Tax Type
BPOL Tax
Description
Definite place of business; Auto safety educator
Topic
Local Power to Tax
Date Issued
06-27-1997
June 27, 1997
Re: Request for Advisory Opinion: BPOL
Dear******************
This will response to a facsimile dated June 13, 1997, from your office regarding the application of the BPOL tax to certain activities of a training specialist whose sole contract is with the government.
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
You request an opinion on the application of the BPOL tax to activities of a taxpayer whose sole function involves services on behalf of the government. You state that the Virginia Department of Motor Vehicles (DMV) has received a grant from the federal government to provide information and education to the public regarding automobile seat belt and air bag safety in Virginia and several other states. The DMV has entered into an eighteen (18) month contract with the taxpayer to conduct these sessions.
Although the taxpayer submits information regarding his activities to the DMV in Richmond, Virginia, the taxpayer makes all contacts and appointments independently and conducts the informational sessions without oversight from the DMV.
The DMV compensates the taxpayer with a fixed monthly payment and reimburses the taxpayer for all of his expenses. However, the DMV does not treat the taxpayer as an employee. The taxpayer lives in your locality, and while he does not maintain an office in his home, he does make and accept business calls from his residence. Moreover, the taxpayer plans to file federal tax forms reporting upon his above described activities. You ask whether this taxpayer is required to obtain a business license from your locality for these activities.
OPINION
Localities may charge a fee for issuing BPOL licenses and may levy a BPOL tax on businesses, trades, professions, occupations and callings, and upon the persons, firms and corporations engaged therein within the locality 1 Code of Virginia § 58.1--3703. When based upon gross receipts, the tax is measured by those gross receipts attributable to the exercise of a licensable privilege at a definite place of business within the locality. Code of Virginia § 58.1-3703.1 A 3a.
An individual or entity must be "engaged in business" at a "definite place of business" within a locality in order to be liable for obtaining a BPOL license and subject to the BPOL tax in that locality. "Business" means a course of dealing which requires the time, attention and labor of the person so engaged for the purpose of earning a livelihood or profit. It implies a continuous and regular course of dealing, rather than an irregular or isolated transaction. Advertising or otherwise holding oneself out to the public as being engaged in a particular business creates a rebuttable presumption that a person or entity is engaged in a business. Filing tax returns, schedules and documents that are required of persons or entities engaged in a trade or business may also create such a presumption. Code of Virginia § 58.1-3700.1.
"Definite place of business" means an office or a location at which occurs a regular and continuous course of dealing for thirty (30) consecutive days or more. A definite place of business for a person engaged in business may include a location leased or obtained from another person on a temporary or seasonal basis. A person's residence shall be deemed to be a definite place of business if there is no definite place of business maintained elsewhere and the person is not subject to licensure as a peddler or itinerant merchant. Code of Virginia § 58.1-3700.1.
Gross receipts of a service provider are attributed to the definite place of business where the services are performed. If the services are not performed at a definite place of business, then the gross receipts are attributed to the place where the services are directed or controlled. Code of Virginia § 58.1-3703.1 A 3a (4).
Here, the taxpayer has a contract with a governmental agency of the state of Virginia for a duration of eighteen (18) months. The taxpayer is compensated, as well as reimbursed for all of his expenses, for disseminating safety information on behalf of the agency. The taxpayer makes all contacts and appointments independently and conducts the training sessions without oversight from the agency. The agency does not treat the taxpayer as an employee. The taxpayer will file federal tax forms reporting upon his training activities. Based upon the above information, it appears the taxpayer is engaged in business activity.
While the taxpayer does not maintain an office in his home, he does make and accept business calls from his residence. Further, it does not appear the taxpayer spends more than several days at any particular training site. Since there is no definite place of business maintained elsewhere, and the taxpayer is not subject to licensure as a peddler or itinerant merchant, the taxpayer's residence in your locality is deemed to be his definite place of business. Further, it appears that all of the taxpayer's activities are directed or controlled from his residence. Thus, gross receipts derived from such activities would be attributed to the locality where the taxpayer resides.
Finally, l do not find any exemption from the BPOL tax for the taxpayer's activity. Therefore, if your locality chooses, it may require this taxpayer to obtain a business license and pay a BPOL tax for the privilege of conducting the activities described herein.
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/12635H
1Legislation passed in 1997 provides that, effective July 1, 1998, localities may impose either a BPOL license fee or a tax, but not both. Acts of Assembly 1997, c. 903.
Rulings of the Tax Commissioner