Tax Type
BPOL Tax
Local Taxes
Description
Imposition of Business License and Merchant Capital Taxes by Locality
Topic
Local Power to Tax
Local Taxes Discussion
Date Issued
03-17-1989
[Opinion - Virginia Attorney General: 1989 at 315]
REQUEST BY: Honorable Mayo K. Gravatt Commonwealth's Attorney for Nottoway County P.O. Box 21 Nottoway, Virginia 23955
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask two questions concerning the interplay between the local business license tax and the local merchants' capital tax. You first ask whether a locality may impose a business license tax on every category of business except merchants and, at the same time, impose the merchants' capital tax on merchants. Your second question is whether a locality may impose both a license tax on peddlers and a merchants' capital tax on merchants.
I. Applicable Statutes
Section 58.1-3509 of the Code of Virginia permits a county, city or town to impose a merchants' capital tax. A locality also is authorized to impose a license tax on all businesses, trades, professions and occupations pursuant to § 58.1-3703. § 58.1-3704 provides, however, that "whenever any county, city or town imposes a license tax on merchants, the same shall be in lieu of a tax on the capital of merchants. . . ." (Emphasis added.)
The Commonwealth's tax statutes currently do not define the term "merchant." A "peddler" is defined for license tax purposes as "any person who shall carry from place to place any goods, wares or merchandise and offer to sell or barter the same, or actually sell or barter the same." § 58.1-3717(A).
II. Locality May Exclude Merchants From Business License Tax While Imposing Merchants' Capital Tax
A prior Opinion of this Office concludes that a license tax imposed on businesses, professions, trades and occupations under the authority of § 58.1-3703 (formerly § 58-266.1) may exclude merchants if the locality elects to impose a tax on the capital of merchants under §§ 58.1-3509 and 58.1-3510 ( formerly §§ 58-832 and 58-833). See 1983-1984 Att'y Gen. Ann. Rep. 374. I am in agreement with this Opinion. It is my opinion, therefore, that a locality may impose a business license tax on every category of business except merchants and, at the same time, impose a merchants' capital tax on merchants.
III. "Peddlers" Are Not Merchants for Purposes of § 58.1-3704; Locality May Impose License Tax on Peddlers and Merchants' Capital Tax on Merchants
A response to your second inquiry depends upon whether a "peddler," as that term is defined in § 58.1-3717(A), is a "merchant," as that term is used in § 58.1-3704. While the term "merchant" currently is not defined by Virginia statute, the legislative history of statutes authorizing state and local license taxes is instructive as to the meaning of this term in § 58.1-3704.
When former § 58-266.1(5), the statutory predecessor to current § 58.1-3704, was enacted in 1964,1 the term "merchant" was not defined in the Code. At that time, however, there were several statutes in effect dealing with the license taxation of merchants. Statutes that relate to the same subject "are not to be considered as isolated fragments of law, but as a whole, or as parts of a great connected, homogeneous system, or a single and complete statutory arrangement." Prillaman v. Commonwealth, 199 Va. 401, 405, 100 S.E.2d 4, 7 (1957). Based on the above, the scheme of license taxation of merchants in effect when former § 58-266.1(5) was enacted may be examined to determine the meaning of the term "merchant" as used in that statute.
Wholesale and retail merchants were subject to a state license tax, as set forth in separate articles for each merchant.2 See former Art. 6, Ch. 7 of Tit. 58, §§ 58-304 through 58-319 (Repl. Vol. 1959) (wholesale merchants) and former Art. 7, Ch. 7 of Tit. 58, §§ 58-320 through 58-335 (Repl. Vol. 1959) ( retail merchants). Peddlers also were subject to a state license tax, but were classified in a separate article. See former Art. 9, Ch. 7 of Tit. 58, §§ 58-340 through 58-345 (Repl. Vol. 1959). The definitions and classifications used in the administration of the local license tax historically have been based upon definitions and classifications used in the state license tax, even after repeal of the state license tax.3 When the term "merchant" was used in former § 58-266.1(5) (currently § 58.1-3704), it is clear that the General Assembly intended to refer only to wholesale and retail merchants and did not intend to include the separate classification of peddlers.4 Based on the above, it is my opinion that the term "peddler," as that term is defined in § 58.1-3717(A), does not include a "merchant," as that term is used in § 58.1-3704. It is further my opinion, therefore, that a locality may impose a license tax on peddlers and, at the same time, impose a merchants' capital tax on merchants.
1 See Ch. 424, 1964 Va. Acts Reg. Sess. 692.
2 The state wholesale and retail merchants license taxes were repealed in 1966. See Ch. 151, 1966 Va. Acts 258.
3 See, e.g., Department of Taxation, Guidelines for Local Business, Professional and Occupational License Taxes, General Provisions at 3 n.2 (January 1, 1984), (the "BPOL Guidelines"), which provide that "the definition of wholesaler in these guidelines has been derived from the definition of ' wholesale merchant,' as found in § 58-304, before its repeal in 1966". Similarly, the BPOL Guidelines provide that "[t]he definition in these guidelines of the term 'contractor' includes all persons who were 'deemed contractors' in § 58-297, before its repeal in 1982." Id., Classifications of Business at 5 n.4.
4 A prior Opinion of this Office concludes that "peddlers at wholesale are taxable as merchants and are to be classified as wholesalers." See 1982-1983 Att'y Gen. Ann. Rep. 512, 513. The specific inquiry in this prior Opinion was whether peddlers at wholesale were "wholesalers," as that term was used in a rate limitation statute. The analysis and conclusion of this prior Opinion, of course, are limited to the particular question asked and, therefore, do not apply to the facts you present.
Attorney General's Opinion