Tax Type
BPOL Tax
Description
In general; Situs for local license taxation
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 20, 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
Your letter requests general advice on the appropriate treatment of retailers, wholesalers and contractors under the new model ordinance provisions and presents several specific questions on the proper classification for BPOL purposes of the businesses described below.
Produce Company
A business located in the Town of *****purchases locally grown produce. It packages and grades the product for sale to retailers or other resellers.
Telephone Company
As of the date of this inquiry the local telephone Company, ************* , is charged only a $50.00 flat fee for its operations in the town. ***********, the local power Company is charged a license tax based on its gross receipts. The reason why these two public service companies are treated differently is not known.
*********************
These businesses provide satellite television programming to town residents.********is the vendor for the*******system and *****is the vendor for the DSS system. In cases where programming is provided by *** the satellite downlink equipment (dish, signal processor, etc.) are leased to the consumer. A consumer with the DSS system buys the downlink equipment. Other than leased equipment in the case of ***** neither business has any physical presence in .
I will first address your general inquiry concerning retailers, wholesalers and contractors.
DETERMINATION
In order to be subject to the local license tax in ******, retailers must have a definite place of business in the taxing jurisdiction. This means that the retailer must have had an office or other location in***at which the taxpayer has conducted the business of retailing for 30 continuous days or more. The gross receipts for calculation of the license tax should be based on the receipts generated at the definite place of business where the sales solicitation was made. In the typical retail setting, the sales solicitation is made at the shop or store where the retailer is doing business.
The local license provisions for wholesalers are similar to those for retailer as far as the definite place of business requirement is concerned. However, the situs, 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. The maximum tax rate for wholesalers is .05 per $100 of purchases unless there is an exception as provided under § 58.1-3703 Code of Virginia.
Under § 3.1 of the 1995 BPOL Guidelines a business may be classified as a contractor if it, "accepts contracts to perform or regularly performs, or engages others to perform, any of the work described in paragraph B of § 58.1-3714 Code of Virginia xon buildings, structures or real estate owned by it when the buildings, structures or real estate are to be sold upon completion of the work." Under § 58.1-3703.1 A 3 a 1 Code of Virginia, a contractor is subject to a license tax measured by the gross receipts attributed to the definite place of business where the services are performed or if the service are not performed at any definite place of business then the gross receipts are attributed to the definite place of business from which the services are directed or controlled. This provision is modified by § 58.1-3715 Code of Virginia in cases where the contractor is licensed in one Virginia locality and does more than $25,000.00 in annual business in a secondary Virginia locality. In this situation, a contractor may be licensable and thus taxable in both the primary and the secondary locality.
If a contractor has its primary place of business in ****** and performs work in another locality, your first question is whether the builder has done more than $25,000 of work in that second jurisdiction. If so, the contractor is subject to any license tax imposed in that second jurisdiction and the gross receipts attributable there are not taxable in your jurisdiction. If the contractor has done less than $25,000 of work in the second jurisdiction, all of his gross receipts are attributable to **********and subject to local license tax as imposed there. This same rule applies to contractors who have as their principal place of business elsewhere and come into ********** to perform work. If the yearly value of the contractors' work exceeds $25,000 in ********* these receipts are subject to licensure in your jurisdiction.
Taxation Telephone Utilities
It would be appropriate to tax the telephone Company as a public service corporation pursuant to § 58.1-3731 Code of Virginia. The maximum rate for this classification is ½ of 1% of the gross receipts from the sales of services to consumers located in the taxing jurisdiction. In the case of telephone companies, charges for long distance calls are excluded from gross receipts. The authority under § 58.1-3731 for a locality to impose a license tax on utilities was not changed by the 1996 amendments to the BPOL statute.
****************
The sales of satellite television programming to consumers in ***** should be classified as a personal service business for BPOL purposes. As with retailers discussed above, service businesses must have a definite place of business in the taxing jurisdiction in order to be subject to local license taxation. Both**** and *****are out of state businesses with no business presence in ****other than ****leased equipment. Given this fact pattern, neither of these businesses would be subject to license taxes in your jurisdiction.
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/12086
Rulings of the Tax Commissioner