Tax Type
BPOL Tax
Local Taxes
Description
Nonprofit organizations
Topic
Local Power to Tax
Date Issued
04-22-1999
April 22, 1999
Re: BPOL
Dear******
The local license fee and tax are imposed and administered by local officials. §58.1-3701 of the Code of Virginia authorizes the department to promulgate guidelines and issue advisory opinions on local license tax issues. Additionally, § 58.1-3703.1(A)(5) authorizes the department to receive taxpayer appeals of certain local license tax assessments and to issue determinations on such appeals. However, in no case is the department required to interpret any local ordinance. Code of Virginia § 58.1-3701. The following opinion has been made subject to the facts presented to the department as summarized below. Any change in these facts or the introduction of facts by another party may lead to a different result.
While addressing the questions raised in your letter, this response is intended to provide advisory guidance only, and does not constitute a formal or binding ruling. I have enclosed copies of cited material for your review.
FACTS
The taxpayer is a company operating within the * * * * *. It has been classified as exempt from federal income taxes pursuant to IRC § 501 (c)(3) since 1964, and its tax-exempt status was verified by a letter from the Internal Revenue Service on June 23, 1992. You inquire if the taxpayer is exempt from local BPOL taxes and fees under Code of Virginia § 58.1-3703(C)(18)(a).
OPINION
§58.1-3703(C)(18)(a) of the Code of Virginia states that no county, city, or town shall impose a license fee or levy a license tax: on or measured by receipts of a charitable nonprofit organization except to the extent the organization has receipts from an unrelated trade or business the income of which is taxable under Internal Revenue Code § 511 et seq. For the purpose of this subdivision, "charitable nonprofit organization" means an organization which is described in Internal Revenue Code § 501(c)(3) and to which contributions are deductible by the contributor under IRC § 170, except that educational institutions shall be limited to schools, colleges and other similar institutions of learning.
Only the local Commissioner of the Revenue can ascertain the specific facts regarding a taxpayer's BPOL tax obligations. In this case, you concur that the taxpayer is exempt from federal income taxes under IRC § 501 (c)(3). As a result, it is my opinion that the taxpayer meets the definition of a charitable nonprofit organization under Code of Virginia § 58.1-3703(C)(18) and, therefore, is exempt from BPOL taxes and fees, except to the extent that the taxpayer has unrelated business income.
I hope that this information is useful to you. Although I believe that this letter conforms with the requirements of the law, it is only written for your guidance. If you have any other questions, please do not hesitate to contact * * * * * at * * * * *.
Sincerely,
Danny Payne
Tax Commissioner
Rulings of the Tax Commissioner