Tax Type
BPOL Tax
Description
Limitations on rate of license taxes; BPOL tax; Federal and state taxes
Topic
Local Power to Tax
Date Issued
04-17-1997
April 17, 1997
Re: Request for Advisory Opinion: BPOL
Dear******************
This will respond to your facsimile dated April 3, 1997, regarding the ability of a cigarette wholesaler to deduct state and federal cigarette taxes in calculating its BPOL taxes.
The license tax is, of course, 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 on the BPOL law and issuing advisory written opinions in specific cases to interpret those provisions and the guidelines issued thereunder. 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 request an advisory written opinion on the calculation of the BPOL tax of a wholesale dealer of cigarettes which sells to retailers in your town. You inquire whether such a wholesaler may deduct state and federal taxes from its purchases of cigarettes.
OPINION
In calculating its BPOL tax, a wholesale dealer of cigarettes may not deduct the state and federal excise taxes from its purchases of the cigarettes it sells.
Code of Virginia § 58.1-3732 A 1 states that, gross receipts for license tax purposes shall not include any amount not derived from the exercise of the licensed privilege to engage in a business or profession in the ordinary course of business. Amounts received and paid to the U.S., the state of Virginia or any Virginia locality for the Virginia retail sales or use tax, for any local sales tax or any local excise tax on cigarettes, or for any federal or state excise taxes on motor fuels are excluded from gross receipts for BPOL purposes. (Emphasis added.)
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/12390H
Rulings of the Tax Commissioner