Tax Type
BPOL Tax
Description
Taxpayer performs subcontracts foster care services for a fee
Topic
Exemptions
Local Taxes Discussion
Persons Subject to Tax
Date Issued
10-23-2012
October 23, 2012
Re: Request for Advisory Opinion
Business, Professional and Occupational License (BPOL) Tax
Dear *****:
This is in response to your letter in which you request an advisory opinion as to whether a locality may assess the Business, Professional and Occupational License (BPOL) tax on an individual that provides care for one or more mentally and emotionally disabled individuals within his home and is paid by an entity that is not subject to income tax. I apologize for the delay in responding to your letter.
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 facts or the introduction of new facts may lead to a different result.
The Code of Virginia sections and public documents cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department's web site.
FACTS
A foster care provider has a contract with the government for providing foster care services to mentally and emotionally disabled individuals. The provider is exempt from federal income tax under Internal Revenue Code (IRC) § 131. The provider subcontracts foster care services and compensates an individual (the "Taxpayer") who performs the services at a definite place of business in ***** (the "County"). The County requests an opinion as to whether the Taxpayer is subject to the BPOL tax.
OPINION
The BPOL tax is a tax on the privilege of doing business within a locality. The term "business" is defined in Va. Code § 58.1-3700.1 as:
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- 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 . . . The following acts shall create a rebuttable presumption that a person is engaged in a business: (i) advertising or otherwise holding oneself out to the public as being engaged in a particular business or (ii) filing tax returns, schedules and documents that are required only of persons engaged in a trade or business.
Based on the information provided, it is unclear whether the Taxpayer is engaged in a licensable business. The County would need to determine whether the Taxpayer's foster care activities meet the definition of a business in Va. Code § 58.1-3700.1.
If you have any questions regarding this advisory opinion, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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- Craig M. Burns
Tax Commissioner
- Craig M. Burns
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AR/1-4815053916.B
Rulings of the Tax Commissioner