Tax Type
BPOL Tax
Description
Car Wash; Classification of Business Activity
Topic
Taxability of Persons and Transactions
Date Issued
07-12-2001
July 12, 2001
Re: Request for Advisory Opinion
Business, Professional and Occupational License (BPOL) Tax
Dear *****
This is in response to your letter requesting an advisory opinion regarding the local license taxation of a business (the "Taxpayer") that operates a coin operated car wash in addition to a full service car wash in your locality (the "County").
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 has a business service license for a full service car wash, and a retail sales license for the sales of vending machine products, assorted car cleaner amenities and other items. In addition to operating a full service car wash, in which the driver of the vehicle leaves the car while the car is being washed, vacuumed, etc., the Taxpayer offers a "manual" car wash. The manual car wash is coin operated, and provides wash bays, hoses and brushes which can deliver water, soap or wax for the vehicle's driver to use. The Taxpayer charges neither the retail sales tax nor a vending machine tax on the water, soap and wax used in the manual car wash. The Taxpayer holds itself out for business in the yellow pages as a service offering automatic cloth car washes, self-service high pressure washes, vacuums, buffing, waxing, and shampooing, among other services.
You inquire if the manual car wash should be classified as engaged in retail sales or providing a business service under the BPOL tax provisions.
OPINION
Legal Precedent
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- In an earlier ruling, the department found that:
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- If operators of vending machines are not "amusement operators," they are not subject to tax under Sec. 58.1-3720, but the operator could be taxable under the regular BPOL tax rules of Sec. 3703 and 3703.1, provided that the operator has a definite place of business in the locality that is imposing the tax. In such a case, the operator may be classified for BPOL tax purposes as a retailer or business services provider, depending upon whether the vending machine provides goods or services. Public Document 98-156 (September 20, 1998). [Emphasis added.]
Section 5.5.2 of the 2000 BPOL Guidelines lists "washing, cleaning or polishing automobiles" as a personal service. It does not delineate between bays, spraying arms, and different selections one can make at a manual car wash, the manual use of a vacuum in conjunction with the "drive through" car wash, and the full service car wash in which the driver exits the car. In every instance, the owner is providing the patron with some form of service, which can encompass a variety of options.
Conclusion
In my opinion, the Taxpayer is providing a service, rather than goods. This "service" would apply to all three types of car washes: the manual; the type where one remains in the car and drives through the wash; and the complete auto-wash, where the driver exits the car while it is being washed, cleaned, washed, waxed, etc. Therefore, the activity at issue should be taxed at the business service rate.
I hope this has been helpful to you. If you have any further questions, please contact in my office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/34047H
Rulings of the Tax Commissioner