A VIRGINIA TAX MINUTE
A VIRGINIA TAX MINUTE:
WHY CAN VIRGINIA PRINTERS REPORT DIFFERENT SALES NUMBERS FOR SALES TAX AND BPOL TAX PURPOSES?
The Issue: A PGAMA member in Virginia recently received an inquiry from its local Commissioner of the Revenue inquiring why the printer had reported different sales numbers for business, professional and occupational licensing (“BPOL”) tax and Virginia sales tax purposes. The Commissioner of the Revenue had checked state sales tax records for the same period and apparently had discovered a fairly substantial difference.
The Answer: Section 58.1-3703(C)(4) of the Code of Virginia provides that a city or county may not impose a BPOL tax “on a manufacturer for the privilege of manufacturing and selling goods, wares and merchandise at wholesale at the place of manufacture.” Printers are manufacturers; many Virginia printers have only one place of business from which the sales are made and, accordingly, are entitled to exclude “wholesale” sales from the sales amounts reported to the locality for BPOL tax purposes. The term “wholesale” for purposes of the BPOL statute encompasses more than the customary sale-for-resale notion (found in the Virginia sales and use tax statute), also including sales to institutional, commercial, industrial and governmental users which because of the facts and circumstances surrounding the sale such as the quantity, price and other terms, indicate such sales are consistent with sales at wholesale. In many cases a large portion of a printer’s sales will fall into this category, permitting the printer to exclude such sales from BPOL reporting. Note that sales to individual consumers must be reported because these sales would not fit within the definition of “wholesale” sales for BPOL tax purposes.
The Suggestion: Virginia printers should examine their reports of sales for Virginia sales and use tax purposes and compare the reports with the sales amounts reported for local BPOL tax purposes. If the numbers reported for the same period are identical (or close) the printer in all likelihood is paying too much in BPOL taxes and should take this matter up with the person responsible for submitting the reports. You probably will not get rich over the savings, but you can avoid paying more BPOL tax than is owed.