Tax Type
BPOL Tax
Description
Taxpayer is a wholesale merchant and should be taxed for BPOL purposes
Topic
Local Power to Tax
Local Taxes Discussion
Date Issued
05-12-2010
May 12, 2010
Re: Request for Advisory Opinion
Business, Professional and Occupational License (BPOL) Tax
Dear *****:
This is in response to your letter in which you request an advisory opinion regarding the applicability of the Business, Professional and Occupational License tax to your client's petroleum sales. I apologize for the delay in the Department's response.
The local license fee and tax are imposed and administered by local officials. Virginia Code § 58.1-3701 authorizes the Department to issue advisory opinions on local license tax issues. The following opinion has been made subject to the facts presented to the Department summarized below. Any change in facts or the introduction of new facts may lead to a different result.
The Code of Virginia sections, regulations, and public documents cited are available on-line in the Tax Policy Library section of the Department's web site, located at www.tax.virginia.gov.
FACTS
***** (the "Taxpayer") provides fleet fueling through ***** locations in six states, with locations ***** in Virginia. Customers access the gas via unmanned electronic card reader at the pumps. The Taxpayer states that all of its customers are institutional, governmental and commercial entities who purchase fuel for resale or for use in the ordinary course of business to fuel construction equipment, fleet vehicles, commercial equipment, and public transportation vehicles and to heat commercial buildings. The cardlock locations are not open to the general public. The Taxpayer supplies fuel and furnishes 24-hour access to fueling, high speed pumping suitable for large commercial vehicle fuel tanks and accessibility for oversized commercial vehicles.
The Taxpayer offers market-based pricing, giving customers the option for pricing based on the daily average cost of area fuel inventory. To set market-based prices, the Taxpayer utilizes a comprehensive database of wholesale petroleum prices that enables it to find the lowest daily costs for fuel inventory, providing savings that it passes along to customers. Some customers contract to pay the retail price for gasoline, but with no mark up. Because of the large volume purchasing of its customers, the Taxpayer offers a best industry price guarantee, volume pricing, and credit terms. Further, the Taxpayer requires a warranty by the customer that (1) its either a governmental body or a licensed commercial enterprise, and (2) the fuel purchased at cardlock locations will not be available for personal use.
The Taxpayer seeks an advisory opinion as to whether the cardlock petroleum sales transactions should be treated as sales at retail or wholesale.
OPINION
The BPOL definition of wholesale sales incorporates the indicia of quantity, price, and user of the product. Under Title 23 of the Virginia Administrative Code (VAC) 10-500-10, the definition of wholesale goes beyond the traditional concept of "sale for resale" for purposes of the BPOL tax. A wholesale sale includes:
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- sales to institutional, commercial, industrial, and governmental users which because of the facts and circumstances surrounding the sales, such as the quantity, price, or other terms, indicate that they are consistent with sales at wholesale.
The Taxpayer's business specializes in large-volume fueling for institutional, commercial and governmental users. The Taxpayer offers pricing consistent with wholesalers, and does not hold itself out for business as a retailer of fuel for personal consumption. Based on the facts presented, the Taxpayer is a wholesale merchant and should be taxed for BPOL purposes accordingly.
If you have questions regarding this opinion, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
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AR/1-3217180058.C
Rulings of the Tax Commissioner