Tax Type
BPOL Tax
Description
Alcoholic beverages tax; Multiple taxation
Topic
Local Power to Tax
Date Issued
04-11-1997
April 11, 1997
Re: Request for Advisory Opinion: BPOL
Dear**********************
This will respond to your facsimile dated February 27, 1997, regarding the application of the BPOL license fee when a local license tax on the sale of alcoholic beverages is imposed.
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
Your locality has a filing threshold of $100,000 and charges a license fee of $60. A restaurant operates in your locality. The restaurant has gross receipts in excess of $100,000. It has paid $60 for a license and a tax on its gross receipts. Your locality also imposes a flat license on the sale of Alcoholic beverages based on seating capacity pursuant to Code of Virginia § 4.1 et seq.
You ask whether your locality may impose a license fee on the sale of alcoholic beverages on the restaurant as well as a BPOL license fee.
OPINION
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- Code of Virginia § 4.1-233 C, copy enclosed, states that:
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- ... [n]o local alcoholic beverage license authorized by [the Alcoholic Beverage Control Act] shall exempt any licensee from any local merchant's and local restaurant license tax, but such local merchant's and local restaurant license taxes may be in addition to the local alcoholic beverage license taxes...
Pursuant to this statute, localities may require restaurants to purchase a local alcoholic beverage license and simultaneously pay a BPOL license tax.
The determinative question is whether the local merchant's and local restaurant "license tax" also includes the BPOL license fee. A license allows an entity to engage in a certain privilege. The intent of Code of Virginia § 4.1-233 C is to allow localities to license the privilege of engaging in business while separately licensing the privilege of selling alcoholic beverages. For BPOL purposes, the payment of a license fee allows an entity to engage in business. Thus, for Code of Virginia § 4.1-233 C purposes, a license fee and a license tax are the same. Therefore, your locality may impose a flat license fee on Alcoholic beverages based on seating capacity and it may simultaneously impose a business license fee.
In the Commissioner's prior Advisory Opinion of December 20, 1988, copy enclosed, the Commissioner held that a locality may impose both a local wholesale merchants' license tax and a license tax on wholesale beer distributors provided that the locality established the two taxes under the proper authority.
The requirement of obtaining both a license on the sale of alcoholic beverages and a business license also passes constitutional scrutiny. The Attorney General decided in its opinion of April 26, 1974, copy enclosed, that an ordinance which required restaurants to purchase a local license tax to sell mixed alcoholic beverages and a license tax based on gross sales did not violate the U.S. or Virginia Constitutions.
To correct the inequities caused by the current law, House Bill 2783 was signed into law. This bill allows a locality to levy a BPOL license tax on a licensable business provided the locality does not impose a license fee on the same business. It becomes effective July 1, 1998.
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/12235B
Rulings of the Tax Commissioner