Tax Type
BPOL Tax
Description
Excise taxes on motor fuels not claim an exclusion on BPOL tax returns.
Topic
Subtractions and Exclusions
Date Issued
02-07-2006
February 7, 2006
Re: Request for Advisory Opinion
Business, Professional and Occupational License tax
Dear *****:
This is in response to your letter in which you request an advisory opinion regarding the Business, Professional and Occupational ("BPOL") tax liability of motor fuel retailers. You ask if the exclusion for amounts received and paid to the United States or the Commonwealth for federal and state excise taxes on motor fuels applies to retail sellers of gasoline. I apologize for the delay in responding to your inquiry.
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. The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site.
ANALYSIS
Virginia Code § 58.1-3732 A 1 provides an exclusion from the BPOL tax for monies "received and paid to the United States, the Commonwealth or any county, city or town for . . . any federal or state excise taxes on motor fuels." At the time this statute was enacted, retail service stations collected the taxes at the pump and remitted the taxes to the appropriate state and federal agencies.
Effective January 1, 2001, the point of imposition of both the federal and state excise taxes on motor fuels was removed from the point of retail sale. Under current law, the taxes are imposed at the point the motor fuel is "removed from a refinery or a terminal and, upon removal, is subject to the federal excise tax imposed by 26 U.S.C. § 4081." See Va. Code § 58.1-2218. The suppliers collect the tax from distributors and retailers and are charged with holding the tax payments in trust until such time the taxes are to be remitted to the Commonwealth. The distributor does not have to remit the tax due to the supplier until such time as the supplier must remit the taxes to the Commonwealth. See Va. Code § 58.1-2231.
Under the provisions of Va. Code §§ 58.1-2235 and 58.1-2237 the supplier must keep accurate records of all sales and taxes due to the Commonwealth. Furthermore, the supplier is required to notify licensed distributors, licensed exporters, or licensed importers who received motor fuel from the supplier during a reporting period of the number of taxable gallons received. The supplier must give this notice after the end of each reporting period and before the distributors, exporters or importers are required to remit to the supplier the amount of tax due on the fuel.
The distributor or retailer in turn, may or may not choose to include the tax in the sales price of the motor fuel sold to consumers. The question you present is, under current law, whether retailers are allowed to exclude any motor fuels taxes paid to wholesalers.
OPINION
The exclusion from gross receipts pursuant to Va. Code § 58.1-3732 A 1 applies to motor fuels excise taxes received by taxpayers and paid to the United States or the Commonwealth. Under the provisions of the Virginia Motor Fuels Act, these excise taxes are received by the suppliers and paid by the suppliers to the United States or to the Commonwealth. Because the retailers of motor fuels are no longer receiving and paying the excise taxes on motor fuels to the United States or the Commonwealth, they may not claim an exclusion for such taxes when filing their BPOL tax returns.
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/55150H
Rulings of the Tax Commissioner