Tax Type
BPOL Tax
Description
Beauty salon providing therapeutic massages
Topic
Local Power to Tax
Date Issued
08-28-1997
August 28, 1997
Re: Request for Advisory Opinion: BPOL
Dear*********************
This will respond to your facsimile dated August 6, 1997, which asked whether a business should be classified as a massage parlor for BPOL purposes.
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") is operating a business in your locality. It operates as a full service salon offering haircuts, manicures, pedicures, other beauty services and massages. All of the above services are advertised in a brochure and in a letter to potential clients which is distributed by the Taxpayer.
The Taxpayer offers therapeutic massage which is not part of any prescribed medical treatment. The massages involve no sexual contact. They are given by a full time massage "practitioner" who is not a licensed therapist. The business has a specific room set aside for massages.
The beauty care business is licensed under the category of repair, personal, and business services and is charged a $30.00 application fee plus $0.25 per $100.00 of gross receipts. The massage service is separately licensed as a massage parlor and is charged a flat tax of $1,500.00. The Taxpayer questions its classification as a massage parlor. Its position is that their business offers massage "therapy" and does not operate as a massage parlor. Thus, it should be classified as a service and taxed accordingly. You ask for an advisory opinion as to whether you have classified the Taxpayer's business correctly. You also ask whether the classification of the business as a massage parlor would change when the practitioner becomes licensed as a "massage therapist" or hires a massage therapist to provide massages.
DETERMINATION
Code of Virginia § 58.1-3706 A, copy enclosed, provides the taxation rates of various classifications. There is no legal authority in Virginia which defines the term "massage parlor" for BPOL purposes. Massage parlors are commonly known as establishments which provide a front for prostitution. In fact, the Random House Unabridged Dictionary defines "massage parlor" as an establishment which provides sexual services for money under the guise of providing therapeutic massage. The legislature created a separate classification of "Massage parlor" which is not subject to the rate thresholds and does not have a rate ceiling. The intent of creating this classification and not setting a rate ceiling was to allow localities to regulate illicit sexual activity by imposing exorbitant license taxes on massage parlor operations.1
The determinative question is whether a business which provides therapeutic massage should be classified as a business service or as a massage parlor. Whether a business should be classified as either is a matter of fact to be determined by the locality on a case by case basis. However, the department would encourage localities to classify businesses which clearly provide therapeutic, as opposed to sexual massages as a business service. Factors which would assist a governing official in determining whether a business provides therapeutic massages include whether the massage room(s) are equipped for therapeutic massages, the certification of the masseuses, and how the business holds itself out to the public though its promotional materials.
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/12810B
1The tax rate on massage parlors need not conform to the tax rates of other classifications. A tax on massage parlors which exceeds the tax rate on a barber or beauty shop business and the medical care business is constitutional. Such discrimination is valid as it is based upon a reasonable distinction in municipal policy - namely that massage parlors are more difficult to regulate than beauty parlors. See Rogers v. Miller 401 F. Supp. 826 (E.D. Va. 1975).
Rulings of the Tax Commissioner