Tax Type
BPOL Tax
Description
Single BPOL license for two businesses at same location
Topic
Local Power to Tax
Date Issued
02-14-1997
February 14, 1997
Re: Request for Advisory Opinion: BPOL
BPOL Licenses
Dear***************
This will respond to your letter transmitted by facsimile on January 28, 1997. You asked whether a person, engaged in two or more licensable businesses at one location in the City of *****may elect to obtain one BPOL license for all such businesses regardless of whether the city can levy a license tax.
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 written opinions. However, the department shall not be required to interpret any local ordinance.
FACTS
You indicate that Company A is engaged in two businesses (retailing and providing services) at one location in the City of ********. The city levies a license tax on retailers at a rate of $.20 per $100 of gross receipts and on repair, personal, and business service providers at a rate of $.36 per $100 of gross receipts. Company A has requested to obtain one BPOL license in order to pay one license fee. The applicable BPOL tax threshold for the city is $100,000. The combined gross receipts from Company A'$ retail and service businesses are below the city's tax threshold.
OPINION
Subject to limits in Code of Virginia § 58.1-3703 C, localities may charge a fee for issuing BPOL Incenses and may levy a license tax on a business for the privilege of engaging in business at a definite place of business within the locality. Code of Virginia §§ 58.1-3700 and 58.1-3703 A (copies enclosed). A definite place of business means an office or a location at which occurs a regular and continuous course of dealing where one holds one's self out or avails one's self to the public for thirty consecutive days or more, exclusive of holidays and weekends. 1997 BPOL Guidelines, page 4 (copy enclosed).
For each BPOL license issued, a locality may charge a license fee. The maximum fee that can be charged depends upon the locality's population. Code of Virginia § 58.1-3703 A. The license fee may not exceed $100 for any locality with a population greater than 50,000, fifty dollars for any locality with a population of 25,000 but no more than 50,000 and thirty dollars for any locality with a population smaller than 25,000. Code of Virginia § 58.1-3703 A.
Generally, a taxpayer conducting multiple businesses at one location will be issued a BPOL license for each licensable business. Code of Virginia § 58.1 -3703.1 A 1 (copy enclosed). Each business issued a license is subject to a BPOL license fee and tax. Code of Virginia § 58.1-3703.1 A 1, Section 3.5 of 1997 BPOL Guidelines, page 38 (copy enclosed). The issuance of a BPOL license, however, carries with it BPOL tax threshold protection. Section 3.5 of 1997 BPOL Guidelines, page 38.
There is an exception to the general rule of licensing each licensable business at one location. A person engaged in two or more businesses at one location may elect to obtain one license for all licensable businesses if (I) all of the businesses are subject to the same tax rate, or (ii) if subject to different tax rates, the licensee agrees to be taxed on all businesses at the highest rate. Code of Virginia § 58.1-3703.1 A 1.
Company A is engaged in a retail and service business at one location in the city. The city levies a license tax on retailers at a rate of $.20 per $100 of gross receipts. It also levies a license tax on repair, personal or business service providers at a rate of $.36 per $100 of gross receipts. Company A's retail and service businesses are subject to different tax rates. Provided Company A agrees to be taxed at the higher rate of $.36 per $100 for the combined gross receipts of both businesses, Company A may elect to obtain one BPOL license permitting it to conduct its retail and service businesses.
Upon Company A's election, the city would be required to issue one BPOL license encompassing Company A's retail and service businesses. The power to charge a license fee arises when a license is issued. Code of Virginia § 58.1-3703 A. Thus, the city may charge only one license fee, in an amount not to exceed $100, for issuing this single license. Although this license would permit Company A to conduct a retail and a service business at one location, the city may not impose a license fee upon each of these businesses because only one license would have been issued.
You indicate that gross receipts of both Company A's retail and service business for base year 1996 are below the city's $100,000 tax threshold. Thus, when filing an application for a BPOL license in 1997, Company A will not be subject to a BPOL license tax on gross receipts earned from its businesses for base year 1996. Company A nevertheless may elect to obtain one BPOL license for the privilege of conducting its retail and service businesses at one location. In order to make this election, Company A is only required to agree to be taxed at the higher rate of $.36 per $100 for the combined gross receipts of its retail and service businesses. Code of Virginia § 58.1 -3703.1 A 1. Company A is not required to pay a license tax to be able to elect one BPOL license. Code of Virginia § 58.1-3703.1 A 1. Upon this election, the city may impose only one license fee for issuing a single license encompassing two licensable businesses.
I hope that the above information will be beneficial to you. Although letter conforms with the law, it is written only for your guidance, and the final determination is with the locality.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12105C
Rulings of the Tax Commissioner