Tax Type
BPOL Tax
Local Taxes
Description
Internet sales
Topic
Local Power to Tax
Date Issued
06-10-1999
June 10, 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 tax classification of a business (the "Taxpayer') selling goods via the Internet. 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
You state that the Taxpayer offers dance costumes and related goods for sale over the Internet. You seek guidance concerning the local license tax classification of this Taxpayer.
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 § 1.
In my opinion, a mere presence on the Internet, in and of itself, is not a "definite place of business' for local license tax purposes.
Classification
In general, a business which sells tangible personal property, such as dance costumes and related goods, is classified as a retail or wholesale merchant. Guidelines § 1. The fact that these sales are solicited over the Internet, in and of itself, does not change the business's classification as a merchant.
Attribution Rules
The gross receipts of a retailer are attributed to the definite place of business at which sales solicitation activities occur, or if sales solicitation activities do not occur at any definite place of business, then to the definite place of business from which sales solicitation activities are directed or controlled. Code of Virginia § 58.1-3703.1(A)(3)(a)(2). A presence on the Internet, in and of itself, does not establish a definite place of business in Virginia for local license tax purposes. Accordingly, retail sales solicited over the Internet are attributed to the definite place of business from which the sales solicitation activities are directed or controlled. Guidelines § 3.8.2.
In a locality which imposes a license tax on wholesalers based on purchases, a wholesaler determines the situs of its purchases by the definite place of business at which or from which deliveries of the purchased goods are made to customers. Id. As this determination is based on the point of delivery, the fact that the sales are solicited over the Internet is not relevant to this determination.
CONCLUSION
Your request for guidance does not present sufficient detail regarding the Taxpayer to make a conclusive determination concerning the license taxation of its activities. I hope that the law as outlined above will assist you in your determination. 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 Payne
Tax Commissioner
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 tax classification of a business (the "Taxpayer') selling goods via the Internet. 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
You state that the Taxpayer offers dance costumes and related goods for sale over the Internet. You seek guidance concerning the local license tax classification of this Taxpayer.
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 § 1.
In my opinion, a mere presence on the Internet, in and of itself, is not a "definite place of business' for local license tax purposes.
Classification
In general, a business which sells tangible personal property, such as dance costumes and related goods, is classified as a retail or wholesale merchant. Guidelines § 1. The fact that these sales are solicited over the Internet, in and of itself, does not change the business's classification as a merchant.
Attribution Rules
The gross receipts of a retailer are attributed to the definite place of business at which sales solicitation activities occur, or if sales solicitation activities do not occur at any definite place of business, then to the definite place of business from which sales solicitation activities are directed or controlled. Code of Virginia § 58.1-3703.1(A)(3)(a)(2). A presence on the Internet, in and of itself, does not establish a definite place of business in Virginia for local license tax purposes. Accordingly, retail sales solicited over the Internet are attributed to the definite place of business from which the sales solicitation activities are directed or controlled. Guidelines § 3.8.2.
In a locality which imposes a license tax on wholesalers based on purchases, a wholesaler determines the situs of its purchases by the definite place of business at which or from which deliveries of the purchased goods are made to customers. Id. As this determination is based on the point of delivery, the fact that the sales are solicited over the Internet is not relevant to this determination.
CONCLUSION
Your request for guidance does not present sufficient detail regarding the Taxpayer to make a conclusive determination concerning the license taxation of its activities. I hope that the law as outlined above will assist you in your determination. 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 Payne
Tax Commissioner
Rulings of the Tax Commissioner