Tax Type
BPOL Tax
Local Taxes
Description
Membership dues; Campground
Topic
Local Power to Tax
Local Taxes Discussion
Date Issued
06-20-2000
June 20, 2000Re: Taxpayer: ****
Locality Assessing Tax:
Final State Determination
Appeal of Business, Professional, and Occupational License (BPOL) Tax
Dear ****
This final state determination is issued upon an application for correction of
BPOL taxes filed by you on behalf of your client, **** (the "Taxpayer"). The assessment contested was made by the Commissioner of the Revenue of the **** (the "City”). I apologize for the delay in responding to your application for correction.
The BPOL tax and fee are imposed and administered by local officials. Code of Virginia § 58.1-3703.1(A)(5) authorizes the department to issue determinations on taxpayer appeals of certain BPOL tax assessments. On appeal, a BPOL tax assessment is deemed prima facie correct. In other words, the local assessment will stand unless the taxpayer proves that it is incorrect.
The following determination is based on the facts presented to the department by the Taxpayer and the City as summarized below. Copies of cited sources are enclosed.
This determination addresses the question of whether or not a non-stock corporation organized to administer the operation of a membership campground is entitled to exclude dues received from its members from its gross receipts.
The Taxpayer is a non-stock corporation organized to administer the operation of a membership campground. The campground is not open to the general public and does not advertise to the general public. However, non-members who are guests of members may use the campground for a fee.
The Taxpayer collects annual membership dues from the campground members. In addition to the membership dues, the Taxpayer receives income from its sales of goods and from fees it charges for laundry, activities, trailer rentals, storage and nonmember camping. The membership dues and other income are used to pay the costs of managing and maintaining the campground, including employee salaries and wages, repairs and maintenance, taxes, insurance premiums and utilities.
The Taxpayer, which is not recognized as a nonprofit organization, files a Form 1120 U.S. Corporate Income Tax Return. The Taxpayer includes the membership dues and other income in its total income and deducts the costs of managing and maintaining the campground to determine its taxable income.
However, on its business license applications, the Taxpayer excludes membership dues from its taxable gross receipts. As a result of an audit, the City has disallowed this exclusion and assessed additional license taxes for license years 1996 and 1997.
The Taxpayer contends that the membership dues should be excluded from its taxable gross receipts because it is not acting as a business with respect to its receipt of the membership dues. The Taxpayer filed this appeal when its arguments were rejected by the City.
The facts presented are not sufficient to determine whether the expenses to which the membership dues were applied were incurred by the Taxpayer or by its members. Accordingly, I am returning this matter to the City for a redetermination regarding this issue consistent with this opinion.
As I am not aware of any other provision of law that would authorize the Taxpayer to exclude the membership dues from its gross receipts, it is my determination that the license years 1996 and 1997 assessments are otherwise correct.
I am returning this matter to the City for a redetermination regarding the agency issue. The Taxpayer may appeal the City's redetermination to the department within 90 days of the redetermination. If you have other questions, please do not hesitate to contact ****, Tax Policy Analyst, in my Office of Tax Policy at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/23297D
Locality Assessing Tax:
Final State Determination
Appeal of Business, Professional, and Occupational License (BPOL) Tax
Dear ****
This final state determination is issued upon an application for correction of
BPOL taxes filed by you on behalf of your client, **** (the "Taxpayer"). The assessment contested was made by the Commissioner of the Revenue of the **** (the "City”). I apologize for the delay in responding to your application for correction.
The BPOL tax and fee are imposed and administered by local officials. Code of Virginia § 58.1-3703.1(A)(5) authorizes the department to issue determinations on taxpayer appeals of certain BPOL tax assessments. On appeal, a BPOL tax assessment is deemed prima facie correct. In other words, the local assessment will stand unless the taxpayer proves that it is incorrect.
The following determination is based on the facts presented to the department by the Taxpayer and the City as summarized below. Copies of cited sources are enclosed.
This determination addresses the question of whether or not a non-stock corporation organized to administer the operation of a membership campground is entitled to exclude dues received from its members from its gross receipts.
FACTS
The Taxpayer is a non-stock corporation organized to administer the operation of a membership campground. The campground is not open to the general public and does not advertise to the general public. However, non-members who are guests of members may use the campground for a fee.
The Taxpayer collects annual membership dues from the campground members. In addition to the membership dues, the Taxpayer receives income from its sales of goods and from fees it charges for laundry, activities, trailer rentals, storage and nonmember camping. The membership dues and other income are used to pay the costs of managing and maintaining the campground, including employee salaries and wages, repairs and maintenance, taxes, insurance premiums and utilities.
The Taxpayer, which is not recognized as a nonprofit organization, files a Form 1120 U.S. Corporate Income Tax Return. The Taxpayer includes the membership dues and other income in its total income and deducts the costs of managing and maintaining the campground to determine its taxable income.
However, on its business license applications, the Taxpayer excludes membership dues from its taxable gross receipts. As a result of an audit, the City has disallowed this exclusion and assessed additional license taxes for license years 1996 and 1997.
The Taxpayer contends that the membership dues should be excluded from its taxable gross receipts because it is not acting as a business with respect to its receipt of the membership dues. The Taxpayer filed this appeal when its arguments were rejected by the City.
ANALYSIS
-
- Section 1 of the 2000 BPOL Guidelines defines "gross receipts" to be:
the whole, entire, total receipts, of money or other consideration received by the taxpayer as a result of transactions with others besides himself and which are derived from the exercise of a licensed privilege to engage in a business . . . without deduction or exclusion except as provided by law.
- Section 1 of the 2000 BPOL Guidelines defines "gross receipts" to be:
The facts presented are not sufficient to determine whether the expenses to which the membership dues were applied were incurred by the Taxpayer or by its members. Accordingly, I am returning this matter to the City for a redetermination regarding this issue consistent with this opinion.
CONCLUSION
As I am not aware of any other provision of law that would authorize the Taxpayer to exclude the membership dues from its gross receipts, it is my determination that the license years 1996 and 1997 assessments are otherwise correct.
I am returning this matter to the City for a redetermination regarding the agency issue. The Taxpayer may appeal the City's redetermination to the department within 90 days of the redetermination. If you have other questions, please do not hesitate to contact ****, Tax Policy Analyst, in my Office of Tax Policy at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/23297D
Rulings of the Tax Commissioner