Tax Type
BPOL Tax
Local Taxes
Description
Sales to nonprofit groups
Topic
Local Power to Tax
Date Issued
04-07-1999
April 7, 1999
Re: Request for Advisory Opinion
-
- Business, Professional, and Occupational License (BPOL) Tax
Dear **************
This is in response to your letter requesting an advisory opinion on: (1) the appropriate "definite place of business" of a seafood merchant who operates out of his home in ***** and (2) the applicability of the BPOL tax to gross receipts attributable to food prepared and sold elsewhere or to non-profit groups by a local caterer. I apologize for the delay in responding to your request.
The local license fee and tax are imposed and administered by local officials. §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.
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
One of the taxpayers (the "Seafood Merchant") included in your request for an advisory opinion, is a local merchant who has a business office and telephone listing in the Yellow Pages under "Seafood-Retail" at his home address in the town. He also maintains equipment at his home, prepares and stores the seafood at his home, and uses trucks to sell the seafood in other towns. The Seafood Merchant contends that he is not responsible for applying to the town for a business license because he sells the product elsewhere.
Your second question involves the other taxpayer (the "Caterer") who has a kitchen and a small hall which seats 50-60 people and caters to special functions. In this instance, the Caterer contends that food prepared for non-profit groups or to be consumed elsewhere cannot be included in his gross receipts. You ask if the Caterer's assertions are correct.
OPINION
Seafood Merchant
The BPOL statutes are clear on the issue of the Seafood Merchant who is operating a seafood operation from his home within the town. Localities may charge a fee for issuing BPOL licenses or may levy a BPOL tax on businesses, trades, professions, occupations and callings and upon the persons, firms and corporations engaged therein within a locality. Code of Virginia § 58.1 -3703. Further, every person must apply for a license for each business or profession when engaging in a business within a locality if the person has a definite place of business in the jurisdiction or there is no definite place of business anywhere and the person resides in the jurisdiction. Code of Virginia § 58.1-3703.1. In my opinion, from the facts presented, the Seafood Merchant has a definite place of business in the town given his business listing in the Yellow Pages, the telephone solicitation of business and inventory from his residence, and the maintenance of vehicles and other equipment at his residence.
To the extent that the Seafood Merchant's business occurs in other jurisdictions, he may be subject to the BPOL tax in those jurisdictions. Code of Virginia §§ 58.1-3708(A) and 58.1-3717, respectively. However, he is subject to BPOL licensure by the town because he maintains a definite place of business there.
Caterer's Serving Food Off Premises or to Non-profit Organizations.
Gross receipts are all receipts without deduction, and when the tax is based on gross receipts, it is based upon those receipts attributable to the exercise of a "licensable" privilege at a definite place of business within the locality. Code of Virginia §§ 58.1-3700.1 and 58.1-3703.1(A)(3)(a). The only deductions allowed from gross receipts are those specifically provided by statute or common-law, none of which appear to be applicable to this factual situation.
In my opinion, given the definition of gross receipts, the characterization of a caterer's clients have no bearing on how his gross receipts should be measured. A caterer is in the business of selling food and providing other services, be it to profitable or non-profit organizations. Furthermore, where the food is consumed does not change the fact that all gross receipts are to be used in calculating the BPOL tax due.
I hope that this information is useful to you. Although I believe that this letter conforms with the requirements of the law, it is only written for your guidance. If you have any other questions, please do not hesitate to contact *******at ******.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13562H
Rulings of the Tax Commissioner