Tax Type
BPOL Tax
Description
Specific Types of Local License Taxes
Topic
Local Power to Tax
Date Issued
12-07-1998
December 7, 1998
Re: Request for Advisory Opinion Business, Professional, & Occupational License (BPOL) Tax
Dear *****
This is in reply to your letter of January 23, 1998 which requested an advisory opinion as to whether or not an engineering corporation which has performed substantial services at a construction site in your county is subject to local business license taxation. The firm has an office in an adjacent county, but none in your county. I apologize for the delay in responding to your request.
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
The background documents enclosed with your request reflect that ***** (the "Taxpayer') performed substantial services at a construction site in ***** ("your county'). The engineering firm has its offices in ***** County, Virginia and has no office in your county. You became aware of the Taxpayer's activities at the construction site when it filed memoranda claiming subcontractor ***** mechanic's liens in the circuit court clerk's office. These memoranda stated that the firm had furnished "(p)rofessional engineering services, including soils testing and analysis, concrete testing, structural steel inspections, project management, asphalt testing, geotechnical engineering, and testing permeability of clay pond liners.'
OPINION
Subject to limits set forth in Code of Virginia § 58.1-3703 C, localities may charge a fee for issuing BPOL licenses or may levy a license tax on a business for the privilege of engaging in business at a definite place within the locality. Code of Virginia Secs.58.1-3700 and 58.1-3703 A. Business means "a course of dealing which requires the time, attention and labor of the person so engaged for the purpose of earning a livelihood or profit. It implies a continuous and regular course of dealing, rather than an irregular or isolated transaction.' Code of Virginia § 58.1-3700.1. 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.
The determination of whether or not a business has a definite place of business in a locality is dependent on the facts and circumstances of each case. Factors indicating that an entity has a definite place of business in a locality may include the maintenance of a business phone, a phone directory listing, a mailing address, facilities for meeting with customers and retention of business records at a place in the locality P.D. 97-201.
While it is true that the Taxpayer performed engineering services in your county, the facts presented in this case do not establish that the Taxpayer maintains a definite place of business in your county. The Taxpayer does not own or lease office space or receive mail in your county, nor does the Taxpayer exhibit other factors indicating that it maintains a definite place of business in your county.
The definite place of business requirement set forth in Code of Virginia § 58.1-3703.1 (A)(3) does not apply to contractors who are subject to Code of Virginia § 58.1-3715. Under that section, a Virginia contractor who earns gross receipts of $25,000 or more in a year in a locality may be subject to a license tax or fee in the locality regardless of the duration of the business activity. Code of Virginia § 58.1-3715.
It is my opinion, however, that the Taxpayer is engaged in the provision of professional services and is not a contractor subject to Code of Virginia § 58.1-3715. Although the Taxpayer may be considered a contractor under the mechanic's lien laws, it is not necessarily a contractor for BPOL purposes. The Attorney General of Virginia has opined that as contractor's licenses for regulatory purposes under § 54.1-1117 serve different purposes from licenses for tax purposes under § 58.1-3714, different definitions apply. 1994 Op. Va. Att'y Gen. 114. The services detailed on the Taxpayer's liens are not characteristic of a contractor for BPOL purposes as defined in Code of Virginia § 58.1-3714 (B). Nor are they included among the activities typical of contractors listed in § 5.2 of the Guidelines. Moreover, Guidelines §8.4.2 expressly categorizes engineers as "professionals' and the services of engineers are included in the definition of professional services set forth in § 58.1-3700.1.
In conclusion, it is my opinion that the Taxpayer is not subject to a license fee or tax in your county as it was engaged in providing professional services and does not maintain a definite place of business in your county.
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 ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13472D
Re: Request for Advisory Opinion Business, Professional, & Occupational License (BPOL) Tax
Dear *****
This is in reply to your letter of January 23, 1998 which requested an advisory opinion as to whether or not an engineering corporation which has performed substantial services at a construction site in your county is subject to local business license taxation. The firm has an office in an adjacent county, but none in your county. I apologize for the delay in responding to your request.
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
The background documents enclosed with your request reflect that ***** (the "Taxpayer') performed substantial services at a construction site in ***** ("your county'). The engineering firm has its offices in ***** County, Virginia and has no office in your county. You became aware of the Taxpayer's activities at the construction site when it filed memoranda claiming subcontractor ***** mechanic's liens in the circuit court clerk's office. These memoranda stated that the firm had furnished "(p)rofessional engineering services, including soils testing and analysis, concrete testing, structural steel inspections, project management, asphalt testing, geotechnical engineering, and testing permeability of clay pond liners.'
OPINION
Subject to limits set forth in Code of Virginia § 58.1-3703 C, localities may charge a fee for issuing BPOL licenses or may levy a license tax on a business for the privilege of engaging in business at a definite place within the locality. Code of Virginia Secs.58.1-3700 and 58.1-3703 A. Business means "a course of dealing which requires the time, attention and labor of the person so engaged for the purpose of earning a livelihood or profit. It implies a continuous and regular course of dealing, rather than an irregular or isolated transaction.' Code of Virginia § 58.1-3700.1. 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.
The determination of whether or not a business has a definite place of business in a locality is dependent on the facts and circumstances of each case. Factors indicating that an entity has a definite place of business in a locality may include the maintenance of a business phone, a phone directory listing, a mailing address, facilities for meeting with customers and retention of business records at a place in the locality P.D. 97-201.
While it is true that the Taxpayer performed engineering services in your county, the facts presented in this case do not establish that the Taxpayer maintains a definite place of business in your county. The Taxpayer does not own or lease office space or receive mail in your county, nor does the Taxpayer exhibit other factors indicating that it maintains a definite place of business in your county.
The definite place of business requirement set forth in Code of Virginia § 58.1-3703.1 (A)(3) does not apply to contractors who are subject to Code of Virginia § 58.1-3715. Under that section, a Virginia contractor who earns gross receipts of $25,000 or more in a year in a locality may be subject to a license tax or fee in the locality regardless of the duration of the business activity. Code of Virginia § 58.1-3715.
It is my opinion, however, that the Taxpayer is engaged in the provision of professional services and is not a contractor subject to Code of Virginia § 58.1-3715. Although the Taxpayer may be considered a contractor under the mechanic's lien laws, it is not necessarily a contractor for BPOL purposes. The Attorney General of Virginia has opined that as contractor's licenses for regulatory purposes under § 54.1-1117 serve different purposes from licenses for tax purposes under § 58.1-3714, different definitions apply. 1994 Op. Va. Att'y Gen. 114. The services detailed on the Taxpayer's liens are not characteristic of a contractor for BPOL purposes as defined in Code of Virginia § 58.1-3714 (B). Nor are they included among the activities typical of contractors listed in § 5.2 of the Guidelines. Moreover, Guidelines §8.4.2 expressly categorizes engineers as "professionals' and the services of engineers are included in the definition of professional services set forth in § 58.1-3700.1.
In conclusion, it is my opinion that the Taxpayer is not subject to a license fee or tax in your county as it was engaged in providing professional services and does not maintain a definite place of business in your county.
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 ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13472D
Rulings of the Tax Commissioner