IN SEARCH OF A WIN-WIN FOR THE VIRGINIA BPOL TAX
There are constant calls for the elimination of the Virginia business, professional, and occupational license (BPOL) tax by the business community, government, and others. In fact, the current Virginia gubernatorial candidates — Attorney General Ken Cuccinelli (R), Democrat Terry McAuliffe, and Libertarian Robert Sarvis — agree, and have issued preliminary proposals to reduce or eliminate the BPOL tax.
According a recent Tax Foundation article about the candidates’ tax proposals, each would eliminate or reduce the BPOL tax, the machine and tool tax, and the merchants’ capital tax — or allow localities the option to eliminate or reduce these taxes.
The BPOL tax, like most other areas in state tax, is deceptively simple and endlessly complicated. As a result of this complexity, companies that do business in Virginia must consider the following questions:
- Is my activity licensable?
- Do I have a ‘‘definite place of business’’ in Virginia? More than one?
- Do any exemptions apply?
- How are intercompany transactions treated?
- Do I need a license for each of my businesses (multiple businesses)?
- How are affiliated groups treated?
- What is the basis of the tax and the rate of tax?
- Are there any exclusions and deductions from taxable gross receipts?
- How do I determine the situs of my gross receipts?
- How do you apportion gross receipts among more than one definite places of business?
- If I have a disagreement with a locality regarding the BPOL tax, what are my options for appeal?
Unfortunately, the answers to these questions lead to taxpayer problems and call for the tax’s repeal.
To read more, check out my article in Tax Analysts State Tax Notes on October 7, 2013. (the link to the article is in my LinkedIn profile)
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at firstname.lastname@example.org.
Because state and local taxes are deceptively simple and endlessly complicated.