Tax Type
BPOL Tax
Local Taxes
Description
Common carrier; Leasing company
Topic
Local Power to Tax
Date Issued
07-29-1999
July 29, 1999
Re: Request for Advisory Opinion Business, Professional and Occupational License (BPOL) Tax
Dear***************
This will respond to your letter requesting an advisory opinion as to the local license taxation of ***** (the "Taxpayer') and (the "Leasing Company'). I apologize for the delay in responding to your request.
The local license fee and tax are imposed and administered by local officials. Section 58.1-3701 of the Code of Virginia authorizes the department to promulgate guidelines and issue advisory opinions on local license tax issues. Additionally, § 58.1-3703.1(A)(5) authorizes the department to receive taxpayer appeals of certain local license tax assessments and to issue determinations on such appeals. However, in no case is the department required to interpret any local ordinance. Code of Virginia § 58.1-3701. The following opinion has been made subject to the facts presented to the department as summarized below. Any change in these facts or the introduction of facts by another party may lead to a different result
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. I have enclosed copies of cited material for your review.
FACTS
The Taxpayer, which is located within your jurisdiction, is engaged in the business of transporting property, both intrastate and interstate, by tractor trailer. The Taxpayer states that it was granted a permit in 1993 by the Interstate Commerce Commission (the "ICC') to engage in transportation as a contract carrier by motor vehicles in interstate or foreign commerce. You ask whether or not the Taxpayer is entitled to an exemption under Code of Virginia § 58.1-3703(C)(1).
The Taxpayer leases tractors and trailers from the Leasing Company. The Taxpayer states that the Leasing Company was established solely for the purpose of leasing equipment to the Taxpayer. The purpose of this arrangement was to shelter the equipment from liabilities incurred by the Taxpayer and provide insurance savings to the Taxpayer. You ask whether or not the Leasing Company is subject to license taxation.
OPINION
Exemption for Certain Motor Vehicle Carriers
copy enclosed. The application of this exemption to a motor carrier formerly certified by the ICC is addressed in Public Document 97-324. As explained in Public Document 97-324, it is my opinion that a carrier formerly certified by the ICC is exempt from license taxation under Code of Virginia § 58.1-3703(C)(1).
License Taxation of the Leasing Company
In general, the rental of tangible personal property is subject to license taxation. I have not been provided with sufficient information to determine whether the Leasing Company is entitled to any specific exemptions or deductions. As explained in the 1997 Guidelines, Appendix A, members of an affiliated group of corporations are afforded an exemption under Code of Virginia § 58.1-3703(C)(10). Also, Code of Virginia § 58.1-3732(B)(2) affords a deduction to businesses subject to an income or income-like tax in another jurisdiction. Public Document 97-90, copy enclosed, explains this deduction.
CONCLUSION
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 ***** Tax Policy Analyst, in my Office of Tax Policy at*******
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/20608D
Re: Request for Advisory Opinion Business, Professional and Occupational License (BPOL) Tax
Dear***************
This will respond to your letter requesting an advisory opinion as to the local license taxation of ***** (the "Taxpayer') and (the "Leasing Company'). I apologize for the delay in responding to your request.
The local license fee and tax are imposed and administered by local officials. Section 58.1-3701 of the Code of Virginia authorizes the department to promulgate guidelines and issue advisory opinions on local license tax issues. Additionally, § 58.1-3703.1(A)(5) authorizes the department to receive taxpayer appeals of certain local license tax assessments and to issue determinations on such appeals. However, in no case is the department required to interpret any local ordinance. Code of Virginia § 58.1-3701. The following opinion has been made subject to the facts presented to the department as summarized below. Any change in these facts or the introduction of facts by another party may lead to a different result
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. I have enclosed copies of cited material for your review.
FACTS
The Taxpayer, which is located within your jurisdiction, is engaged in the business of transporting property, both intrastate and interstate, by tractor trailer. The Taxpayer states that it was granted a permit in 1993 by the Interstate Commerce Commission (the "ICC') to engage in transportation as a contract carrier by motor vehicles in interstate or foreign commerce. You ask whether or not the Taxpayer is entitled to an exemption under Code of Virginia § 58.1-3703(C)(1).
The Taxpayer leases tractors and trailers from the Leasing Company. The Taxpayer states that the Leasing Company was established solely for the purpose of leasing equipment to the Taxpayer. The purpose of this arrangement was to shelter the equipment from liabilities incurred by the Taxpayer and provide insurance savings to the Taxpayer. You ask whether or not the Leasing Company is subject to license taxation.
OPINION
Exemption for Certain Motor Vehicle Carriers
-
- Code of Virginia § 58.1-3703(C)(1) provides that no locality shall impose a license fee or levy any license tax:
[o]n any public service corporation or any motor carrier, common carrier, or other carrier of passengers or property formerly certified by the Interstate Commerce Commission or presently registered for insurance purposes with the Surface Transportation Board of the United States Department of Transportation, Federal Highway Administration, except as provided in § 58.1-3731 or as permitted by other provisions of law.
- Code of Virginia § 58.1-3703(C)(1) provides that no locality shall impose a license fee or levy any license tax:
copy enclosed. The application of this exemption to a motor carrier formerly certified by the ICC is addressed in Public Document 97-324. As explained in Public Document 97-324, it is my opinion that a carrier formerly certified by the ICC is exempt from license taxation under Code of Virginia § 58.1-3703(C)(1).License Taxation of the Leasing Company
In general, the rental of tangible personal property is subject to license taxation. I have not been provided with sufficient information to determine whether the Leasing Company is entitled to any specific exemptions or deductions. As explained in the 1997 Guidelines, Appendix A, members of an affiliated group of corporations are afforded an exemption under Code of Virginia § 58.1-3703(C)(10). Also, Code of Virginia § 58.1-3732(B)(2) affords a deduction to businesses subject to an income or income-like tax in another jurisdiction. Public Document 97-90, copy enclosed, explains this deduction.
CONCLUSION
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 ***** Tax Policy Analyst, in my Office of Tax Policy at*******
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/20608D
Rulings of the Tax Commissioner