Current through Register Vol. 41, No. 3, September 23, 2024
A. Generally, under § 58.1-3703.1A 3 a
(1) of the Code of Virginia, the gross receipts of a contractor are attributed
to the definite place of business where its services are performed. If a
contractor performs services in a locality in which it does not maintain a
definite place of business, then gross receipts from such services are
attributed to the definite place of business where its services are initiated,
controlled or directed, unless the contractor is subject to § 58.1-3715 of
the Code of Virginia. Prior to July 1, 1999, the provisions of § 58.1-3715
of the Code of Virginia did not apply to contractors with no definite place of
business in Virginia.
B. A
contractor is subject to § 58.1-3715 of the Code of Virginia when it
derives gross receipts in excess of $25,000 in one year from a Virginia
locality in which it does not maintain a definite place of business. This
locality may require the contractor to pay a license fee or tax. If the
contractor maintains a definite place of business in a Virginia locality, the
contractor may deduct the amount of business done in the locality in which it
does not maintain a definite place of business from the gross revenue reported
to the locality where its definite place of business is located. If gross
receipts derived from the locality in which the contractor does not maintain a
definite place of business do not exceed $25,000, then those receipts are
attributable to the locality in which the contractor's definite place of
business is located.
C. For
example:
1. A painter is located and properly
licensed in County B in Virginia. The painter is contracted to paint a large
warehouse located in Town A in Virginia. The painter will receive gross
receipts in excess of $25,000 for this job. The painter is subject to a license
tax in Town A pursuant to § 58.1-3715 of the Code of Virginia. The gross
receipts taxable in Town A are deductible from the gross receipts that the
painter reports to County B.
2. A
plumber residing in City A performs plumbing work in City A, County B and Town
C. The gross receipts attributable to County B and Town C are each less than
$25,000 a year. The plumber keeps all tools and parts in his truck but
maintains his records and business phone line in his house. The situs of gross
receipts would be City A because the location of his phone line and records
means that he controls his business from this locality.
3. DEF, Inc., a company engaged in the
business of contracting, has its principal office in City A (population
115,000), and provides contracting services in City A as well as County B
(population 235,000) and Town C (population 15,000). DEF's gross receipts in
City A in a year equal $125,000 and its gross receipts in County B equal
$15,000 in that same year. DEF's gross receipts from Town C equal $35,000 in
that same year, also. All of these localities require a license of, and also
assess a BPOL tax on, contractors. DEF pays a license fee of $100 per year in
City A and also pays a license fee of $30 per year in Town C. Here, DEF would
report gross receipts of $175,000 to City A. However, since Town C could assess
a BPOL tax on the $35,000 in gross receipts DEF generated in its locale, and if
in fact it did levy such a tax upon DEF, then DEF would receive a deduction
from the gross receipts it reports to City A for its BPOL tax in the amount of
the business done in Town C. However, DEF would not receive a deduction in the
calculation of its City A BPOL tax for any license fee paid to Town C. For the
reasons stated in subsection A, since DEF's gross receipts from County B do not
exceed $25,000, those receipts are attributable to City A, where DEF's
principal office is located. Accordingly, DEF's gross receipts would be
attributed as follows: $140,000 to City A and $35,000 to Town C.
§ 58.1-3701 of the Code of
Virginia.
