Tax Type
BPOL Tax
Local Taxes
Description
Foreign Importer; Multiple Localities
Topic
Basis of Tax
Local Power to Tax
Local Taxes Discussion
Date Issued
07-31-1986
[Opinion - Virginia Attorney General: 1986 at 288]
REQUEST BY: Honorable Sam T. Barfield Commissioner of the Revenue for the City of Norfolk
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask several questions concerning the application of the local business license tax to the Chilean Nitrate Sales Corporation (the "corporation"), which has a sales office in Norfolk and a warehouse in Chesapeake.
I. Manufacturing Implies Transformation into Different Product; Corporation Is "Wholesaler," Not "Manufacturer"
Your first question concerns the classification of the corporation as a wholesaler or a manufacturer. You state that the corporation "imports raw nitrate from Chile, which is then sold to fertilizer manufacturers who mix it with the other ingredients necessary to fertilizer."
The Department of Taxation has promulgated Guidelines for Local Business, Professional and Occupational License Taxes (January 1, 1984) ("Guidelines") which, on page 3, state:
The term 'wholesaler' is defined as any person who sells to others for resale or who sells at wholesale to institutional, commercial or industrial users. [Emphasis added.]
The term "manufacturer," for purposes of local license taxation, is not defined in either the Guidelines or the Code of Virginia. Previous Opinions of this Office, however, have utilized the interpretation of the term set forth by the Supreme Court of Virginia that "manufacture" implies a transformation of raw material into a product or article of substantially different character. See Solite Corp., v. King George Co., 220 Va. 661, 261 S.E.2d 535 (1980); 1984-1985 Report of the Attorney General at 356, 399.
According to the facts presented, the corporation does not substantially change the character of the raw nitrate anytime prior to sale to fertilizer manufacturers. Thus, based on the previous Opinions noted above, the corporation would not be a manufacturer. It would, instead, be a wholesaler.
II. "Definite Place of Business" Is Determination of Fact to Ascertain Tax Situs
Your second question is whether the situs for taxation of the corporation is Norfolk or Chesapeake. You state the following:
A parent corporation owns the mines in Chile, and through paper transactions, sell[s] it to the Chesapeake warehouse. The Norfolk office . . . makes all contacts and sales which are then sent to their Chesapeake warehouse for shipment.
Section 58.1-3703 of the Code of Virginia, which authorizes and limits the imposition of the local license tax, provides, in pertinent part, as follows:
B. No county, city, or town shall levy any license tax:
6. Upon a wholesaler for the privilege of selling goods, wares and merchandise to other persons for resale unless such wholesaler has a definite place of business or store in such city, town or county. [Emphasis added.]
Under the language of § 58.1-3703(B)(6), the determination of tax situs in this case depends on whether the corporation maintains "a definite place of business" in Norfolk. Previous Opinions of this Office have interpreted this phrase. See Reports of the Attorney General: 1982-1983 at 553 (home or store is a definite place of business), 611 (trash dumpster not a definite place of business).
Based on the information provided in your letter and the analyses in these Opinions, it appears that the corporation has a situs for local license taxation in Norfolk. Whether the warehouse in Chesapeake also constitutes "a definite place of business" is a determination of fact to be made in the first instance by the assessing officer of the City of Chesapeake. If there is taxable situs in both jurisdictions, the business activity on which the tax may be imposed must be apportioned between the jurisdictions. See § 58.1-3708(A), (B), (D) and (F).
Attorney General's Opinion