Tax Type
BPOL Tax
Description
Tax liability of a public service corporation.
Topic
Basis of Tax
Constitutional Provisions
Property Subject to Tax
Date Issued
03-07-2002
March 7, 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 public service corporation. You ask whether certain sales and business service activities of a public service corporation may be considered as separate businesses and assessed as retail sales or repair services as provided for in Code of Virginia § 58.1-3706.
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. I have enclosed copies of cited material for your review.
FACTS
In your request, you note that many public service corporations "engage in sales and service activities that appear to be distinct from the primary services provided to customers." If such activities were to be classified as separate businesses, they potentially could be taxed at a different rate than the one-half of one percent rate that applies to public service corporations. See Code of Virginia § 58.1-3731. 1
OPINION
Code of Virginia § 58.1-3703(C)(1) provides that:
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- No county, city, or town shall impose a license fee or levy any license tax: [o]n any public service corporation ... except as provided in § 58.13731 or as permitted by other provisions of law. [Emphasis added.]
In other words, for local business license tax purposes, public service corporations are to be treated differently than other business. In a 1995 opinion the Attorney General found that:
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- Public service corporations that conduct several separate business activities should be assessed the public utility rate of one-half of one percent of the gross receipts of the corporation consistent with the definition of gross receipts contained in § 58.1-2600. 1995 Op. Att'y. Gen. at 277.2
- Public service corporations that conduct several separate business activities should be assessed the public utility rate of one-half of one percent of the gross receipts of the corporation consistent with the definition of gross receipts contained in § 58.1-2600. 1995 Op. Att'y. Gen. at 277.2
It should be noted that effective tax year 2001, the local gross receipts tax on gas and electric companies was replaced by a consumption tax, so gas and electric companies are no longer subject to the local BPOL tax. However, other public service corporations continue to be subject to the provisions of Code of Virginia § 58.1-3731, separate activities notwithstanding.
I hope this information has been helpful to you. If you have any questions regarding this opinion, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
AR/37658H
1 For example, pursuant to Code of Virginia § 58.1-3706, the maximum rate that could apply to retail sales is 0.2 percent, and the maximum rate that could be applied to business services is 0.36 percent.
2"Gross receipts" means the total of all revenue derived in the Commonwealth, including but not limited to income from the provision or performance of a service or the performance of incidental operations not necessarily associated with the particular service performed, without deductions for expenses or other adjustments. Such term shall not, however, include interest, dividends, investment income or receipts from the sale of real property or other assets except inventory of goods held for sale or resale. Code of Virginia § 58.1-2600.
Rulings of the Tax Commissioner