Virginia Administrative Code
Title 23 - TAXATION
Agency 10 - DEPARTMENT OF TAXATION
Chapter 500 - BUSINESS, PROFESSIONAL AND OCCUPATIONAL LICENSE TAX REGULATIONS
Section 23VAC10-500-10 - Definitions
Current through Register Vol. 41, No. 3, September 23, 2024
The following words and terms when used in this regulation shall have the following meanings unless the context clearly indicates otherwise:
"Affiliated group" means:
1. One or more chains of corporations subject to inclusion connected through stock ownership with a common parent corporation that is a corporation subject to inclusion if:
2. Two or more corporations if five or fewer persons who are individuals, estates, or trusts own stock possessing:
3. When one or more of the corporations subject to inclusion, including the common parent corporation, is a nonstock corporation, the term "stock" as used in this definition shall refer to the nonstock corporation membership or membership voting rights, as is appropriate to the context.
4. Two or more entities if such entities satisfy the requirements in this definition as if they were corporations and the ownership interests therein were stock (See 23VAC10-500-50) .
"Amount in dispute," when used with respect to taxes due or assessed, means the amount specifically identified in the application for review, the appeal to the Tax Commissioner, or the appeal to the circuit court as disputed by the party filing such appeal (See 23VAC10-500-660 through 23VAC10-500-820) .
"Ancillary" means subordinate to, subservient to, auxiliary to, or in aid of, that which is principal and primary (See 23VAC10-500-110) .
"Appealable event" means an increase in the assessment of a local license tax payable by a taxpayer, the denial of a refund, or the assessment of a local license tax where none previously was assessed, arising out of the local assessing official's:
"Appeal to the circuit court" means an application by a taxpayer to the appropriate circuit court for review of a local license tax assessment pursuant to § 58.1-3984 of the Code of Virginia or an application by a taxpayer or a local assessing officer to the appropriate circuit court for review of the Tax Commissioner's determination, or any part thereof, pursuant to §§ 58.1-3703.1A 7 and 58.1-3984 of the Code of Virginia (23VAC10-500-660 through 23VAC10-500-820) .
"Appeal to the Tax Commissioner" means a taxpayer's application filed with the Tax Commissioner pursuant to § 58.1-3703.1A 5 c of the Code of Virginia (23VAC10-500-660 through 23VAC10-500-820) .
"Application for review" means a taxpayer's written request filed with a local assessing officer for review of an assessment resulting from an appealable event made pursuant to § 58.1-3703.1A 5 a of the Code of Virginia (23VAC10-500-660 through 23VAC10-500-820) .
"Apportionment" means the division of the volume of business done between taxing jurisdictions within which the business' income or purchases are generated (23VAC10-500-210) .
"Assessment" means a determination as to the proper rate of tax, the measure to which the tax rate is applied, and ultimately the amount of tax, including additional or omitted tax, that is due. An assessment shall include a written assessment made pursuant to notice by the assessing official or a self-assessment made by a taxpayer upon the filing of a return (23VAC10-500-580) .
"Audit" means an examination of records, financial statements, books of accounts, and other information to evaluate the correctness of a local license tax. An audit shall include, but is not limited to, an examination to determine the correctness of a classification of a licensable business, examinations resulting in adjustments made to gross receipts, tax, and other information contained in the taxpayer's return, and examinations resulting in the imposition of a local license tax when no return has been filed. An audit assessment is not a statutory assessment, a self-assessment, or an assessment resulting from the correction of mathematical errors. However, if an examination of records or other information takes place in conjunction with the above, the assessment may be appealable as an audit assessment (23VAC10-500-600) .
"Base year" means the calendar year preceding the license year, except for contractors subject to the provisions of § 58.1-3715 of the Code of Virginia. The local ordinance may provide for a different period for measuring the gross receipts of a business in the following situations:
"Business" means a course of dealing that 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. A person may be engaged in more than one business. If a person (i) advertises or otherwise holds himself out to the public as being engaged in a particular business or (ii) files tax returns, schedules and documents that are required only of persons engaged in a trade or business, he is presumed to be engaged in business. However, a person may present evidence to overcome this presumption.
"Charitable nonprofit organization" means an organization that is described in § 501(c)(3) of the Internal Revenue Code ( 26 USC § 501(c)(3) and to which contributions are deductible by the contributor under § 170 of the Internal Revenue Code ( 26 USC § 170), except that educational institutions are limited to schools, colleges and other similar institutions of learning. To the extent that a charitable nonprofit organization is required to report income that is in fact "unrelated business taxable income" for federal income tax purposes under § 511 et seq. of the Internal Revenue Code ( 26 USC § 511 et seq.), such organization may be presumed to have gross receipts from an activity which, depending on the applicable classification, is licensable for BPOL purposes. The fact that a charitable nonprofit organization does not report any unrelated business taxable income for federal income tax purposes would not prevent the locality from requiring a license for the business activity; however, local officials may only determine whether a charitable nonprofit organization has unrelated taxable business income pursuant to § 511 et seq. of the Internal Revenue Code ( 26 USC § 511 et seq.) (23VAC10-500-40) .
"Collection activity" means the use of any means, direct or indirect, to obtain payment of an assessment (23VAC10-500-660 through 23VAC10-500-820) .
"Date of the assessment" means the date when a written notice of assessment is delivered to the taxpayer by the assessing officer or an employee of the assessing officer, or mailed to the taxpayer at the taxpayer's last known address. Self-assessments shall be deemed made as of the date a return is filed, or if no return is required, when the tax is paid.
"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 30 consecutive days or more, exclusive of holidays and weekends. A definite place of business for a person engaged in business may include a location leased or otherwise obtained from another person on a temporary or seasonal basis and real property leased to another. A person's residence shall be deemed to be a definite place of business if there is no definite place of business maintained elsewhere and the person is not subject to licensure as a peddler or itinerant merchant (23VAC10-500-30) .
"Entity" means a business organization, other than a sole proprietorship, that is a corporation, limited liability company, limited partnership, or limited liability partnership duly organized under the laws of the Commonwealth or another state (23VAC10-500-50) .
"Filed" means the date a document is postmarked for first class delivery via United States Postal Service or when it is received if any other method of delivery, including facsimile transmissions, is utilized.
"Final Local Determination" means a writing setting out the local assessing officer's final determination on a taxpayer's Application for Review, including facts and legal authority in support of the local assessing officer's position on each issue raised by the taxpayer (23VAC10-500-800) .
"Financial services" means the buying, selling, handling, managing, and investing money, credit, securities, or other investments for others, as well as providing advice to others on such matters.
"Frivolous" means a finding, based upon specific facts, that the party asserting the appeal is unlikely to prevail upon the merits because the appeal is (i) not well grounded in fact; (ii) not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law;
"Fuel sale" or "fuel sales" shall mean retail sales of alternative fuel, blended fuel, diesel fuel, gasohol, or gasoline, as such terms are defined in § 58.1-2201 of the Code of Virginia (23VAC10-500-100) .
"Gas retailer" means a person or entity engaged in business as a retailer offering to sell at retail on a daily basis alternative fuel, blended fuel, diesel fuel, gasohol, or gasoline, as such terms are defined in § 58.1-2201 of the Code of Virginia (23VAC10-500-100) .
"Gross receipts" means the whole, entire, total receipts, of money or other consideration received by the taxpayer as a result of transactions with others besides himself and that are derived from the exercise of the licensed privilege to engage in a business or profession in the ordinary course of business, without deduction or exclusion except as provided by law. (23VAC10-500-70 and 23VAC10-500-90 for examples of items excluded from the definition of gross receipts).
"Jeopardized by delay" includes a finding, based upon specific facts, that the application is frivolous or that a taxpayer designs to (i) depart quickly from the locality, (ii) remove his property therefrom, (iii) conceal himself or his property within the locality, or (iv) do any other act tending to prejudice, or to render wholly or partially ineffectual, proceedings to collect the tax for the period in question (23VAC10-500-680 and 23VAC10-500-811) .
"License year" means the calendar year for which a license is issued for the privilege of engaging in business.
"Local assessing officer" means the Commissioner of Revenue or chief assessing officer or his designee.
"Local officer responsible for collection activity" means the treasurer or other local officer responsible for collection activity, or his designee.
"Nonprofit organization" means an organization, other than a "charitable nonprofit organization," which is exempt from federal income tax under § 501 of the Internal Revenue Code ( 26 USC § 501). Activities conducted for consideration that are similar to activities that are conducted for consideration by for-profit businesses may be presumed to be activities that are subject to licensure. For example, a lunch counter operated by an organization open to members only, the proceeds from which are used to maintain the organization, may be subject to local license tax. In any case, gifts, contributions, and membership dues of nonprofit organizations would not be taxable gross receipts from the conduct of a business, nor could a locality impose a license fee on activities giving rise to such funds (23VAC10-500-40) .
"Notice of intent to appeal" means the taxpayer's written statement filed with the local assessing officer that informs the local assessing officer of the taxpayer's intent to file an Application for Review. It also means the taxpayer's written statement filed with the local assessing officer and the Tax Commissioner informing of the taxpayer's intent to file an appeal to the Tax Commissioner (23VAC10-500-660 through 23VAC10-500-820) .
"Professional services" means services performed by those practicing the professions as listed in 23VAC10-500-450. The word "profession" implies attainments in professional knowledge as distinguished from mere skill, and the application of knowledge to uses for others rather than for personal profit.
"Purchases" means all goods, wares and merchandise received for sale at each definite place of business of a wholesale merchant. (23VAC10-500-340 for the application of purchases to the classification of wholesale merchants.)
"Real estate services" means providing a service for others with respect to the purchase, sale, lease, rental, or appraisal of real property.
"Retail sale" means a sale of goods, wares and merchandise for use or consumption by the purchaser or for any purpose other than resale by the purchaser, but does not include sales at wholesale to institutional, commercial, industrial, and governmental users that are classified as wholesale sales.
"Sales solicitation" is the act or acts directly related to selling particular items or goods to a particular person. See 23VAC10-500-170 for a discussion of situs of gross receipts of retailers and wholesalers (for wholesalers taxable on purchases, see 23VAC10-500-180) . Sales solicitation does not include nonsolicitation activities prior or subsequent to sales solicitation activities.
"Services" mean things purchased by a customer that do not have physical characteristics, or that are not goods, wares, or merchandise. Specific types of services are defined further in the BPOL law. See, for example, the definitions of "financial services" and "professional services" in § 58.1-3700.1 of the Code of Virginia.
"Situs of gross receipts" means the definite place of business that generated taxable gross receipts. If activities are conducted outside a definite place of business, gross receipts are taxable at the definite place of business where these activities are initiated, controlled or directed (23VAC10-500-150) .
"Tax Commissioner" means the chief executive officer of the Department of Taxation, or his delegate, authorized pursuant to § 58.1-3703.1A 5 c of the Code of Virginia to issue a final determination on an appeal.
"Taxpayer" means a person, corporation, partnership, unincorporated association, or other business or representative thereof subject to a local license tax.
"Tax Year" means the same as license year, or the calendar year in which a license is issued.
"Volume" means gross receipts, sales, purchases, or other base for measuring a license tax which is related to the amount of business done.
"Wholesale sale" means a sale of goods, wares and merchandise for resale by the purchaser, including sales when the goods, wares and merchandise will be incorporated into goods for sale, and also includes sales to institutional, commercial, industrial, and governmental users which, because of the facts and circumstances surrounding the sales, such as the quantity, price, or other terms, indicate that they are consistent with sales at wholesale.
Statutory Authority
§ 58.1-3701 of the Code of Virginia.
