Tax Type
BPOL Tax
Description
Are all Receipts to be Included for BPOL Purposes
Topic
Basis of Tax
Computation of Tax
Property Subject to Tax
Date Issued
10-29-2001
October 29, 2001
Re:Appeal of Assessment: Final Local Determination
Locality Assessing Tax: *****
Business, Professional and Occupational License (BPOL) Tax
Dear *****
This final state determination is issued upon the application for correction filed by you on behalf of ***** (the "Taxpayer") with the Department of Taxation. You appeal a final local determination upholding an audit assessment of BPOL taxes made by the Commissioner of the Revenue of the ***** (the "City").
The local license 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 as summarized below. This determination addresses the question of whether or not certain receipts earned by the Taxpayer are subject to the BPOL tax imposed by the City. Copies of cited sources are enclosed.
FACTS
The Taxpayer is a physician who specializes in emergency services. He contracts with various umbrella healthcare groups (the "Providers"), which in turn provide for physician coverage to the emergency rooms of hospitals. During the period in question, 1997-2000, the Taxpayer practiced emergency medicine at four different hospitals, three in Virginia and one in North Carolina. Other than for two months in the year 2000, he did not practice medicine in the City. He does, however, reside in the City, and commutes to the hospitals for which he is under contract to provide emergency medical services.
The Taxpayer's contract with one of the Providers stipulates, among other things:
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- the name of the hospital where the Taxpayer is to practice under the terms of this particular contract that the Taxpayer is an independent contractor entering into an agreement with the Provider the Taxpayer's obligations to the hospital where it is to work that the Taxpayer shall not be considered as an employee of either the Provider or the Hospital, nor shall he be entitled to any health benefits, retirement benefits, etc. the Taxpayer is responsible for reporting all federal and state self-employment, income and other taxes as they may apply the Taxpayer is free to work in other hospitals, so long as such work does not interfere with the duties and obligations enumerated in the contract.
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From 1997-1999, the Taxpayer had two similar contracts in two different cities. Only in the year 2000 did the Taxpayer work in a clinic in the City, and that was for a two-month period during which he earned $2,000.
The City has assessed BPOL tax on all of the Taxpayer's gross receipts, no matter where earned, citing the section of the BPOL statute which states that "a person's residence shall be deemed to be a definite place of business if there is no definite place of business maintained elsewhere." The City contends that since the Taxpayer stated that it often commutes to the locations where it practices and often spends the night at the locations, he could not be conducting business for thirty consecutive days or more in any given location. Finally, the City noted that the Taxpayer's home telephone number was in the business white pages of the telephone book.
The Taxpayer asserts that almost all of his business was conducted in two other Virginia locations and in North Carolina during the time in question. Further, he states that his gross receipts earned in the City in the year 2000 totaled approximately $2,000.
The Taxpayer has been issued an assessment of ***** for past due license taxes, penalties and interest. The Taxpayer has asked for relief of all license taxes, penalties and interest except for the amount owed for his two-month practice in the City in 2000. He also requests that he not be required to apply for a business license in the City in the future.
DETERMINATION
Definite Place of Business
Code of Virginia § 58.1-3701 generally defines a "definite place of business" as:
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- [A]n office or a location at which occurs a regular and continuous course of dealing for thirty consecutive days or more... A person's residence shall be deemed to be a definite place of business if there is no definite place of business maintained elsewhere and the person is not subject to licensure as a peddler or itinerant merchant.
In an earlier ruling, the department found that:
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- "Continuous" for purposes of this definition is analyzed in terms of whether the business has established a location for the exercise of the licensable privilege. The time spent actually conducting business at this location is not important so long as the business is availing itself to the public and conducting its activities at that particular location. Regularly conducting business refers to a periodic pattern of instances in which a business is "open for business." A regularly conducted business may operate daily, weekly, monthly or for some other set time period. Public Document (P.D.) 97-75 (2/18/97).
Code of Virginia § 58.1-3703.1(A)(3)(a)(4) also states that the following rules of order be observed in establishing situs for purposes of business taxation:
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- The gross receipts from the performance of services shall be attributed to the definite place of business at which the services are performed or, if not performed at any definite place of business, then to the definite place of business from which the services are directed or controlled. [Emphasis added.]
The Taxpayer's contract with the Provider stipulates that he shall prepare and maintain medical records incidental to the services he performs, that he shall work in 12 or 24 hour shifts as scheduled, that he shall serve on hospital committees as required by the hospital, particularly the Emergency Department Committee, and that he "shall comply with all federal, state and local laws, rules ordinances and regulations." All of these requirements indicate that the Taxpayer is regarded as practicing the privilege of engaging in business within the jurisdiction in which the Hospital is located.
Furthermore, an examination of the W-2 forms supporting the Taxpayer's federal income tax return indicates that he did practice a continuous business outside of the City. His activities were "directed and controlled" by two different Providers, one of which is based in Florida, and the other of which is based in a different city in Virginia. The Taxpayer's income earned in each of the other Virginia jurisdictions is subject to their local BPOL tax. So long as the Taxpayer is subject to an income or income-like tax in North Carolina and has filed a North Carolina income tax return, income generated by his practice in North Carolina is not subject to the City's license tax. See Code of Virginia § 58.1-3732 (B)(2), 2000 BPOL Guidelines § 2.6.
Therefore, it is my determination that the receipts the Taxpayer earned in the three other jurisdictions are not subject to the City's BPOL tax. However, the receipts earned in the City during the two-month period in 2000 are subject to the City's BPOL tax.
If you have any questions regarding this final state determination, you may contact ***** in the department's Office of Policy and Administration, Appeals and Rulings, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
ARO/33701H
Rulings of the Tax Commissioner