10-277 | Virginia Tax

Tax Type

BPOL Tax

Description

Trailer considered to be a definite place of business for BPOL tax purposes.

Topic

Government Contractor

Local Power to Tax

Tangible Personal Property

Taxable Transactions

Date Issued

12-21-2010

December 21, 2010

Re: Request for Advisory Opinion
Business, Professional and Occupational License Tax

Dear *****:

This is in response to your letter in which you request an advisory opinion as to whether ***** (the "Taxpayer") is subject to the Business, Professional and Occupational License (BPOL) tax in your locality.

The local license fee and tax are imposed and administered by local officials. Virginia Code § 58.1-3701 authorizes the Department to issue advisory opinions on local license tax issues. The following opinion has been made subject to the facts presented to the Department summarized below. Any change in these facts or the introduction of new facts may lead to a different result.

The Code of Virginia sections and public document cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site.

FACTS

The Taxpayer is a government contractor with a definite place of business in the ***** ("City A"). The Taxpayer is primarily engaged in providing repair services at military installations in City A and surrounding localities. City A has classified the Taxpayer as a business service and has assessed BPOL tax based on the gross receipts generated from the services directed and controlled from the definite place of business within its borders.

The Taxpayer is currently performing repair services on vehicles at a military base located in the ***** ("City B"). The Taxpayer leases a trailer located on the base that is furnished with desks and computers. Repair personnel use the trailer for meetings and to interact with the City A facility. Clerical staff employed at the trailer provide administrative support and organize technical documentation. A telephone land line is installed in the trailer, but the phone number is not advertised to the public.

The name of the Taxpayer is not posted on any signage on or near the trailer pursuant to military requirements. The Taxpayer does not negotiate any contracts or solicit any business from the trailer. The Taxpayer did not receive mail at the trailer and contracts performed at the base list the City A office as the Taxpayer's address and place of contact.

City B has contacted the Taxpayer concerning its business license obligations to City B. City B believes the activities conducted by the Taxpayer as the military base are subject to licensure in City B. City A avers that the Taxpayer does not have a definite place of business in City B, and all the services conducted at the base are directed and controlled from the office in City A. City B request, an advisory opinion as to whether the Taxpayer is subject to the BPOL tax in City B.

OPINION

Virginia Code § 58.1-3700.1 defines a "definite place of business" as an office or a location at which occurs a regular and continuous course of dealing for 30 consecutive days or more. Some characteristics that may help determine whether the location is a definite place of business include, but are not limited to, the following onsite activities: (1) a continuous presence; (2) having an office with a phone; (3) the reception of mail; (4) having employees; (5) record keeping; (6) and advertising or otherwise holding oneself out as engaging in business at the particular location. See Public Document (P.D.) 97-201 (4/25/1997).

Although these activities are indicative of a definite place of business, all facts and circumstances concerning the nature of a taxpayer's operations must be considered. In this case, the Taxpayer does not receive mail, keep records, or hold itself out as engaging in business at the trailer located in City B.

The Taxpayer does, however, have a continuous presence at the trailer. The Taxpayer maintains a phone line, computers, and furniture in the trailer. Repair personnel use the trailer for meetings and to contact the City A facility and administrative staff assigned, either temporarily or permanently, at the trailer support the services performed at the base.

The Department has previously addressed the issue of trailers becoming a definite place of business with regard to construction contractors. While not directly on point, such analysis appears to be analogous to the circumstances currently under consideration. In P.D. 10-104 (7/18/2010) and P.D. 02-153 (12/11/2002), the Department opined that contractors that maintained a trailer at a particular site on a daily and continuous basis for 30 days or more established a definite place of business at the locality in which the trailers were located. The Department found that the contractor's physical presence, along with having some of the characteristics of having a definite place of business, such as having a phone, was indicative of having a definite place of business.

Based on the specific facts presented, it is my opinion that the Taxpayer's usage of the trailer constitutes a "regular and continuous" business activity. As such, the Taxpayer's trailer located in City B is considered to be a definite place of business for BPOL tax purposes.

In determining the situs of gross receipts, Va. Code §§ 58.1-3703.1 A 3 a 4 and 58.1-3703.1 A 3 b state that receipts from services are to be taxed based on (in order): (i) the definite place of business at which the service is performed, or if not performed at any definite place of business, (ii) the place from which the service is directed or controlled; or as a last resort (iii) when it is impossible or impractical to determine where the service is performed or from where the service is directed or controlled, by payroll apportionment between definite places of business.

In this case, the Taxpayer's repair services are being performed at a definite place of business in City B. As such, the gross receipts generated from the repair services accruing in City B are subject to tax by City B.

If you have questions regarding this opinion, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.

- - - - Sincerely,

- - - - Craig M. Burns
        Tax Commissioner

AR/1-4357863728.B

Rulings of the Tax Commissioner