Virginia Business BPOL and BTPP Taxes
In Virginia, all business owners are subject to a gross receipts tax, which is called a Business Professional Occupational and License (BPOL) tax and a tax on their furniture and fixtures, computers, machinery, tools, and heavy equipment used in their business, which is called Business Tangible Personal Property (BTPP) tax.
Business license tax (BPOL) rates vary according to the business’s classification(s) and are based on gross receipts. Business owners must renew their license each year by reporting the business’s prior year gross receipts. Both filing and payment are due March 1st.
Business Tangible Personal Property tax (BTPP) rates vary according to the business’s classification or type of business. Business owners must report their equipment as of January 1st by county online by March 1st. The County will process the return and issue two semi-annual bills to the business.
Recent Tax Ruling from The VA State Tax Commissioner
For some reason one of my VA’s clients seemed to be on the tax radar of multiple tax departments. First sales tax, then unemployment and finally BTPP and BPOL taxes. Luckily the sales tax audit ended to be a small assessment after initial workpapers had my client owing six figures, unemployment was a zero assessment and BTPP and BPOL was small but changed their classification from a contractor to retailer/wholesaler. So instead of reporting BPOL tax to each county that they did work in, they had to report all sales to Loudoun County, even though some of the sales were out-of-state.
My client was a contractor who manufactured and installed countertops. Marsu Associates appealed the BPOL and BTPP taxes on the basis that the contractor was a manufacturer of countertops and should be assessed as such. After a little legal process snafu, the VA State Tax Commissioner ruled that yes, my client was a manufacturer of countertops and should be assessed as such for the tax years under audit and any subsequent years for both BPOL and BTPP taxes.
If your business has been audited for BPOL or BTPP taxes, then please call me for a free consultation. Since this is a new ruling, it was the counties’ policy to assess businesses as a contractor or a retailer/wholesaler and the manufacturer’s classification was not considered. Even now, the auditor may not know about or even think about mentioning the manufacturing exemption even if they know about it.
The amount of the tax savings received from the new classification will depend on the gross sales the business has, and the dollar amount of the assets reported to the county. For my client, the BPOL and BTPP refunds received paid for the small sales tax assessment and my client will now enjoy the reduced taxes each year.
Marsu will review the operation of the business to determine if the business could be classified as a manufacturer.
Marsu will be paid a percentage of the refund received. If no refund is received, then no compensation is due, and the company has received at no cost that their returns have been properly filed.