Tax Type
BPOL Tax
Description
Tax liability of a pharmacist
Topic
Local Power to Tax
Local Taxes Discussion
Date Issued
12-02-2002
December 2, 2002
Re: Request for Advisory Opinion
Business, Professional and Occupational License (BPOL) Tax
Dear *****:
This is in response to your letter requesting an advisory opinion on the BPOL tax liability of a pharmacist (the "Taxpayer") who owns his own pharmacy. I apologize for the delay in the Department's response.
The local license fee and tax are imposed and administered by local officials. The following opinion has been made subject to the facts presented to the Department as summarized below. Any change in these facts or the introduction of facts by another party may lead to a different result. 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.
Copies of the Code of Virginia, regulations and public documents cited are included for reference purposes. These and other reference documents are also available online in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.state.va.us.
FACTS
The Taxpayer is a pharmacist who owns and operates his own pharmacy. The Taxpayer operates as a full service drug store, offering goods for sale as well as prescription medicines. The ***** (the "Town") classifies the Taxpayer has having two licensable businesses for BPOL tax purposes: (1) as a retailer, and (2) as a professional service.
The Taxpayer questions this approach, contending that in the case of larger supermarkets, drug store chains and retail chains that operate pharmacies within their retail space, the pharmacists are not assessed a separate BPOL tax for professional services.
OPINION
Multiple Businesses
The Town is currently asking the Taxpayer to obtain both a professional license and a retail license, and is assessing the BPOL tax on both licenses. Under Va. Code § 58.1-3700, localities, by ordinance, may require anyone engaging in a business, profession or occupation to obtain a local license. When a business engages in two or more different licensable activities, separate licenses may be required. Caffee v. City of Portsmouth, 203 Va. 928 (1962). In this case a bakery that sold products at both wholesale from the bakery and at retail from the shop in the front of the bakery, was found to be exempt from its gross receipts on the former activity, but was subject to a BPOL tax on its retail sales.
Pharmacists are listed among those limited number of persons defined as "professionals" in § 5.4.4.1 of the 2000 BPOL Guidelines. However, in Public Document (P.D.) 97-326 (8/18/97), the Department found that:
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- while a pharmacist unquestionably qualifies as a professional and while his professional attainments are a prerequisite for the operation of a pharmacy, he is generally engaged in selling goods, wares or merchandise in connection with the practice of his profession. For this reason, it is my opinion that a pharmacist should generally be classified as a practitioner of a profession who sells goods, wares or merchandise (retail sales) in connection with the practice of his profession. Such classification would include all gross receipts of the pharmacy, including those derived from the sale of prescription drugs as well as other sales. Thus, the entire business (the pharmacist and the rest of the drug store operation) would be classified as a retail merchant.
In the situation presented, while the Taxpayer (a pharmacist) is the proprietor of the pharmacy, for BPOL tax purposes his entire business should be classified as that of a retail merchant.
I hope this has been helpful. If you have any questions regarding this opinion, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Kenneth W. Thorson
Tax Commissioner
- Kenneth W. Thorson
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AR/39661H
Rulings of the Tax Commissioner