January 28, 1997
Re: Request for Advisory Opinion: BPOL
Dear *****:
This will response to your facsimile dated January 3, 1997, regarding the proper classification for BPOL purposes of businesses which sell and install television satellite dishes in or at consumers' homes, and which also sell cable television services.
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 ask into which classification "satellite companies" would fall: retail merchant, contractor or business services. By "satellite companies" you mean entities which sell television satellite dishes to consumers and install such dishes at or in the consumers' residences. You state that, in addition to installing satellite dishes, the entities also sell cable television subscriptions on behalf of cable television service providers. You indicate that none of the entities in question maintain a definite place of business in your town.
DETERMINATION
BPOL DEFINITIONS
"Retail sale" means the sale of goods for use by the purchaser for any purpose, other than resale. "Services" mean things purchased by a customer which do not have physical characteristics, or which are not goods or merchandise. 1997 BPOL Guidelines, § 1. The term "contractor" means one who accepts orders or contracts for doing work on or in a building or structure, requiring the use of certain building materials. Contracting includes one who accepts contracts for doing work on or in a building or upon premises involving the erecting, installing, altering, repairing, servicing, or maintaining electric wiring, devices or appliances permanently connected to such wiring, or the erecting, repairing or maintaining of lines which transmit or distribute electric light and power. Code of Virginia § 58.1-3714. "Definite place of business" means an office or location at which occurs a regular and continuous course of dealing for thirty consecutive days or more. Code of Virginia § 58.1-3700.1.
INSTALLATION BY A MERCHANT - RETAILER or CONTRACTOR
The facts and circumstances of each case will determine whether an installation of goods by a merchant constitutes contracting for purposes of the BPOL tax. One factor involves the difficulty entailed in making way for the goods installed. The following factors may also determine whether a merchant's installation of goods constitutes contracting: (I) whether the installation is ancillary to the retail sales of a merchant, as opposed to constituting a substantial portion of the sale; (ii) whether the merchant holds himself out as able to perform contractors' activities; and, (iii) whether the merchant installs his own merchandise only, as opposed to installing the goods of others. 1997 BPOL Guidelines, § 5.3.
You indicated that these satellite companies install merchandise which they sell; therefore, any installations which they make would be ancillary to their own retail sales. Thus, with respect to activities involving the sale and installation of satellite dishes, these companies would more properly be classified as retail merchants, as opposed to contractors.
SITUS OF GROSS RECEIPTS OF RETAILER
The gross receipts of a retailer are attributed to the definite place of business where the sales solicitation occurs. Code of Virginia § 58.1-3703.1 A 3a(2). The companies' gross receipts from retail activity will be attributed to the locality where their definite places of business are found. You have indicated that these companies do not maintain a permanent presence in your locality and that their definite places of business are outside of your town; therefore, your locality cannot require a BPOL license, assess a fee or levy a tax upon these companies' retail activities.
SALE OF CABLE SERVICES - SITUS OF GROSS RECEIPTS
The sale of cable television services constitutes the sale of personal services. The situs for the local license tax for a licensable business shall be the locality in which the person so engaged has a definite place of business. Code of Virginia § 58.1-3708. You have indicated that these companies' definite places of business are outside your town. Therefore, your locality cannot require a BPOL license, assess a fee or levy a tax upon these companies for their sale of services.
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/12016H