Tax Type
BPOL Tax
Local Taxes
Description
Consulting performed outside the locality; Refund statute of limitations
Topic
Local Power to Tax
Statute of Limitations
Date Issued
01-11-1999
January 11, 1999
Re: Request for Advisory Opinion
Business, Professional, & Occupational License (BPOL) Tax
Dear ****
I am writing in response to your letter in which you requested an advisory opinion concerning BPOL taxes assessed upon ***** (hereinafter "your corporation") by the Commissioner of the Revenue of the City of ***** (hereinafter "the city"). 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
In a letter dated April 1, 1994, you were notified by the city that it had assessed additional BPOL taxes to your corporation for license years 1991 through 1994. The assessment was the result of an audit which determined that your corporation had not reported receipts related to consulting work performed outside the city. You initially disputed the assessment, but subsequently paid it after meeting with the city. On January 5, 1998, you applied to the city for correction of this assessment. The city denied your application and took the position that the April 1, 1994 assessment was correct. You have requested the issuance of this advisory opinion asking whether or not the assessment was correct.
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 §§ 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.
Persons contesting a local license tax assessment made prior to January 1, 1997 may apply to the commissioner of the revenue or to the circuit court of the county or city wherein such assessment was made for a correction thereof. Code of Virginia §§ 58.1-3980(A) and 58.1-3984(A). However, the application for correction must be made within three years from the last day of the tax year for which such assessment was made, or within one year from the date of the assessment, whichever is later. Id. As the assessment in question was made April 1, 1994 and concerned license years 1991 through 1994, the last day on which you could timely apply for correction of any of the license years in question was December 31, 1997. As your application for correction was dated January 5, 1998, it is my opinion that your efforts to reverse this assessment are barred by the passage of time, and the Department is precluded from addressing the merits of your case.
Situs of Gross Receipts for a Service Business
For your information, the 1996 BPOL amendments set forth situs rules for the attribution of gross receipts. These rules are effective for license years beginning on and after January 1, 1997.
Gross receipts from the performance of services shall be attributed to the definite place of business at which the services are performed or, if not performed at any definite place of business, then to the definite place of business from which the services are directed or controlled.
Code of Virginia § 58.1-3703.1(A)(3)(a)(4). If your corporation maintains a definite place of business outside the city to which receipts are attributed or sourced using this rule, these receipts are not subject to taxation by the city.
Gross Receipts Deduction under Code of Virginia § 58.1-3732(B)(2)
In addition, the current BPOL statutes entitle a business to deduct from its gross receipts any receipts attributable to business conducted in another state or foreign country in which the business is liable for an income or other tax based on income. Code of Virginia § 58.1-3732(B)(2). A taxpayer is liable for an income or other tax based on income if the taxpayer files a return for such tax in another state or country. 1997 BPOL Guidelines§ 3.3.4.
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
OTP13510D
Rulings of the Tax Commissioner