Tax Type
BPOL Tax
Description
Limitations on rate of license taxes; New businesses; Power and telephone utilities; Time of payment of tax
Topic
Local Power to Tax
Date Issued
01-17-1997
January 17, 1997
Re: Request for Advisory Opinion: BPOL
Dear*********
;
This will respond to your letter transmitted by fax on December 21, 1996 requesting an advisory opinion.
The license tax is a local tax which is imposed and administered by local officials. The Code of Virginia limits the involvement of the Department of Taxation to promulgating guidelines and issuing advisory opinions. This response is intended to provide guidance only and does not constitute a formal or binding ruling.
FACTS
Your letter raises three issues. First, may continue with a quarterly BPOL tax payment schedule for some businesses? From your letter, it appears that routinely allows some business to pay their license tax in installments. Second, under what conditions can a "flat" $30.00 tax be imposed for the first year of a new business? As you state in your letter, ***** charges a fee of $5.00 for the issuance of a business license. In addition to this fee, you would like to tax all new businesses with a "flat" $30.00 tax because the gross receipts of the first year are uncertain. And finally, can **** continue to tax the gross receipts of power and telephone utilities at the ½ of 1% rate? Power and telephone utilities are public service corporations for purposes of BPOL taxation. would like verification that it can ****continue to tax these utilities at the ½ of 1% rate. I will address each of your questions in the order they are presented above.
DETERMINATION
Quarterly Payment of BPOL Taxes
Under § 58.1-3703.1 A 2b Code of Virginia, you may continue to allow businesses to pay in installments so long as the taxes to be paid are measured by gross receipts. License taxes not measured by gross receipts will be due at the time the business makes application for its business license. Under § 58.1-3703.1 B 3 Code of Virginia, by the 2001 license year, all localities must adopt a filing deadline no later than March 1st for business license applications.
Flat Tax for New Business
As******* population is under 25,000, threshold protection from license tax is not afforded to businesses engaging in licensable privileges within the city. In addition to imposing a $5.00 fee for issuing a BPOL license, the city may levy a flat license tax upon receipts attributable to a licensable business so long as the applicable maximum rate limitations enumerated in Code of Virginia § 58.1-3706 A are not exceeded.
Taxation of Power and Telephone Utilities
Public service corporations are referenced in the uniform ordinance provisions as an exception to the general rule that a taxpayer is only subject to license taxes if it has a definite place of business in the taxing locality. The foregoing reference is a clarification rather than a restriction. The authority under § 58.1-3731 for a locality to impose a license tax on utilities was not changed by the 1996 amendments to the BPOL statute.
I hope that the above information will be beneficial to you. Although I believe this letter conforms with the law, it is written only for your guidance. If you have any further questions or comments, please do not hesitate to let me know.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11981
Rulings of the Tax Commissioner