Document Number
Tax Type
Classification: Multiple Businesses - Winery; Administration: License Application - Failure to Apply; Administration: Statute of Limitations - Six Preceding Years; Administration: Penalty - Late Filing, Late Payment, Underpaid Assessment, Waiver; Administration: Offer in Compromise
Date Issued

February 6, 2020

Re:  Request for Advisory Opinion
        Business, Professional and Occupational License (BPOL) Tax

Dear *****:

This will reply to your letter in which ***** (the “County”) requests an advisory opinion regarding the licensing of multiple businesses for purposes of the Business, Professional and Occupational license (BPOL) tax.

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, regulations and public documents cited are available online at in the Laws, Rules and Decisions section of the Department’s web site.


A farm winery located in the County filed an application for a business license for the winery, but did not apply for a separate license for its rental of its facilities for events. The County requests an advisory opinion as to whether the application for a business license for the winery would also apply to the separate business of renting its facilities. If not, the County asks whether it can assess omitted BPOL tax against the facility rental business for three or six years. Finally, the County asks from what date the penalty for failing to apply for a business license or pay the BPOL tax begins.


Multiple Businesses

Virginia Code § 58.1-3703.1 A 1 provides that a separate license will be required for each definite place of business and for each business a taxpayer is operating. Local tax officials are responsible for making the determination as to whether a taxpayer is engaged in a single business or in two businesses, each of which could operate independently of the other. 

In order to be required to obtain multiple licenses, a business must be engaged in clearly identifiable separate business activities and not merely activities ancillary to the primary business. In Public Document (P.D.) 12-220 (12/21/2012), the Department held that a farm winery’s event rental operations could be considered a separate business requiring a separate business license. Such a determination would rely on examining a taxpayer’s books and records in order to establish whether the rental activities are not ancillary to the principal business activity of wine making. 

Because a separate license is required for each business that a taxpayer operates, the timely application for one business does not apply to the failure to apply to other business that a taxpayer operates. As such, if the County determines that the farm winery and its event rental operation are separate businesses, then the application for a business license for the farm winery does not apply to the event rental business. 

Assessment Limitations Period

Virginia Code § 58.1-3903 provides that an assessing official shall assess omitted taxes for the current tax year and the three preceding years. Notwithstanding this statute, Virginia Code § 58.1-3703.1 A 4 b states that “an assessing official shall assess the local license tax omitted due to fraud or failure to apply for a license for the current tax year and the six preceding license years.”  

In the commentary accompanying the Report of the Subcommittee Studying the Business, Professional and Occupation License Tax, House Document 59 (1995), the author clarified this section, noting that the six-year assessment period for fraud or failure to file under Virginia Code § 58.1-3703.1 A 4 b is similar to the period for state taxes under Virginia Code § 58.1-104. Virginia Code § 58.1-104 provides that certain taxes administered by the Department must be assessed within three years from the return due date or within six years from the last day prescribed by law for filing a return if no return were filed or it was fraudulently filed. The authority to assess state tax for a six-year period, however, is discretionary. The Department has addressed this authority on several occasions. See P.D. 91-298 (11/22/1991), P.D. 95-221 (8/25/1995), and P.D. 99-230 (08/11/1999).

The reference to Virginia Code § 58.1-104 in the commentary indicates that the intent of Virginia Code § 58.1-3703.1 A 4 is to make mandatory the assessment of omitted taxes for the current tax year plus the three preceding tax years under Virginia Code § 58.1-3903, but to allow localities the discretion to assess tax for the additional three years when there is fraud or a failure to apply for a license. 

This intent is reflected in P.D. 97-413 (10/10/1997), in which the Department ruled that Virginia Code § 58.1-3703.1 B 4 b permits (rather than requires) the assessment of BPOL tax for the current license year and the six previous license years. Title 23 of the Virginia Administrative Code (VAC) 10-500-580 A also supports the intent to treat the six-year assessment period as discretionary. The regulation states that an assessing officer may assess the local license tax omitted because of fraud or failure to apply to a license for the current license year and the six preceding years. Thus, while this section authorizes a locality to assess seven years of license tax when the conditions are met, it is the Department’s opinion that a locality is not required to do so.

With regard to the facts described above, the Code of Virginia allows the local assessing official to assess omitted BPOL tax for the winery’s facility rental business for the current tax year and the six previous tax years. The locality, however, is not required to assess all six preceding tax years.

Penalty Assessment Date

Virginia Code § 58.1-3703.1 A 2 d provides that localities may impose a penalty of 10% of the BPOL tax upon a taxpayer's failure to file a BPOL application or to pay the BPOL tax by the appropriate due date. The County asks whether the appropriate due date is when the tax was due, when a tax due is discovered or 30 days after the taxpayer is actually billed. 

In accordance with Virginia Code § 58.1-3703.1 A 2 a, a locality must adopt a fixed or application due date for the license or tax year that must fall on or after March 1st but on or before May 1st. See also Title 23 VAC 10-500-530 D. Businesses are required to file their annual business license applications by the due date established by local ordinance.

Localities are also granted latitude under Virginia Code § 58.1-3703.1 A 2 b to set a later date (payment due date) by which time the full amount of tax must be paid. Thus, a locality may, by local ordinance, establish a due date for the license application and a later date for businesses to actually pay the tax. 

In addition, localities are permitted to grant extensions for the filing and payment of the BPOL tax in cases where reasonable cause can be established. See Virginia Code § 58.1-3703.1 A 2 c. As long as the full tax is paid on or before the extension period, no penalty will apply.

As indicated in your request above, localities may impose a penalty equal to 10% of the BPOL tax due upon a taxpayer’s failure to file a BPOL application or to pay the BPOL fee or tax by the appropriate due date. If both the license application and payment of the tax are late, then only the late filing penalty shall be imposed. However, a locality may impose both the failure to file penalty and the late payment penalty only when the local assessing official determines that the taxpayer has a history of noncompliance. See Virginia Code § 58.1-3703.1 A 2 d.

Based on the above law, a locality may assess a 10% penalty if a taxpayer either fails to file a BPOL license application, or is late in paying its BPOL tax or fee. The appropriate date, as prescribed under Virginia Code § 58.1-3703.1 A 2 d, will depend on the due dates established by local ordinance. If the license application and payment due date are the same under local ordinance, the appropriate date would be the date the license application and payment are due. If a locality grants a later payment date, the appropriate date could be either the application due date, the payment due date including extensions, or both if a taxpayer has a history of noncompliance.

In addition, Virginia Code § 58.1-3703.1 A 2 d grants authority to local collecting officers to impose a penalty equal to 10% of an unpaid balance of BPOL tax if a taxpayer fails to pay an assessment made by an local assessing official within 30 days of such assessment. Virginia Code § 58.1-3700.1 defines an “assessment” to mean: 

a determination as to the proper rate of tax, the measure to which the tax rate is applied, and ultimately the amount of tax, including additional or omitted tax, that is due. An assessment shall include a written assessment made pursuant to notice by the assessing official or a self-assessment made by a taxpayer upon the filing of a return or otherwise not pursuant to notice. 

A local assessing official is deemed to have made an assessment when a written notice is delivered to the business either in person, or by mail to the business at its last known address. Such assessments generally result from a review or audit action by a locality. Contrary to the variable dates on which license applications and payments are due, the date on which this penalty on an unpaid assessment becomes applicable is specifically defined and is, thus, not considered to be a date included as an appropriate date for purposes of Virginia Code § 58.1-3703.1 A 2 d.

In the situation presented, when the taxpayer did not report the separate business for six years, it failed to file a BPOL application or to pay the BPOL fee or tax by the appropriate due date as established by local ordinance. As indicated above, if the taxpayer has a history of noncompliance, the local assessing official may assess both the failure to file and failure to pay penalties. Presuming the locality has made an assessment and executed the delivery of such, the taxpayer must pay the full amount of the assessment within 30 days of the date of such assessment or it may be subject to the unpaid assessment penalty imposed by the local collecting official. 

While granting authority to assess penalties, the General Assembly also recognized that circumstances may arise under which the imposition of penalties may not be appropriate. To that extent, Virginia Code § 58.1-3703.1 A 2 d provides guidance concerning when it may be appropriate for a locality to forgo a penalty assessment. Before an assessing officer imposes a penalty or abates any penalty that has been assessed, it should consider whether or not a taxpayer is at fault for failing to file its BPOL tax return or pay its tax liability. Such a finding is a factual matter for the local assessing official or local collecting officer to determine.

In addition, Virginia Code § 58.1-3994 authorizes an assessing officer to compromise and settle any disputed assessment of local business taxes if there is substantial doubt under applicable law, regulations, or guidelines as to the taxpayer’s liability for such taxes. Further, a local collecting official, with the consent of the local government, may compromise or settle the amount due and payable when they determine the collection of the entire amount due and owing is in substantial doubt and the best interests of the locality will be served by such compromise.

With regard to the scenario described above, the locality should consider whether the winery can show that it acted responsibly and the failure was due to events beyond its control based on the guidance provided under Virginia Code § 58.1-3703.1 A 2 d. Further, the locality may consider an offer in compromise pursuant to Virginia Code § 58.1-3994 or local ordinances that may grant authority to provide relief to the winery.

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



Craig M. Burns
Tax Commissioner


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Last Updated 04/20/2020 09:47