Document Number
11-3
Tax Type
BPOL Tax
Description
A county may not impose a BPOL tax on businesses operating in a town that lies within its borders unless it has the town's permission
Topic
Local Power to Tax
Local Taxes Discussion
Property Subject to Tax
Date Issued
01-07-2011


January 7, 2011




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 as to whether a county may assess Business, Professional and Occupational License (BPOL) tax on the lessor of real property that operates in a town within the county if the town cannot impose the BPOL tax. 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 these facts or the introduction of new facts may lead to a different result.

The Code of Virginia sections and public document cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site.

FACTS


Persons or other entities are engaged in the business of renting real property within the town of ***** (the "'Town"). The Town is located in the ***** (the "County"). The Town cannot impose a BPOL tax on lessors of real property because it did not impose a BPOL tax on these lessors prior to January 1, 1974. The County, however, can impose a BPOL tax on lessors of real property because it did impose a BPOL ax on lessons of property prior to January 1, 1974. The County and the Town have jointly requested an advisory opinion as to whether the County is permitted to impose the BPOL tax on lessors of real property within the Town.

OPINION


The BPOL tax is a gross receipts tax imposed on the persons, firms and corporations for the privilege of engaging in business. While Va. Code § 58.1-3700.1 defines the term "gross receipts" as "the whole, entire, total receipts, without deduction," the law provides for certain deductions and exclusions from gross receipts. Included among these is an exemption for the rental of real property. Virginia Code § 58.1-3703 C 7 provides that no locality may impose a license fee or license tax:
    • Upon any person, firm or corporation for engaging in the business of renting, as the owner of such property, real property other than hotels, motels, motor lodges, auto courts, tourist courts, travel trailer parks, lodging houses, rooming houses and boardinghouses; however, any county, city or town imposing such a license tax on January 1, 1974, shall not be precluded from the levy of such tax by the provisions of this subdivision.

The Town did not impose such a tax prior to 1974; therefore, rentals of real property, as described above, are exempt from the Town's BPOL tax. The County, however, did impose a BPOL tax on the rental of real property prior to 1974. As such, it can impose a BPOL tax on persons or entities located within its jurisdiction engaged in the rental of real property as described in Va. Code § 58.1-3703 C 7.

Under Va. Code § 58.1-3711:
    • Any county license tax imposed pursuant to this chapter shall not apply within the limits of any town located in such, county, where such town now, or hereafter, imposes a town license tax on the same privilege. If the governing body of any town within a county, however, provides that a county license tax shall apply within the limits of such town, then such license tax may be imposed within such towns.

Virginia Code § 58.1-3705 provides that a license tax must be uniform for all persons engaged in the same business within the locality. The County contends that because the Town cannot impose a BPOL tax on the lessors of real property under Va. Code § 58.1-3711, it is required to impose BPOL tax on the lessors of real property in the Town because those entities, are operating within the County.

The Town contends that the County does not have the authority to tax lessors of real property within the Town because the uniformity requirement in Va. Code§ 58.1-3705 only applies to a locality's taxing boundaries and the Town's taxing boundaries are separate from those of the County. The Town also argues that the term "privilege" means the general right to impose the BPOL tax, rather than the right to tax a specific business. As such, the County would not have the right to impose a BPOL tax on the lessors of real property located within the Town. In addition, the Town avers that the BPOL situs rules equalize towns and counties and limits the application of county ordinances to counties, not to towns that lie therein.

Virginia Code § 58.1-3703 C 19 provides that "[g]ross receipts from the sale and rental of real estate and buildings remain taxable by the locality in which the real estate is located provided the locality is otherwise authorized to tax the rental of real estate. In this case, the Town is not authorized to tax the lessors of real property within its borders.

In general, a county may not impose a BPOL tax on businesses operating in a town that lies within its borders unless it has the town's permission. See Public Document (P.D.) 02-131 (10/08/2002). Specifically, a county may only impose a BPOL tax on the lessors of real property within a town that lies within the county, if the town gives them such permission. See P.D. 97-176 (4/16/1997). As such, in this case, the County may not tax the lessors of real property located in the Town unless the Town has given the County permission to impose the BPOL tax on such lessors.

If you have any question regarding this advisory opinion, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
                • Sincerely,



                • Craig M. Burns
                  Tax Commissioner




AR/1-4474853919.B


Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46