Tax Type
BPOL Tax
Description
Apportionment of laboratory's gross receipts
Topic
Local Power to Tax
Rate of Tax
Date Issued
06-25-1997
June 25, 1997
Re: Request for Advisory Opinion: BPOL
Dear*************
This will respond to your facsimile dated June 17, 1997, regarding the taxation of a laboratory company 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 questions raised in your letter, this response is intended to provide advisory guidance only and does not constitute a formal or binding ruling.
FACTS
********** ("the Taxpayer") has a laboratory in your locality. This laboratory is responsible for the collection of specimens. The specimens are then sent to branch or regional testing facilities outside of your locality for the actual testing. All of the Taxpayer's billing and collection services occur at their out-of-state corporate headquarters. The Taxpayer states that it owes no gross receipts tax to your locality since gross receipts are attributed to the location where the tests occur, not where the specimens are collected. You ask whether the Taxpayer is subject to the gross receipts tax in your locality. You also ask whether it may be taxed as a testing laboratory as listed in § 9.2 of the BPOL Guideline if it is subject to the gross receipts tax.
OPINION
It is my opinion that the Taxpayer's gross receipts are subject to taxation in your locality. However, these receipts must be apportioned between your locality and the location of the Taxpayer's testing facilities. Code of Virginia § 58.1-3703.1 A 3a 4, copy enclosed, states that:
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- The gross receipts from the performance of services shall be attributed to the definite place of business at which the services are performed or, if not performed at any definite place of business, then to the definite place of business form which the services are directed or controlled.
The determinative question is whether the service performed by the Taxpayer is limited to specimen testing or whether it consists of specimen collection and testing. Clearly, the taxpayer's customers are employing the Taxpayer to collect specimens as well as test specimens. Thus, both the collection and the testing of specimens are part of the services performed by the taxpayer.
The gross receipts attributed to the collection of the specimens are subject to the license tax in your locality. The gross receipts attributable to the testing of specimens would be sited to the definite place of business where the testing activities occur. If it is impossible or impractical to determine which gross receipts are attributed to the collection of the specimens and which gross receipts are attributed to the testing of the specimens, Code of Virginia § 58.1-3703.1 A 3b provides that "... gross receipts of the business shall be apportioned between the definite places of businesses on the basis of payroll." The payroll used for the apportionment should be the payroll of the Taxpayer's employees who actually conduct the specimen collecting and testing.
Section 9.2 of the 1997 BPOL Guidelines, copy enclosed, lists many of the occupations which are classified as repair, personal or business services. Testing laboratories are listed under § 9.2. The Taxpayer is engaged in business as a testing laboratory. Therefore, they would properly be classified as a personal or business service and taxed accordingly.
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/12646B
Rulings of the Tax Commissioner