Tax Type
BPOL Tax
Local Taxes
Description
Construction, architecture, engineering and surveying
Topic
Allocation and Apportionment
Local Power to Tax
Local Taxes Discussion
Date Issued
12-05-2000
December 5, 2000
Re: Request for Advisory Opinion:
Business, Professional, and Occupational License (BPOL) Tax
Dear ****
This advisory opinion is issued in response to your letter regarding the apportionment of gross receipts between two definite places of business. I apologize for the delay in responding to your request.
The license tax is a local tax, which is imposed and administered by local officials. Code of Virginia § 58.1-3701 authorizes the Department of Taxation to promulgate guidelines and issue advisory opinions on local license tax issues. The department, however, is not required to interpret any local ordinance.
The following opinion is based on 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.
FACTS
****** (the "Taxpayer") operates several lines of business, including construction, architecture, engineering and surveying. Its corporate headquarters are located in the City of ****** (the "City"), from which the several lines of business are directed or controlled. In performing the various professional services contracts, the Taxpayer's architects, engineers and surveyors may conduct field operations in localities other than the City.
A 1999 contract provided for fieldwork to be performed by surveyors in ****** County (the "County"). The Taxpayer leased office space in ***** (the "Town"). You state that the office is under lease for the sole purpose of accommodating the Taxpayer's field crews of surveyors. The leased space is used to store field equipment and parts. The leased space includes a telephone/fax for communication between the Taxpayer's Town office and the Taxpayer's office in the City; a computer station for timesheet preparation; a copy machine; kitchen equipment; a layout table for plans; and restroom facilities. You ask if that office space is considered a "definite place of business" for BPOL tax purposes.
OPINION
Definite Place of Business
Pursuant to 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 for thirty consecutive days or more. A definite place of business for a person engaged in business may include a location leased or otherwise obtained from another person on a temporary or seasonal basis and real property leased to another.
In my opinion, and based on the facts presented, the Taxpayer has a definite place of business in the Town.
Code of Virginia § 58.1-3703.1 A.3.(4) addresses the situs of gross receipts from the performance of services:
The 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
It is clear from the statute cited above that attribution of receipts to the definite place of business from which services are directed or controlled becomes operative only when the services are not performed at any definite place of business. In this instance, the nature of the Taxpayer's fieldwork necessitates its continuous presence at a definite place of business for a period of greater than thirty days. Once it is established that the Taxpayer has more than one "definite place of business," the next question to address is how to best apportion the Taxpayer's receipts between the localities. Again, the statute is clear on this.
Apportionment
The only restrictions on apportionment agreements between or among taxing localities are that the (1) gross receipts must be apportioned between definite places of business, and (2) these gross receipts must not be taxed twice. See Code of Virginia § 58.1-3703.1 A.3.(4)(c).
In those instances when apportionment agreements are difficult to obtain, the following rule shall prevail:
If the licensee has more than one definite place of business and it is impractical or impossible to determine to which definite place of business gross receipts should be attributed under the general rule, the gross receipts of the business shall be apportioned between the definite places of businesses on the basis of payroll. Code of Virginia §58.1-3703.1 A.1(4)(b).
Although it was not addressed in your request, given the nature of the Taxpayer's business, a determinative question would be which employees should be included when apportioning gross receipts. A governing body may include only those employees who directly participate in the business' licensed activity. For further discussion on apportionment, see Public Document (P.D.) 97-308 (11/27/97). Within this context, I would note that local governing bodies must make a factual determination as to whether individual corporate office personnel directly participate in the Taxpayer's licensed activity. If corporate office employees directly participate in the licensed activity in a particular locality, they should be included for apportionment purposes in that locality.
I hope that the above information will be beneficial to you. Although I believe this letter conforms with the law, it is written only for your guidance. If you have any other questions, please contact ***** in my Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/29642H
Related Documents
Rulings of the Tax Commissioner