Tax Type
BPOL Tax
Description
Concrete wholesaler subject to tax
Topic
Local Power to Tax
Date Issued
07-29-1997
July 29, 1997
Re: Request for Advisory Opinion: BPOL
Dear***************
This will respond to a facsimile dated July 14, 1997, from your office regarding the application of the BPOL tax to a certain company with a presence 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
You request an opinion on the application of the BPOL tax to the activities of a company that purchases bulk quantities of sand, rock and cement and which engages in dry mixing and bagging concrete in your locality. It receives wholesale orders, and fills and ships those orders, from its place of business in your locality. However, the accounts receivable, credit and collections functions are handled at one of the company's offices in Maryland. You further state that sales solicitations are made from Maryland. You point out that the Department of Taxation has issued an opinion that the above activity is not manufacturing, and thus is not exempt from the BPOL tax. Nevertheless, you ask whether your locality should require a business license and impose a license tax on this company because its product is bagged, sold at wholesale and shipped from your locality.
OPINION
An 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 a locality's BPOL tax1 No locality shall impose a license fee or levy any license tax upon a wholesaler for the privilege of selling goods, wares and merchandise to other persons for resale unless such wholesaler has a definite place of business or store in such locality. Code of Virginia § 58.1-3703 C 6. The measure of the BPOL tax on wholesalers is generally based upon their purchases. Purchases are attributed to the definite place of business at or from which deliveries of the goods are made to customers. Code of Virginia § 58.1-3703.1 A 3a (2).
You indicate that the taxpayer conducts wholesale sales activity. Thus, the measure of its BPOL tax would be based upon its purchases. Those purchases would be attributed to the definite place of business at or from which deliveries of the goods are made to customers. That definite place of business is within your locality, thus you can require a business license along with a license fee and impose a BPOL tax on the taxpayer based on the purchases delivered therefrom.
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/12729H
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