Tax Type
BPOL Tax
Local Taxes
Description
Affiliated group of limited liability companies (LLC's)
Topic
Local Power to Tax
Date Issued
03-15-2000
March 15, 2000
Re: Taxpayer: ****
Locality Assessing Tax:
Final State Determination
Appeal of Business, Professional, and Occupational License (BPOL) Tax
Dear ****
This final state determination is issued upon an application for correction of BPOL taxes filed by you on behalf of ***** (the "Taxpayer"). The assessment contested was made by the Commissioner of the Revenue of the City of ******** (the "City"). I apologize for the delay in responding to your application for correction.
The BPOL tax and fee are imposed and administered by local officials. Code of Virginia
§58.1-3703.1(A)(5) authorizes the department to issue determinations on taxpayer appeals of certain BPOL tax assessments. On appeal, a BPOL tax assessment is deemed prima facie correct. In other words, the local assessment will stand unless the taxpayer proves that it is incorrect.
The following determination is based on the facts presented to the department by the Taxpayer and the City as summarized below. Copies of cited sources are enclosed.
FACTS
The Taxpayer is a limited liability company (an "LLC@) that is the parent LLC of several subsidiary LLCs. The Taxpayer receives income from the subsidiary LLCs. As a result of an audit, the City determined that the Taxpayer had excluded this income from its taxable gross receipts on its business license applications. The City assessed additional license taxes on account of the excluded receipts for license years 1995-98.
The Taxpayer filed an application for correction of this assessment with the City and filed this appeal when the City rejected its argument. The Taxpayer contends that income received by a parent LLC from its subsidiaries is not subject to license taxation because of the affiliated group exclusion provided by Code of Virginia § 58.1-3703(C)(10).
ANALYSIS
Code of Virginia § 58.1-3703(C)(10) provides an exclusion from local license taxation for certain transactions between corporations that are members of an "affiliated group" of corporations. Membership in an affiliated group is limited to corporations. Code of Virginia §58.1-3700.1. As neither the Taxpayer nor its subsidiaries are corporations, this exclusion is not available to the Taxpayer.
Legislation introduced in the 2000 General Assembly, House Bill 1494, would expand affiliated group membership eligibility to limited liability companies and several other entity types. However, if enacted, this legislation would not be effective until July 1, 2000 and would not apply to the license years subject to this appeal.
CONCLUSION
As the Taxpayer has not shown sufficient proof that the assessment made by the City for license years 1995-98 is incorrect, the assessment stands, as is. If you have other questions, please do not hesitate to contact ****, Tax Policy Analyst, in my Office of Tax Policy, at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/25342D
Re: Taxpayer: ****
Locality Assessing Tax:
Final State Determination
Appeal of Business, Professional, and Occupational License (BPOL) Tax
Dear ****
This final state determination is issued upon an application for correction of BPOL taxes filed by you on behalf of ***** (the "Taxpayer"). The assessment contested was made by the Commissioner of the Revenue of the City of ******** (the "City"). I apologize for the delay in responding to your application for correction.
The BPOL tax and fee are imposed and administered by local officials. Code of Virginia
§58.1-3703.1(A)(5) authorizes the department to issue determinations on taxpayer appeals of certain BPOL tax assessments. On appeal, a BPOL tax assessment is deemed prima facie correct. In other words, the local assessment will stand unless the taxpayer proves that it is incorrect.
The following determination is based on the facts presented to the department by the Taxpayer and the City as summarized below. Copies of cited sources are enclosed.
FACTS
The Taxpayer is a limited liability company (an "LLC@) that is the parent LLC of several subsidiary LLCs. The Taxpayer receives income from the subsidiary LLCs. As a result of an audit, the City determined that the Taxpayer had excluded this income from its taxable gross receipts on its business license applications. The City assessed additional license taxes on account of the excluded receipts for license years 1995-98.
The Taxpayer filed an application for correction of this assessment with the City and filed this appeal when the City rejected its argument. The Taxpayer contends that income received by a parent LLC from its subsidiaries is not subject to license taxation because of the affiliated group exclusion provided by Code of Virginia § 58.1-3703(C)(10).
ANALYSIS
Code of Virginia § 58.1-3703(C)(10) provides an exclusion from local license taxation for certain transactions between corporations that are members of an "affiliated group" of corporations. Membership in an affiliated group is limited to corporations. Code of Virginia §58.1-3700.1. As neither the Taxpayer nor its subsidiaries are corporations, this exclusion is not available to the Taxpayer.
Legislation introduced in the 2000 General Assembly, House Bill 1494, would expand affiliated group membership eligibility to limited liability companies and several other entity types. However, if enacted, this legislation would not be effective until July 1, 2000 and would not apply to the license years subject to this appeal.
CONCLUSION
As the Taxpayer has not shown sufficient proof that the assessment made by the City for license years 1995-98 is incorrect, the assessment stands, as is. If you have other questions, please do not hesitate to contact ****, Tax Policy Analyst, in my Office of Tax Policy, at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/25342D
Rulings of the Tax Commissioner