Tax Type
BPOL Tax
Description
Situs for local license taxation; Businesses subject to licensure
Topic
Local Power to Tax
Date Issued
03-20-1997
March 20, 1997
Re: Request for Advisory Opinion: BPOL
Dear******************
This will respond to your letter transmitted by fax on February 27, 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 trucking company that, in addition to its regular trucking business, performs hauling jobs by making arrangements with other trucking companies; i.e. it "refers" the job. The referring company collects the hauling charges for the job then remits the total payment collected, less a 10% fee, to the trucking company that did the work. At year's end, the referring company issues a 1099 form reporting the income paid to the trucking companies it has referred jobs to.
Your second inquiry concerns the proper BPOL treatment of businesses which conduct transactions in your jurisdiction. From the facts presented, it appears that the businesses have a definite place business in the county adjoining your jurisdiction which does not impose the BPOL tax. The facts do not indicate the nature of the businesses.
OPINION
Trucking Company
Trucking falls under the general classification of business services for BPOL purposes. Providing for delivery of goods by referring the job to other trucking companies is a different means to provide the same type of service and is nonetheless a business service under the same general classification. The maximum tax rate for this classification is .36 per $100 of gross receipts.
In § 1 of the 1997 BPOL Guidelines, the term "gross receipts" is defined as follows:
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- The whole, entire, total receipts, of money or other consideration received by the taxpayer as a result of transactions with others besides himself and which are derived from the exercise of the licensed privilege to engage in a business or profession in the ordinary course of business, without deduction or exclusion except as provided by law.
The total income from services to third parties derived from the exercise of the privilege for which the taxpayer is licensed by the locality constitutes gross receipts for purposes of BPOL taxation. In this case, the service rendered is delivery of goods through arrangements with other trucking companies. The total compensation paid for this service is total sum paid the referring company for delivery of the load. It is the company's total receipts, not merely its 10% fee, which are subject to the gross receipts tax. See, e.g. Savage v. Commonwealth, 186 Va. 1012 (1947).
County Businesses
Generally, in order for a business to be subject to licensure in your jurisdiction, it must have a definite place of business there. If the nature of a business is such that it has no definite place of business anywhere, it may be subject to licensure where the owner resides. Additionally, certain classifications of business are subject to licensure without reference to a definite place of business. These business classifications are listed in § 58.1-37-3.1 Code of Virginia and include amusement machine operators, itinerant merchants, peddlers, carnivals, circuses, public service corporations and contractors subject to § 58.1-3715.
The term "definite place of business" is defined on page 4 of the 1997 BPOL Guidelines as an office or a location at which occurs a regular and continuous course of dealing where one holds one's self out or avails one's self to the public for 30 consecutive days or more exclusive of holidays and weekends. Unless a business classification fits one of the exceptions listed above, or has a definite place of business in your jurisdiction, it would be improper to license this business in your jurisdiction.
In the event that a company or individual conducts activity in your jurisdiction sufficient to establish a definite place of business, this company or individual would be subject to licensure in your jurisdiction regardless of whether the BPOL tax is imposed on the company or individual in the adjacent county. If the individual or company has a definite place of business in your jurisdiction and in another jurisdiction, only the gross receipts attributable to the businesses activities in your jurisdiction would be reportable for purposes of the BPOL tax imposed in 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/12239
Rulings of the Tax Commissioner