Tax Type
BPOL Tax
Local Taxes
Description
Used automobile dealer; Sales price vs. amount received from lending institution
Topic
Basis of Tax
Local Power to Tax
Date Issued
04-13-2001
April 13, 2001
Re: Taxpayer: Locality Assessing Tax: Appeal of Business, Professional, and Occupational License (BPOL) Tax
Dear ****
This final determination is issued upon an application for correction of a BPOL tax assessment filed by you on behalf of ***** (the "Taxpayer"). The contested assessment was made by the Commissioner of the Revenue of the City of ***** (the "City").
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.
FACTS
The Taxpayer is a dealer of used automobiles. When the Taxpayer sells an automobile, the price agreed upon by the Taxpayer and the buyer is reflected on a bill of sale and a loan application. The lending institution that finances the buyer's purchase of the automobile imposes certain charges on the Taxpayer. The lending institution deducts these amounts from the financed selling price and remits the remainder to the Taxpayer.
When determining its taxable gross receipts for business license tax purposes, the Taxpayer uses the amount received from the lending institution rather than the sales price. As a result of an audit, the City assessed additional license taxes based on the sales prices of the vehicles.
The Taxpayer contends that when determining its gross receipts from each sale, it is entitled to include only the amounts that it actually receives from the lending institution, rather than the full sales prices. 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."
I am not aware of any provision of law that would authorize the Taxpayer to exclude expenses incurred with the lending institution from its gross receipts. Even though the Taxpayer may not actually receive the full selling price of the vehicle from the lending institution, it must include the full selling price of the vehicle in its taxable gross receipts because it is legally entitled to receive this amount from the buyer. Accordingly, it is my determination that the assessment is correct.
If you have any other questions about this final determination, please do not hesitate to contact ****, Tax Policy Analyst, in my Office of Tax Policy at ****.
.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner