Tax Type
BPOL Tax
Description
Situs of gross receipts
Topic
Local Power to Tax
Date Issued
03-21-1997
March 21, 1997
Re: Request for Advisory Opinion: BPOL
Dear****************
This will respond to your facsimile dated February 21, 1997, regarding the situs of companies located in your locality.
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 question raised in your letter, this response is intended to provide advisory guidance only and does not constitute a formal or binding ruling.
FACTS
Company X and its sales office is located in your locality. The company sells supplies which they do not manufacture. The supplies are for the use of the customers and are not for resale. Sales personnel make sales calls to potential customers in various localities. Orders are taken by the sales personnel at the customer location and then brought back to the sales office for processing. The sales orders are either placed with Company X or with other companies located outside of your locality. The supplies are shipped back to the company's warehouse and are delivered to the customer by Company X drivers. You ask whether Company X's gross receipts are taxable in your jurisdiction.
Company Y is also located in your locality. A Company Y employee travels to potential customers in various localities and solicits the rental of uniforms. Company Y drivers deliver fresh uniforms and pick up soiled uniforms from its customers. The soiled uniforms are sent to a different locality to be cleaned. You ask if this rental of uniforms is subject to the local license tax.
OPINION
Retail Sales
Code of Virginia § 58.1-3703.1 A 3a 2, copy enclosed, states that:
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- [t]he gross receipts of a retailer or wholesaler shall be attributed to the definite place of business at which sales solicitation activities occur, or if sales solicitation activities do not occur at any definite place of business, then the definite place of business from which sales solicitation activities are directed or controlled....
Sales are solicited at the customer's sites which are in different localities. The determinative issue is whether the sales solicitations in the other localities occur at a definite place of business. Code of Virginia § 58.1-3700.1 provides that a definite place of business is "an office or a location at which occurs a regular and continuous course of dealing for thirty consecutive days or more." Company X's sales staff visits customers at their locations to sell their supplies. It is unlikely that Company X's sales personnel engage in a regular and continuous course of dealing at customer's locations. Indeed, sales calls and deliveries are probably made on a periodic basis.
If the gross receipts cannot be sited to the place of the sales solicitations, they must be sited to the definite place of business where the sales solicitations are directed or controlled. The only place that Company X's sales solicitations could be directed or controlled is the business or sales offices, both of which are located in your locality. Based in this fact pattern, the gross receipts of this business would be taxable in your jurisdiction.
Uniform Rentals
Code of Virginia § 58.1-3703.1 A 3a 4, states that:
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- [t]he gross receipts of a business renting tangible personal property shall be attributed to the definite place of business from which the tangible personal property is rented or, if the property is not rented from any definite place of business, then to the definite place of business at which the rental of such property is managed.
The place of business from which the uniform rentals occur is the place where the rental agreement is signed. In the instant case the rental agreements are signed at customer sites. However, Company Y's rental solicitations at the customer sites do not occur at a definite place of business. The rental agent does not engage in a regular or continuous course of dealing at the customer's location. The gross receipts of the uniform rentals would be sited back to the definite place of business where the rentals are managed. From the facts presented, the rentals appear to be managed at the corporate office which is located in your locality. The laundering of the uniforms in another locality does not effect the situs of the gross receipts.
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, and the final determination is with the locality.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12224B
Rulings of the Tax Commissioner