Tax Type
BPOL Tax
Description
Merchant engaged in wholesale and retail
Topic
Local Power to Tax
Date Issued
02-11-1997
February 11, 1997
Re: Request for advisory Opinion: BPOL
Dear***************
This will respond to your letter transmitted by fax on January 23, 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. This response is intended to provide guidance only and does not constitute a formal or binding ruling.
FACTS
The Town of ****has adopted a BPOL gross receipts tax as of January 1, 1997. The license tax for previous years was a flat fee. At least two of the businesses located in the town conduct both wholesale and retail business in the same location.
OPINION
I will first address your question concerning the use of 1996 gross receipts figures for calculating the 1997 license tax. Under § 58.1-3700.1 Code of Virginia, “base year" is defined as the calender year preceding the license year. There is nothing in the transitional provisions set out in § 58.1-3703.1 B Code of Virginia to prohibit the use of 1996 as the base year for calculation of gross receipt taxes for 1997.
As you state in your letter, it is possible for a merchant to be engaged in wholesaling and retailing at the same location. In this case, the merchant can be subject to licensure as two separate businesses. Although the local license provisions for wholesalers are similar to those for retailers as far as the definite place of business requirement is concerned, the situs rules and tax measure are different. In most localities, wholesale license taxes are to be based on the businesses purchases measured at the location at which or from which the wholesaler delivers its goods to customers. Under § 58.1-3703 Code of Virginia, the maximum tax rate for wholesalers is .05 per $100 of purchases unless the locality is grand fathered to impose a higher rate. Where a merchant is engaged in both wholesaling and retailing, it would need to maintain adequate records for its wholesale and retail businesses to comply with the BPOL tax applied to separate licensable activities.
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/12099
Rulings of the Tax Commissioner