Tax Type
BPOL Tax
Description
Procedure for determining situs of service providers.
Topic
Local Power to Tax
Date Issued
10-09-1997
October 9, 1997
Re: Request for Advisory Opinion: BPOL
Dear************************
This will respond to your letter of September 19, 1997, requesting an advisory opinion.
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 have inquired as to how gross receipts should be reported for the BPOL tax as it applies to a catering business which will operate out of a sales office located in*****County (the "County"). The catering business will serve customers within the County, in other localities and in other states. You have also inquired as to how the local meals tax should be applied to the business.
OPINION
Although your catering business provides food, an item of tangible personal property, the primary business activity is the service provided in conjunction with the food. The business you describe would therefore be classified as a service provider for purposes of the BPOL tax. The situs rule for gross receipts for a service business are discussed at page 56 of the 1997 BPOL Guidelines. The gross receipts of a service business are to be attributed to the definite place of business where the services are rendered. When the services are not performed at any definite place of business, the gross receipts are attributed to the definite place of business from which the services are directed or controlled.
From the facts presented it is clear that your catering services are not performed at any definite place of business. Caterers travel to render their services at a location selected by the customer. Thus, under the situs rule discussed above, the gross receipts would be sited to the sales office location in the County from which the services are directed and controlled. To the extent that the catering business provides services in another state or the District of Columbia, and the business is liable for an income or income-like tax in these other jurisdictions, the catering business would have a deduction from its gross receipts attributable to the out of state activity pursuant to Code of Virginia § 58.1-3732 B 2.
Your second questions concerns the application of the County's local meals tax to the business. The meals tax is a local tax administered by local officials. The department has not been authorized to render advisory opinions on this tax and it would be inappropriate to comment on this matter. I have, however, enclosed a copy of the County's local meals tax ordinance that you may find helpful. I encourage you to contact the locality with any questions you may have about this particular tax.
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/12791D
Rulings of the Tax Commissioner