Tax Type
BPOL Tax
Local Taxes
Description
BPOL Tax; Banks, Savings and Loan Associations
Topic
Local Power to Tax
Local Taxes Discussion
Date Issued
07-20-1984
[Opinion - Virginia Attorney General: 1984 at 353]
REQUEST BY: Honorable Victor J. Smith Commissioner of the Revenue for the City of Harrisonburg
OPINION BY: Gerald L. Baliles, Attorney General
OPINION:
You have asked three questions concerning local license taxation of banks and savings and loan associations. First, you ask whether a home mortgage corporation which is the wholly owned subsidiary of a savings and loan association is liable for the local gross receipts license tax. Second, you ask whether a mortgage corporation which is the wholly owned subsidiary of a bank is liable for the local gross receipts license tax. Finally, you ask whether a savings and loan association branch office which handles only mortgage services at that location is liable for the local gross receipts license tax. You have provided a portion of the local ordinance which appears to require every corporation providing financial services to pay a business license tax measured by its gross receipts as authorized by § 58-266.1 of the Code of Virginia.
Your first question was recently answered in an Opinion found in the 1983-1984 Report of the Attorney General at 364. That Opinion concluded that a home mortgage corporation which is the wholly owned subsidiary of a savings and loan association is liable for the local gross receipts license tax. The amount of the tax should be based on gross receipts generated by transactions with third-party customers. All gross receipts resulting from transactions with the parent savings and loan association must be excluded in accordance with § 58-266.1(A)(13). If there are no gross receipts from third party transactions, the home mortgage corporation remains liable for the minimum tax in accordance with the local ordinance.
Your second question is essentially identical to your first question, except that the parent corporation is a bank rather than a savings and loan association. The analysis used in the Carmichael Opinion is applicable to the taxation of the subsidiary mortgage corporation, even when the parent corporation is a bank.1 A wholly owned subsidiary mortgage corporation is liable for the gross receipts tax. The extent of liability depends on the amount of gross receipts generated by transactions with third-party customers. See 1983-1984 Opinion, supra.
Your third question is whether a savings and loan association branch office which handles only mortgage services at that location is liable for the local gross receipts tax. I understand that the main office of the savings and loan association is located in another jurisdiction. § 58-266.10 limits the license tax which a jurisdiction may impose on a savings and loan association to a maximum of fifty dollars and further provides that the tax may be levied only where the main office of the association is located. Thus, as a practical matter, your jurisdiction cannot levy such a license tax upon the branch of such an association when the main office is located outside the jurisdiction. I am not aware of any statutory provision that provides an exception to this general rule when the branch office provides mortgage services only.
In contrast to the fact situation in your previous questions, the savings and loan association is providing mortgage services through a branch office rather than through a separate corporate subsidiary. A savings and loan association providing mortgage services to its customers may choose to do so by creating a separate corporate subsidiary, or it may simply open a branch office. Although identical mortgage services may be provided through either method chosen, liability for the gross receipts tax depends on the corporate organizational structure. Based on the foregoing, it is my opinion that a savings and loan association branch office which handles only mortgage services is not liable for the local gross receipts tax.
1 Note, however, that taxation of the parent corporation is different, depending on whether the parent is a savings and loan association (amount of tax limited, see § 58-266.10) or a bank (generally not subject to gross receipts tax, see § 58-485.04).
Attorney General's Opinion