Tax Type
BPOL Tax
Description
Threshold for imposition of tax
Topic
Local Power to Tax
Date Issued
02-14-1997
February 14, 1997
Re: Request for Advisory Opinion: BPOL
Thresholds, License Fees, and Uniform Ordinance Provisions
Dear********************
This will respond to your letter of December 23, 1996, in which you asked several questions relating to the 1996 General Assembly amendments to Code of Virginia § 58.1-3700 et. seq.
The license tax is, of course, 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 on the BPOL law and issuing advisory written opinions in specific cases to interpret those provisions and the guidelines issued thereunder. 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 asked whether a locality may impose a license fee in addition to levying a license tax. You also asked whether threshold protections from the local license (BPOL) tax are applicable to fortune-tellers, carnival operators, itinerant merchants, and peddlers. Finally, you asked whether**********County must adopt the uniform ordinance provisions of Code of Virginia § 58.1-3703.1 into its local ordinance.
DETERMINATION
LICENSE FEE IN ADDITION TO A LICENSE TAX
The ordinances of some Virginia localities require businesses to obtain a BPOL license for the privilege of engaging in a licensable business within the locality. As long as a local ordinance provides that a particular business privilege must be licensed, a locality may charge a fee for issuing a BPOL license for that privilege. The license fee may not exceed $100 for any locality with a population greater than 50,000, $50 for any locality with a population of 25,000 but no more than 50,000, and $30 for any locality with a population smaller than $25,000. Code of Virginia § 58.1-3703 A (copy enclosed.)
In addition to charging a licensable business a BPOL license fee, a local ordinance may also provide for the levying of a BPOL license tax on the same licensable business for the privilege of engaging in that business within the locality. Code of Virginia § 58.1-3703 A states "(t)he governing body of any county, city or town may charge a fee for issuing a license . . . and may levy and provide for the assessment and collection of county, city or town license taxes on businesses, trades, professions, occupations and callings ...." Code of Virginia § 58.1-3703 A (emphasis added.) The license tax is generally levied upon the gross receipts of a licensable business. Code of Virginia § 58.1-3706 A (copy enclosed.)
Currently, the Virginia House of Delegates passed a bill (House Bill 2783) which would allow a locality to levy a BPOL license tax on a licensable business provided the locality does not impose a license fee on the same business. The bill is currently under consideration in the Virginia Senate.
APPLICABILITY OF BPOL LICENSE TAX THRESHOLDS
Code of Virginia § 58.1-3706 A states that except as specifically provided in that section, no license tax on gross receipts shall be imposed on a licensable business unless the business's gross receipts meet tax thresholds based upon a locality's population. Code of Virginia § 58.1-3706 A. The statute then lists license tax rate limitations for contracting, retail sales, financial services and personal and business services. The wording of the statute attaches the thresholds to the enumerated licensable businesses with rate limitations.
In a separate paragraph, the statute provides that "(t)he rate limitations prescribed in this section shall not be applicable to the license taxes on . . . (iii) carnivals, circuses, and speedways . . .; (iv) fortune-tellers . . .; (vi) itinerant merchants or peddlers ...." Code of Virginia § 58.1-3706 A. Since the thresholds are attached to licensable businesses with rate limitations, it follows that carnival operators, fortune-tellers, itinerant merchants, and peddlers and other licensable businesses which are exempt from the rate limitations are also exempt from threshold protection. As a result, any Virginia locality whose ordinance provides for a local license tax on fortune-tellers, carnival operators, itinerant merchants, and peddlers may begin to levy the tax on such businesses at any dollar level of gross receipts.
ADOPTION OF UNIFORM ORDINANCE PROVISIONS
Every local ordinance providing for a BPOL license tax pursuant to Chapter 37 of the Code of Virginia must adopt uniform ordinance provisions substantially similar to the uniform ordinance provisions appearing in Code of Virginia § 58.1-3703.1 A (copy enclosed). A locality's authority to levy a license tax, whether it be based on gross receipts or a flat tax, derives from Chapter 37 of the Code of Virginia. Thus, every locality levying a license tax on gross receipts or levying a flat license tax must adopt uniform ordinance provisions substantially similar to those appearing in Code of Virginia § 58.1-3703.1.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11990C
Rulings of the Tax Commissioner