Tax Type
BPOL Tax
Retail Sales and Use Tax
Description
Business located in two different localities
Topic
Local Power to Tax
Local Taxes Discussion
Date Issued
11-23-1992
November 23, 1992
Dear***************
This will reply to your letter of June 11, 1992 in which you request a ruling regarding the division of sales and use tax collections and the imposition of local business license tax to a retailer that occupies a business location which is situated in two different localities.
FACTS
You are the Commissioner of Revenue of the City of ************** (the "City") ********* (the "Retailer") maintains a place of business that may be situated in the City and in the County of Spotsylvania (the "County"). Of the land that the Retailer occupies (which includes buildings that are actively used in the business operations and parking lots which are contiguous thereto), you allege that 40% of the land is located in the City and 60% of the land is located in the County. The Retailer has been designating the County as the locality in which it operates for purposes of allocating the local portion of the sales and use taxes it collects.
RULING
Sales and Use Taxation
Va. Code §58.1-605(E) requires that the local portion of sales and use tax revenues collected be distributed one half to each different locality if a dealer transacts business at a location that is situated in two separate localities. If the Retailer's place of business is actually situated in the County and the City, one half of the local portion of the sales and use tax revenues collected are to be equally divided between the County and the City. If the Retailer's operations are located exclusively in the County, then the Retailer has been correctly reporting the collected taxes.
The department has interpreted the term "place of business" as including not only the building which houses a dealer's stock, cash register, etc., but also the contiguous ancillary property such as the parking lot, storage area, etc. However, to be considered property which consists of a dealer's place of business the property must also be used in the ordinary course of business for which the dealer is registered.
If the Retailer has been mistakenly designating the County as the locality that was entitled to the entire local portion of tax collected, an adjustment will be necessary for those period in which collected taxes were mistakenly remitted to the County. Although some of the amount remitted to the County may have to be reallocated to the City, the adjustment would be phased in over time to avoid the financial hardship that would result to the County from a one-time adjustment.
Local Business License Tax:
You have also asked for a ruling on how the City's and the County's local business license tax should be levied upon the Retailer assuming that the Retailer's operations are in both the City and the County. authority to issue advisory opinions under Va. Code §58.1-3701 does not extend to this type of issue; however, Va. Code §58.1-3709 clearly sets forth the rules for allocating the tax in such an instance.
I have asked our***********District Office to work with you and ********County to take those actions necessary to definitively determine the location of the Retailer's operations to ascertain if an adjustment is necessary for sales tax purposes. If you have any further questions or need further clarification of the information contained herein, please do not hesitate to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6218O
Rulings of the Tax Commissioner