Tax Type
BPOL Tax
Description
In general; Gross receipts; Flowers and grave services
Topic
Local Power to Tax
Date Issued
02-04-1997
February 4, 1997
Re: Request for advisory Opinion: BPOL
Dear*****************
This will respond to your letter transmitted by fax on January 9, 1997 requesting an advisory opinion as to whether a funeral home should be subject to BPOL tax based on its gross receipts less the flower and grave service charges the funeral home incurs in servicing its clients.
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. This response is intended to provide guidance only and does not constitute a formal or binding ruling.
FACTS
In its fee for services rendered, a funeral home includes its costs for flowers and the charges for opening and closing the grave. Flowers are supplied by a local florist. Grave opening and closing services are provided by a vault service. Because the funeral home pays for these expenses "up front," it contends that it is actually "loaning" money to the client. Based on this assertion, the funeral home argues that its costs for flowers and grave services should be excluded from gross receipts under § 3.3.3 of the 1997 BPOL Guidelines as "receipt of loan proceeds by a licensee where it is the obligor." Roanoke takes the position that the entire amount that the funeral home bills its clients should be included in its gross receipts.
OPINION
The Alexandria v. Morrison-Williams Associates. Inc., 223 Va. 349 (1982), cited on page 6 of the 1997 BPOL Guidelines should control on this issue. As stated on page 5 of the 1997 BPOL Guidelines, "gross receipts means the whole, entire, total receipts, of money or other consideration received by the taxpayer as a result of transactions with others...without deduction or exclusion except as provided by law." While there is an exclusion available for receipts which constitute the return of principal on a loan, there is no promissory note, interest charged, or any other evidence of a loan in the facts presented here. The flower and grave service charges that the funeral home incurs in servicing its clients is best viewed as part of the cost of doing business. There is no legal basis in the BPOL statute for excluding these costs in calculating the funeral home's gross receipts.
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. If you have any further questions or comments, please do not hesitate to let me know.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12056
Rulings of the Tax Commissioner