Tax Type
BPOL Tax
Description
Out-of-state contractors
Topic
Local Power to Tax
Date Issued
01-24-1997
January 24, 1997
Re: Request far Advisory Opinion: BPOL
Dear**********:
This will respond to your letter of January 14, 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. This response is intended to provide guidance only and does not constitute a formal or binding ruling.
FACTS
County borders West Virginia and Maryland and is miles from the District of Columbia. Many of the contractors who regularly work and actively solicit business in the County live and/or maintain their principal offices outside of the Commonwealth. Currently, virtually all out-of-state contractors are licensed in and taxed on their gross receipts derived from their work in ****** County. They are not licensed in any other locality within the Commonwealth. Because of the proximity of their principal offices to the job sites just over the state line, the out-of-state contractors do not maintain any permanent presence in the County. The length of time that these contractors work at a particular job site varies from a few days to several months.
DETERMINATION
Under § 58.1-3703.1 A 3 a 1 Code of Virginia, a contractor is subject to a license tax measured by the gross receipts attributed to the definite place of business where the services are performed. If the services are not performed at any definite place of business, then the contractor's gross receipts are attributed to the definite place of business from which the services are directed or controlled. A "definite place of business" is defined as an office or a location at which occurs a regular and continuous course of dealing for 30 consecutive days or more. In the particular trade of contracting, a contractor has a definite place of business where he establishes his presence for the purpose of regularly and continuously carrying on his trade for a period of more than 30 days.
Whether a particular contractor is licensable and thus taxable in County will be a factual question that focuses on the quantity, frequency and intensity of the contractor's activities. At a minimum, the contractor must establish a presence at a job site in the County that exceeds 30 days. The key factor is that the contractor has established a presence at the job site and plans to return there to continue work over a span of time that exceeds 30 days. For example, contractor's who, because of their relative size, organization or field of specialization, move frequently from job to job, spending only a few days on each, may never establish enough of a presence to be considered to have a definite place of business in******** County for BPOL tax purposes. However, contractors who return to the same job site throughout extended periods, exceeding 30 days, can be considered to have a definite place of business in********County, Virginia and may be licensable and taxable for gross receipts attributable to that definite place of business.
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/12077
Rulings of the Tax Commissioner