Tax Type
BPOL Tax
Description
In general;Penalties and interest on delinquent license fees
Topic
Local Power to Tax
Date Issued
10-02-1997
| Mr. Larry W. Davis County Attorney for Albemarle County |
You ask whether a county may impose a penalty and interest on delinquent license fees payable under the county business license tax ordinance.
Chapter 37 of Title 58.1 of the Code of Virginia contains the legislation enabling localities to require a business license and to impose business, professional and occupational license ("BPOL') fees and taxes.1 § 58.1-3700 provides that "whenever the local governing body shall impose a license fee or levy a license tax on any business, employment or profession, it shall be unlawful to engage in such business, employment or profession without first obtaining the required license.' § 58.1-3703(A) provides that a locality "may charge a fee for issuing a license and may levy license taxes on businesses.'2
Section 58.1-3703.1(A)(2)(d) and (e) authorizes a locality to charge a penalty and interest for late payments or for failure to file a license application.3 § 58.1-3703.1(A)(2)(d) states, in part: "A penalty of ten percent of the tax may be imposed upon the failure to file an application or the failure to pay the tax by the appropriate due date.' § 58.1-3703.1(A)(2)(e) provides, in part: "Interest shall be charged on the late payment of the tax from the due date until the date paid without regard to fault or other reason for the late payment.'
Section 58.1-3701 requires the Department of Taxation to promulgate guidelines for the use of local governments in their administration of BPOL fees and taxes. In light of amendments to Chapter 37adopted at the 1996 Session of the General Assembly,4 the Department of Taxation issued its updated guidelines on January 1, 1997 (the "BPOL Guidelines').5 § 3.10.1 of the BPOL Guidelines provides that penalty and interest apply to license fees as well as license taxes. The Comment to § 3.10.1 in the BPOL Guidelines states:
- Clearly the license tax and fee, if imposed by the locality, fulfill the same purpose; they are required to conduct business. Since they are identical, all penalty provisions which apply to the failure to file [an] application [and] to pay the tax apply to the failure to pay the fee.6
In your written opinion, you conclude that, notwithstanding § 3.10.1 of the BPOL Guidelines, § 58.1-3703.1(A)(2)(d) and (e) does not authorize the imposition of a penalty and interest on license fees.7 You point out that the BPOL statutes do not use the terms "license fee' and "license tax' interchangeably but rather treat the two as different terms with different meanings.
Section 58.1-3703 authorizes a locality to "charge a fee for issuing a license' and identifies this fee as a "license fee.' § 58.1-3703 authorizes a locality also to "levy and provide for the assessment and collection of license taxes' and identifies this tax as a "license tax.' You note that when the General Assembly has intended to encompass both license fees and license taxes within a statute, the statute uses both terms. Thus, §§ 58.1-3700 and 58.1-3703(A) and (C)refer both to the act of "imposing license fees' and the act of "levying license taxes.' Unlike these and other provisions in the enabling legislation, § 58.1-3703.1(A)(2)(d) and (e) authorizes a "penalty of ten percent of the tax' and "interest on the late payment of the tax.' (Emphasis added.) It is accordingly your view that § 58.1-3703.1(A)(2)(d) and (e) authorizes a locality to impose a penalty and interest on license taxes but not on license fees, and that § 3.10.1 is inconsistent with the clear language of the statutes.
Constructions placed on the law by agencies charged with administrative duties in connection with the law are entitled to great weight, particularly when the agency has been charged by the General Assembly with construing individual statutes that constitute part of a complex statutory scheme.8 The agency interpretation, however, is to be consistent with the language and intent of the statutes.9 While you present a sound argument that § 3.10.1 of the BPOL Guidelines is inconsistent with the language and intent of § 58.1-3703.1(A)(2)(d) and (e), the view expressed in § 3.10.1 and in the Comment to the guideline likewise has support.
In the case of Charlottesville v. Marks' Shows10 the Supreme Court of Virginia considered the difference between a license fee and a license tax. The city ordinance provided for a "license fee' on circus performances, stating that the license was charged for the purpose of providing police protection. Because the charge was imposed on shows performing outside the city boundary, it would be invalid if it constituted a tax rather than a fee. The Court concluded that, notwithstanding the designation of the charge as a fee, it was in fact a tax.11 The Court observed: "[T]he character of an enactment is determined not by the denomination given to it by the legislative body, but rather from its substance and its real purpose.'12 The Court provided the following general tax principles for determining whether a charge is a tax or a license fee:
- (1) If revenue is the primary purpose and regulation is merely incidental, the imposition is a tax. If regulation is the primary purpose the mere fact that incidentally a revenue is also obtained does not make the imposition a tax.
(2) Where the fee is imposed for the purpose of regulation and the statute requires compliance with certain conditions in addition to the payment of the prescribed sum, such sum is a license proper, imposed by virtue of the police power. But where it is exacted solely for revenue purposes and its payment gives the right to carry on the business without any further conditions, it is a tax.13
Under the reasoning in Charlottesville v. Marks' Shows, all amounts imposed by a locality under the BPOL enabling statutes may be deemed a "tax.'14 Whether the locality imposes license fees or license taxes, the payment gives the person the right to engage in business within the locality. The BPOL statutes do not regulate the conduct of the business or require compliance with conditions other than the payment of the fee or tax. Thus, applying general principles of taxation, the charges constitute a tax. Based on this analysis and the weight to be accorded the BPOL Guidelines issued by the Department of Taxation, it is my opinion that a locality may impose a penalty and interest on delinquent license fees payable under its business license tax ordinance.
1 Sections 58.1-3700 to 58.1-3735.
2 Section 58.1-3703(A) sets limits on both the amount of the fee and the amount of the tax.
3 Section 58.1-3703.1(A)(2)(a) provides: "Each person subject to a license tax shall apply for a license prior to beginning business if he was not subject to licensure in [the] jurisdiction on or before January 1 of the license year, or no later than March 1 of the license year if he had been issued a license for the preceding year. The application shall be on forms prescribed by the assessing official.'
4 See 1996 Va. Acts chs. 715, 720, at 1233, 1247.
5 See Dep't of Tax'n, Guidelines for Business, Professional and Occupational License Tax Imposed by City, County and Town Ordinances (Jan. 1, 1997) [hereinafter BPOL Guidelines].
6 The final sentence in the Comment to § 3.10.1, as printed in the BPOL Guidelines, reads: "Since they are identical, all penalty provisions which apply to the failure to file and application to pay the tax apply to the failure to pay the fee.' I assume the Comment should read as stated in the text above.
7 Section 2.1-118 requires that any request by a county attorney for an opinion from the Attorney General "shall itself be in the form of an opinion embodying a precise statement of all facts together with such attorney's legal conclusions.'
8 See Dept. Taxation v. Prog. Com. Club, 215 Va. 732, 739, 213 S.E.2d 759, 763 (1975); Miller v. Commonwealth, 180 Va. 36, 21 S.E.2d 721 (1942); Op. Va. Att'y Gen.: 1996 at 124, 126 & 127 n.7; 1995 at 250, 252; 1987-1988 at 590, 591.
9 See 1989 Op. Va. Att'y Gen. 279, 281.
10 179 Va. 321, 18 S.E.2d 890 (1942).
11 Id. at 328, 18 S.E.2d at 894.
12 Id. at 329, 18 S.E.2d at 894.
13 Id. (citation omitted). The Court applied this same type of analysis in County of Loudoun v. Parker, 205 Va. 357, 360-61, 136 S.E.2d 805, 807-08 (1964). See also Commonwealth v. Shell Oil Co., 210 Va. 163, 166-67, 169 S.E.2d 434, 437 (1969) (license tax is fee exacted as prerequisite to right or privilege to carry on business).
14 I note that, unlike other provisions in the BPOL statutes that use the term "license tax,' § 58.1-3703.1(A)(2)(d)and (e) uses only the word "tax.' It could be argued that this distinction implies a legislative intent to encompass a broader category than "license taxes.'
Attorney General's Opinion