Tax Type
BPOL Tax
Local Taxes
Description
Manufacturing exemption; Blending of salad dressings, barbecue sauce, etc.
Topic
Exemptions
Local Power to Tax
Date Issued
04-13-2001
April 13, 2001
Re: Request for Advisory Opinion
Business, Professional, & Occupational License (BPOL) Tax
Dear ***********
This advisory opinion is issued in response to your request for guidance concerning the local license taxation of ***** (the "Taxpayer"). I apologize for the delay in responding to your request.
While addressing the questions raised in your letter, this response is intended to provide advisory guidance only, and does not constitute a formal or binding ruling. I have enclosed copies of cited material for your review.
FACTS
You state that the Taxpayer takes mayonnaise, mustard, sugar, oil, eggs, honey, sugar, spices and other ingredients and by a special blending process creates salad dressing, barbecue sauce, coleslaw dressing and tartar sauce. You contend that the Taxpayer is a manufacturer for local license tax purposes.
OPINION
Manufacturing
Public Document (P.D.) 99-14 (January 19, 1999) reflects that, for BPOL tax purposes, manufacturing is determined using a three-element test. Manufacturing requires that: (1) an original material (2) be processed and (3) changed substantially into a product of a different character from the original material. In accordance with the public policy of Virginia to encourage manufacturing, a local assessing officer must liberally construe each element of this test when considering whether a particular business activity is manufacturing. See P.D. 98-154 (October 16, 1998).
It is my opinion that the processes carried out by the Taxpayer constitute manufacturing. The Taxpayer takes original materials, including mayonnaise, mustard, sugar, oil, eggs, honey, sugar and spices, and processes them in a special blending process. The resulting products, salad dressings, barbecue sauce, coleslaw dressing and tartar sauce, have a substantially different character from the original materials.
Manufacturing Exemption
Code of Virginia § 58.1-3703(C)(4) prohibits a Virginia locality from imposing a license fee or levying a license tax "[o]n a manufacturer for the privilege of manufacturing and selling goods, wares and merchandise at wholesale at the place of manufacture."
CONCLUSION
I hope that the above information will be of assistance to you. Although I believe this letter conforms with the requirements of the law, it is written only for your guidance. 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
Rulings of the Tax Commissioner