Tax Type
BPOL Tax
Description
Situs; Courier services
Topic
Local Power to Tax
Date Issued
03-10-1997
March 10, 1997
Re: Request for Advisory Opinion: BPOL
Dear******************
This will respond to your letter transmitted by fax on February 21, 1997, 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. However, the department shall not be required to interpret any local ordinance.
While addressing the questions raised in your letter, this response is intended to provide advisory guidance only and does not constitute a formal or binding ruling.
FACTS
You have inquired concerning the proper BPOL treatment of a package delivery service such as **********and the City's authority to tax wholesale beer distributors. I will first address your question concerning the beer distributors.
OPINION
Beer Wholesaler
Section 4.1-233 C Code of Virginia makes it clear that a locality may subject a beer wholesaler to the BPOL tax as if the beer was a non-alcoholic beverage subject to the condition that the local ordinance imposing the BPOL tax must exclude an amount of the wholesaler's purchases sufficient to yield a BPOL tax liability equal to the amount imposed as the local beer license tax authorized under the Alcoholic Beverage Control Act.
Under the foregoing provision a beer wholesaler is given what is tantamount to a "credit for BPOL license purposes equal to the amount imposed as the local beer license tax. Except for this provision, however, the basic concepts of local license taxation apply to alcoholic beverage wholesalers as they apply to ordinary wholesalers. In order to be subject to licensure, the wholesaler must have a definite place of business in your locality. From the facts presented, it appears that the beer wholesaler has his definite place of business outside the jurisdiction. The wholesaler would therefore not be subject to the BPOL tax imposed in your jurisdiction.
Package Delivery Services
For BPOL purposes, this type of business falls under the general classification of business or personal services. The maximum rate for this classification is .35 per $100 of gross receipts. Generally, the gross receipts of a service business are attributed to the definite place of business where the services are rendered. In the event the services are rendered at no particular location, the gross receipts are attributed to the jurisdiction from which the services are directed, initiated or controlled.
A package delivery service is not rendered in any particular location. The majority of the business activity consists of travel to delivery locations as directed by the customer. Depending on the size of the company, the service may deliver in a limited geographical area or worldwide. Since the delivery service is not performed at a specific place, the business is subject to the BPOL tax at the location from which the deliveries are directed or controlled. Unless the delivery business has its definite place of business from which operations are directed or controlled in your jurisdiction, the business cannot be subjected to the BPOL tax in your jurisdiction. A worldwide delivery service that has a drop-off and pick-up office in your jurisdiction would be subject the BPOL tax imposed on those receipts attributable to the exercise of delivery services as a licensable privilege in your jurisdiction. Certainly, a small service that delivers in your area which has its central location in your jurisdiction would be subject to licensure with all the gross receipts from the business sited to your jurisdiction.
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/12234
Rulings of the Tax Commissioner