Tax Type
BPOL Tax
Description
Specific Types of Local License Taxes
Topic
Local Power to Tax
Date Issued
10-20-1998
October 20, 1998
Re: Request for Advisory Opinion - Business, Professional and Occupational License Tax
Dear *****
You requested from the Department of Taxation an advisory opinion on whether or not vending machine companies are subject to the Business, Professional and Occupational License (BPOL) fee or tax on their vending machines that are located in other jurisdictions.
Although the BPOL tax is a local license tax that is imposed and administered by local officials, the Virginia Department of Taxation may promulgate guidelines and issue advisory opinions on a limited basis according to Virginia statute. The ***** Department, however, is not required to interpret local ordinances.
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. Copies of cited sources are enclosed for your review.
FACTS
A vending machine company has its business office in one jurisdiction and supplies vending machines to locations in other jurisdictions. You ask in which jurisdiction is the vending company subject to BPOL tax.
OPINION
Generally, a locality may only Impose the BPOL fee or tax on a business that establishes a definite place of business within the locality's jurisdiction. Code of Virginia § 58.1-3703; 58.1-3703.11. In some instances, however, a business may be subject to a license fee or tax by a locality even though the business has not established a definite place of business within such locality, which category includes operators of coin-operated amusement machines as defined in § 58.1-3720 and 58.1-3721. Code of Virginia § 58.1-3703.1 (A)(1).
A locality may impose a tax on an amusement operator for providing coin-operated amusement machines in the locality's jurisdiction, which liability is based on the number of machines located in the jurisdiction. Code of Virginia § 58.1-3720(A). An ``amusement operator' is one who leases, rents, or otherwise furnishes a coin-operated amusement machine in a locality, but does not include one who owns less than three machines and operates the machines on property that is owned or leased by such person. Id.
Coin-operated amusement machines do not include weighing machines, automatic baggage or parcel checking machines or receptacles; vending machines that distribute goods, wares, merchandise, postage stamps, or services; viewing machines or photomat machines; or machines or devices that furnish rides to children or deliver newspapers. Code of Virginia § 58.1-3721. Consequently, an amusement operator subject to tax under § 58.1-3720 is any operator of coin-operated amusement machines not listed in § 58.1-3721, which could include computer games, pinball machines, and similar types of machines.
A locality may impose a tax of any amount not exceeding $200 on an amusement machine operator who has ten or more coin-operated amusement machines within such locality's jurisdiction. Code of Virginia § 58.1-3720(A). If the operator has less than ten machines, then the locality has the discretion to impose an amount that is ``less than $200 as is deemed appropriate.' Id.
Additionally, a locality may impose a gross receipts tax on an amusement operator's receipts received from coin-operated amusement machines that are located within such locality's jurisdiction. Code of Virginia § 58.1-3720(B). These receipts are subject to the locality's threshold limits and tax rate limits as described in § 58.1-3706.
If operators of vending machines are not ``amusement operators,' they are not subject to tax under § 58.1-3720, but the operator could be taxable under the regular BPOL tax rules of § 3703 and 3703.1, provided that the operator has a definite place of business in the locality that is imposing the tax. In such a case, the operator may be classified for BPOL tax purposes as a retailer or business services provider, depending upon whether the vending machine provides goods or services. Code of Virginia § 58.1-3706; 58.1-3703.1 (A)(3)(2).
Conclusion
Subject to the number of vending machines operating within a locality's jurisdiction that are coin-operated amusement machines, such locality may levy a tax up to $200 on an operator of these machines. The locality, moreover, may impose a BPOL tax on those receipts derived from amusement machines located within such locality, which receipts are subject to the locality's threshold limits. If a person operates a coin-operated machine but is not an ``amusement operator', as defined by § 58.1-3720 and 58.1-3721, the locality may impose a BPOL license or tax if such person has established a definite place of business within such locality.
I hope that the above information will be beneficial to you. Although I believe this letter conforms with the requirements of the law, it is written only for your guidance. If you have other questions, please do not hesitate to contact me.
Sincerely,
Danny M. Payne
Tax Commissioner
1 (Effective July 1, 1998, a locality may impose either a license fee or tax, but not both, on businesses operating within such locality's jurisdiction, subject to the threshold limitations stated in § 58.1-3706. Code of Virginia § 58.1-3703(A).)
Re: Request for Advisory Opinion - Business, Professional and Occupational License Tax
Dear *****
You requested from the Department of Taxation an advisory opinion on whether or not vending machine companies are subject to the Business, Professional and Occupational License (BPOL) fee or tax on their vending machines that are located in other jurisdictions.
Although the BPOL tax is a local license tax that is imposed and administered by local officials, the Virginia Department of Taxation may promulgate guidelines and issue advisory opinions on a limited basis according to Virginia statute. The ***** Department, however, is not required to interpret local ordinances.
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. Copies of cited sources are enclosed for your review.
FACTS
A vending machine company has its business office in one jurisdiction and supplies vending machines to locations in other jurisdictions. You ask in which jurisdiction is the vending company subject to BPOL tax.
OPINION
Generally, a locality may only Impose the BPOL fee or tax on a business that establishes a definite place of business within the locality's jurisdiction. Code of Virginia § 58.1-3703; 58.1-3703.11. In some instances, however, a business may be subject to a license fee or tax by a locality even though the business has not established a definite place of business within such locality, which category includes operators of coin-operated amusement machines as defined in § 58.1-3720 and 58.1-3721. Code of Virginia § 58.1-3703.1 (A)(1).
A locality may impose a tax on an amusement operator for providing coin-operated amusement machines in the locality's jurisdiction, which liability is based on the number of machines located in the jurisdiction. Code of Virginia § 58.1-3720(A). An ``amusement operator' is one who leases, rents, or otherwise furnishes a coin-operated amusement machine in a locality, but does not include one who owns less than three machines and operates the machines on property that is owned or leased by such person. Id.
Coin-operated amusement machines do not include weighing machines, automatic baggage or parcel checking machines or receptacles; vending machines that distribute goods, wares, merchandise, postage stamps, or services; viewing machines or photomat machines; or machines or devices that furnish rides to children or deliver newspapers. Code of Virginia § 58.1-3721. Consequently, an amusement operator subject to tax under § 58.1-3720 is any operator of coin-operated amusement machines not listed in § 58.1-3721, which could include computer games, pinball machines, and similar types of machines.
A locality may impose a tax of any amount not exceeding $200 on an amusement machine operator who has ten or more coin-operated amusement machines within such locality's jurisdiction. Code of Virginia § 58.1-3720(A). If the operator has less than ten machines, then the locality has the discretion to impose an amount that is ``less than $200 as is deemed appropriate.' Id.
Additionally, a locality may impose a gross receipts tax on an amusement operator's receipts received from coin-operated amusement machines that are located within such locality's jurisdiction. Code of Virginia § 58.1-3720(B). These receipts are subject to the locality's threshold limits and tax rate limits as described in § 58.1-3706.
If operators of vending machines are not ``amusement operators,' they are not subject to tax under § 58.1-3720, but the operator could be taxable under the regular BPOL tax rules of § 3703 and 3703.1, provided that the operator has a definite place of business in the locality that is imposing the tax. In such a case, the operator may be classified for BPOL tax purposes as a retailer or business services provider, depending upon whether the vending machine provides goods or services. Code of Virginia § 58.1-3706; 58.1-3703.1 (A)(3)(2).
Conclusion
Subject to the number of vending machines operating within a locality's jurisdiction that are coin-operated amusement machines, such locality may levy a tax up to $200 on an operator of these machines. The locality, moreover, may impose a BPOL tax on those receipts derived from amusement machines located within such locality, which receipts are subject to the locality's threshold limits. If a person operates a coin-operated machine but is not an ``amusement operator', as defined by § 58.1-3720 and 58.1-3721, the locality may impose a BPOL license or tax if such person has established a definite place of business within such locality.
I hope that the above information will be beneficial to you. Although I believe this letter conforms with the requirements of the law, it is written only for your guidance. If you have other questions, please do not hesitate to contact me.
Sincerely,
Danny M. Payne
Tax Commissioner
1 (Effective July 1, 1998, a locality may impose either a license fee or tax, but not both, on businesses operating within such locality's jurisdiction, subject to the threshold limitations stated in § 58.1-3706. Code of Virginia § 58.1-3703(A).)
Rulings of the Tax Commissioner