoreSite resisted, arguing that the requests exceeded the County’s statutory authority, improperly swept in entities with no Virginia tax obligations, and violated confidentiality provisions in its customer agreements.
After more than two years of correspondence, the County issued a formal summons in January 2024 under Code § 58.1-3110, demanding a “complete and accurate listing of all current tenants, and/or individuals or entities otherwise leasing, contracting, or using space or receiving services” at the data centers, along with copies of all related contracts. CoreSite petitioned the Fairfax County Circuit Court for a declaratory judgment and moved to quash the summons. The circuit court granted summary judgment for the County on all three issues: it found the County had broad statutory authority, that the summons sufficiently identified taxpayers, and that a carveout in the customer agreements permitted disclosure to governmental entities.
CoreSite appealed on all three grounds: (1) whether the County may investigate entities of unknown taxpayer status; (2) whether the summons satisfied Code § 58.1-3110’s requirement to “specifically identif[y]” taxpayers; and (3) whether the customer-agreement confidentiality provision blocked disclosure.
The Court’s Holding
The Court of Appeals affirmed the County’s broad investigatory power under Code § 58.1-3109(6), holding that the statute’s mandate to make a “complete assessment of any taxpayer’s tangible personal property” necessarily permits the County to compel information from third parties even when the tax status of the underlying entities is unknown. Limiting the County only to entities already confirmed as taxpayers would render the statute’s “complete assessment” language meaningless and defeat the legislature’s evident purpose. Two Attorney General opinions (2003 and 2016) and the General Assembly’s subsequent acquiescence supported this broad reading.
However, the court reversed on the summons issue. Code § 58.1-3110 authorizes a summons only for “questions touching the tax liability of any and all specifically identified taxpayers.” The court found that phrase ambiguous—dictionaries offer both a precision-based and a naming-based definition—but held that under either reading, a blanket demand for all tenants and all contracting parties fails the test. The County identified only broad categories, not specific taxpayers. The court grounded this conclusion in the 1986 legislative amendment that added “specifically identified” to the statute, reasoning that a contrary interpretation would render that amendment meaningless. On the confidentiality issue, the court disagreed with CoreSite, finding that the customer agreements’ carveout for disclosures required by governmental entities permitted CoreSite to comply.
The court affirmed in part, reversed in part, and remanded, leaving open whether a sufficiently precise description (short of naming individual taxpayers) could satisfy Code § 58.1-3110 in a future case.
Key Takeaways
- A county commissioner’s power under Code § 58.1-3109(6) extends to investigating entities of unknown tax status — a “complete assessment” mandate logically requires determining who the taxpayers are in the first place.
- A Code § 58.1-3110 summons must “specifically identify” taxpayers; a catch-all demand for all tenants or all customers of a business does not satisfy that requirement under either a naming or a precision-based reading of the term.
- The 1986 amendment adding “specifically identified” to § 58.1-3110 was a substantive narrowing of the prior broad language, and courts will give it effect even when it limits convenient investigative tools.
- Data centers are not listed in Code § 58.1-3901’s enumeration of property types whose owners must furnish tenant lists on demand; any gap in the County’s investigative power over data centers is a matter for the General Assembly, not the courts.
- A confidentiality provision in a commercial contract does not block disclosure to a governmental entity when the contract itself contains a carveout for legally required governmental disclosures.
Why It Matters
This decision directly implicates Virginia’s fast-growing data center industry, concentrated in Northern Virginia, where billions of dollars in customer-owned equipment may sit largely outside the reach of local tax assessors. The ruling confirms that counties have robust investigatory authority to determine what taxable property exists in their jurisdictions — but it equally confirms that the summons mechanism under § 58.1-3110 carries a meaningful procedural check: the county must specifically identify the taxpayers it is investigating, not merely cast a wide net over an entire customer base.
For practitioners, the case draws a sharp line between the county’s broad information-gathering power under § 58.1-3109(6) and the more targeted summons power under § 58.1-3110. Counties seeking to compel third-party disclosures will need to do enough investigative groundwork to name or precisely describe specific taxpayers before issuing a § 58.1-3110 summons. Conversely, data centers and similarly situated businesses should understand that blanket confidentiality clauses in customer agreements will not shield them from disclosure obligations to government authorities when those agreements contain standard governmental-entity carveouts.