Tax Type
BPOL Tax
Local Taxes
Description
Internet service provider; Server location; Definite place of business
Topic
Local Power to Tax
Local Taxes Discussion
Date Issued
04-16-2001
April 16, 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 an Internet service provider (the "Taxpayer") in the ***** (the "Town").
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
The Taxpayer is engaged in the business of providing Internet access to customers residing in the Town and other localities. Although the Taxpayer maintains a server and other equipment in the Town, it does not have an office or personnel located in the Town.
The Taxpayer, a corporation, is wholly owned by an electric cooperative. However, the Taxpayer is not an electric cooperative or a public service corporation. Nor does the Taxpayer supply electricity.
You seek guidance regarding the classification of this business.
OPINION
Classification of Taxpayer
The Taxpayer is a corporation. Although the Taxpayer is wholly owned by an electric cooperative, the Taxpayer is not an electric cooperative or a public service corporation. A corporation is an entity wholly separate and distinct from its shareholders. See 4B Michie's Jurisprudence, Corporations 5. With limited exceptions, a corporation is subject to local license taxation based on its own characteristics and activities.
The Taxpayer is not engaged in the business of supplying electricity. The Taxpayer is engaged in the business of providing Internet access. In my opinion, this activity should be classified as a business or personal service. Section 1 of the 2000 BPOL Guidelines defines "services" to mean "things purchased by a customer which do not have physical characteristics, or which are not goods, wares, or merchandise."
Definite Place of Business
Code of Virginia § 58.1-3700.1 defines "definite place of business" to mean "an office or a location at which occurs a regular and continuous course of dealing for thirty consecutive days or more." In my opinion, the mere location of a server in a locality does not, in and of itself, constitute a definite place of business. As the Taxpayer does not have a definite place of business in the Town, it is not subject to business license taxation in the Town. Code of Virginia § 58.1-3703.1(A)(1).
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
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 an Internet service provider (the "Taxpayer") in the ***** (the "Town").
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
The Taxpayer is engaged in the business of providing Internet access to customers residing in the Town and other localities. Although the Taxpayer maintains a server and other equipment in the Town, it does not have an office or personnel located in the Town.
The Taxpayer, a corporation, is wholly owned by an electric cooperative. However, the Taxpayer is not an electric cooperative or a public service corporation. Nor does the Taxpayer supply electricity.
You seek guidance regarding the classification of this business.
OPINION
Classification of Taxpayer
The Taxpayer is a corporation. Although the Taxpayer is wholly owned by an electric cooperative, the Taxpayer is not an electric cooperative or a public service corporation. A corporation is an entity wholly separate and distinct from its shareholders. See 4B Michie's Jurisprudence, Corporations 5. With limited exceptions, a corporation is subject to local license taxation based on its own characteristics and activities.
The Taxpayer is not engaged in the business of supplying electricity. The Taxpayer is engaged in the business of providing Internet access. In my opinion, this activity should be classified as a business or personal service. Section 1 of the 2000 BPOL Guidelines defines "services" to mean "things purchased by a customer which do not have physical characteristics, or which are not goods, wares, or merchandise."
Definite Place of Business
Code of Virginia § 58.1-3700.1 defines "definite place of business" to mean "an office or a location at which occurs a regular and continuous course of dealing for thirty consecutive days or more." In my opinion, the mere location of a server in a locality does not, in and of itself, constitute a definite place of business. As the Taxpayer does not have a definite place of business in the Town, it is not subject to business license taxation in the Town. Code of Virginia § 58.1-3703.1(A)(1).
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