Present: Kinser, C.J., Lemons, and Mims, JJ., and Carrico, 

Russell, Lacy, and Koontz, S.JJ.*

FORD MOTOR CREDIT COMPANY 

 OPINION BY 

v. Record No. 092158 CHIEF JUSTICE CYNTHIA D. KINSER 

 March 4, 2011 

CHESTERFIELD COUNTY 

FROM THE CIRCUIT COURT OF CHESTERFIELD COUNTY 

Michael C. Allen, Judge 

In this appeal, Ford Motor Credit Company (FMCC) challenges 

the assessment of Business, Professional and Occupation License 

(BPOL) taxes by Chesterfield County (the County) on the gross 

receipts that the County attributed to a branch office of FMCC 

located in the County (the Richmond Branch) for the tax years 

2001 through 2004. The Court must determine whether the circuit 

court erred in holding that the County included in the taxable 

measure only those gross receipts attributable to the exercise 

of the licensed privilege at a definite place of business in the 

County. Because the Court concludes that the circuit court so 

erred, we will reverse its judgment for the County. 

MATERIAL FACTS AND PROCEEDINGS 

Pursuant to Code §§ 58.1-3702 and –3703(A), and 

Chesterfield County Code § 6-4, the County levied BPOL taxes 

against FMCC in the amounts of $327,137.85, $306,435.65, 

 *

 Justice Koontz presided and participated in the hearing 

and decision of this case prior to the effective date of his 
$432,620.96, and $449,740.59 for the tax years 2001, 2002, 2003, 

and 2004, respectively. In February 2007, following the 

County's 2004 denial of FMCC's request for a partial refund of 

BPOL taxes paid for the years in question, FMCC filed in the 

circuit court an "Application for Correction of Erroneous 

Assessment of Business, Profession[] and Occupation License 

Tax," seeking a refund of BPOL taxes in the amount of 

$1,515,935.05.1 See Code § 58.1-3984. Citing Code § 58.1-

3703.1(A)(3)(a)(4) and (A)(3)(b), FMCC alleged that, in the 

foregoing years, it had "mistakenly paid BPOL tax[es] to [the] 

County on the entire gross receipts of loans related to its 

Richmond Branch," instead of apportioning the receipts "to 

reflect the limited contribution of the Richmond Branch to 

[FMCC's] nationwide business." FMCC asserted that the 

assessments violated the attribution requirement of Code § 58.1-

3703.1, the deduction requirement of Code § 58.1-3732(B)(2), and 

the Commerce Clause's fair apportionment requirement. Cf. U.S. 

Const. art. I, § 8. 

The material facts are uncontested. FMCC is a subsidiary 

of Ford Motor Company and is headquartered in Dearborn, 

 

retirement on February 1, 2011; Justice Kinser was sworn in as 

Chief Justice on February 1, 2011. 

1

 FMCC initially filed its application in 2004, but 

subsequently nonsuited that action. It refiled the application 

in 2007. 

2 
Michigan. It is a "financial services provider, primarily to 

the automobile purchase or loan lessee environment," but it also 

"finance[s] dealer floor plan[s]" and "dealer capital loans."2 

The capital necessary to make loans originates from FMCC 

headquarters in Michigan, as do the policies and criteria 

governing loan approval, contract terms, and other management 

issues. 

Until its closing in 2007, the Richmond Branch was one of 

FMCC's 300 sales branches and, at one time, was one of three 

operating in the Commonwealth. Approximately 75 percent of the 

Richmond Branch's business was "retail and lease contracts from 

dealerships," generally referred to as consumer financing for 

the purchase of vehicles, but its business also included FMCC's 

other revenue-producing activities: "floor plan loan financing 

and dealership loan financing."3 The Richmond Branch was tasked 

with contacting and training dealers to increase vehicle sales 

and the number of loans made by FMCC, approving loan 

applications, determining loan interest rates, and providing 

 2

 FMCC also had a division called "Primus" that provided 

loans for the purchase of "non-Ford vehicles." There were only 

"negligible differences" between the way FMCC and Primus 

operated at the branch level. 

3

 "Dealership loan financing," also referred to as "dealer 

capital loans," involved financing for physical plant 

improvements and dealership property acquisitions. 

3 
programs and training for dealers concerning FMCC's financing 

programs. 

During the period in question, the Richmond Branch reported 

to a regional office in Chantilly, Virginia, while offices in 

Baltimore, Maryland;4 Nashville, Tennessee; Omaha, Nebraska; 

Mesa, Arizona; and Livonia, Michigan also played a role in 

managing and administering loans that originated in FMCC's 

Richmond Branch. The Chantilly office managed all the branches 

within the region and approved certain larger loan amounts, such 

as dealer floor plan financing. The Baltimore office operated 

as a "service center[]" and was responsible for processing loan 

payments to insure that customer payments were credited to the 

correct account, maintaining customer contact records, working 

with customers on late payments and refinancing, and handling 

the titling of vehicles when loans were initially made and then 

paid in full. The Baltimore service center did "the bulk of the 

work" that went into ensuring receipt of monies from loans 

closed by the Richmond Branch. The Nashville office was also a 

service center, but handled Primus loans exclusively as the 

headquarters of FMCC's Primus division. Some Primus loans were 

processed through FMCC's Richmond Branch. Finally, the service 

 4

 The Baltimore service center is located in Columbia, 

Maryland and is alternatively referred to as the Columbia 

service center. 

4 
center located in Omaha, Nebraska "handle[d] overflow business 

only." 

FMCC also had centers that dealt with loans originating in 

the Richmond Branch, and elsewhere, that subsequently went into 

default. One such office in Mesa, Arizona, "the national 

recovery service center," was responsible for "ensur[ing] that 

[FMCC] obtain[ed] payment for any loans or leases that [were] in 

default." Its objective was to "get all the monies due [FMCC] 

under the loans or the leases." The other collection office 

that served the Richmond Branch was the Livonia office, which 

housed "the bankruptcy specialists." All the loan receivables 

"managed by FMCC [were] the receivables owned by FMCC." 

With regard to the installment financing of vehicle 

purchases, the Richmond Branch reviewed loan applications from 

customers who sought to "purchase or lease a vehicle" from a 

Ford Motor Company dealership, and decided "whether or not to 

approve the loan . . . based on procedures set out by [FMCC 

headquarters in] Dearborn." The Richmond Branch also determined 

interest rates, sometimes approving a lower rate for a customer 

with a good credit score. However, most of the interest rates 

were set by the headquarters in Michigan. When the Richmond 

Branch approved a loan application, it notified the dealership, 

where the customer actually executed the installment loan 

contract. After the documents were signed and returned to the 

5 
Richmond Branch, it collected "all the paperwork" and forwarded 

the documents to a service center, which "then t[ook] over the 

duties of . . . get[ting] the title for the vehicle" and 

"maintain[ing] the loan." When a "contract package [came back] 

into the branch," information was entered into a database, an 

activity that signaled the headquarters in Michigan "to wire 

funds electronically . . . to the dealership's bank account." 

The money was used to finance either the customer's purchase or, 

in the case of a lease, FMCC's purchase of the vehicle from the 

dealership. 

The process of deciding whether to approve a loan 

application, and then processing an approved application and 

completed loan usually took "20 to 30 minutes for one 

application for one customer," while the "standard Ford Credit 

loan or lease usually stay[ed] on the books right at 30 months." 

The entire process "from the time that the loan application 

[came] in until the time the paperwork [was] completed and 

shipped out" took "three days to a week." After "the packet of 

documents [was] sent off," the Richmond Branch had no further 

involvement with the loans. The Richmond Branch did not process 

funds, receive payments, engage in collection or other customer 

service activities, or handle delinquent debts. During the 

years in question, the Richmond Branch processed "around 20,000 

[retail loans and leases] a year." 

6 
The Richmond Branch performed similar activities with 

respect to "floor plan financing," with rates and approval 

guidelines set by, and money sent from, FMCC's headquarters. 

But, the regional office and headquarters exercised a greater 

degree of control over how much money was loaned to a particular 

dealer. Once such a loan was approved, the Richmond Branch's 

"responsibilities were limited to auditing the [dealer's] 

inventory" and occasionally facilitating inventory trades 

between dealerships. 

Likewise, the Richmond Branch's role as to "dealership loan 

financing" or "dealer capital loans" was comparable to its role 

with "floor plan financing." But, in the case of "dealership 

loan financing," the Richmond Branch actually received payments 

on the loan amount, noted their receipt, and then forwarded the 

payments "to a Ford Credit lockbox for posting to the account." 

FMCC's witness who qualified as an "expert in the field of 

accounting" and "in state and local . . . business license 

taxes" summarized in detail how a consumer installment loan to 

purchase a vehicle was processed, maintained, and serviced by 

FMCC: 

A loan gets made at the dealer level and the 

paperwork goes to the branch, it's approved at the 

branch. Branch personnel make sure that the 

underwriting standards are in keeping with the 

parameters of the company. They then approve the loan 

and then within 30 days, that loan package is then 

7 
forwarded on to a service office. In this case, it 

was Columbia during the four years in question. 

At the service office, the loan is administered. 

If there are late payments, someone follows up. They 

record the payments. If there is a need for 

administrative changes in the loans, such as change of 

address, they handle that. If there's a problem with 

a loan, if refinancing is a requirement, if a payment 

needs to be skipped, they handle these matters. They 

also handle matters relating to the loan if the loan 

goes into default, and then they bring in either the 

Livonia office, which would handle the bankruptcy 

proceeding, if one was involved, or – and/or one of 

the recovery centers, and recovery centers handle 

repossession of the underlying security, the 

automobile, and then also the disposal of that 

automobile in recovery of the principal on the debt. 

The headquarters serves a very important function 

as well. They handle the marketing of the company. 

They handle the general overall strategy of the 

company. They set the audit or, rather, the 

underwriting standards so that they can mitigate the 

risk on the loans in the loan portfolios that are made 

by FMCC. They also work within the marketplace to 

secure capital so that the capital can be loaned to 

individuals to buy automobiles. They also handle 

securitization for those loan packages, and 

securitization is merely a secondary market activity 

where they securitize the loans and then receive funds 

in exchange for the securitization so that they can 

reloan those funds to the borrowers. 

The accounting expert also testified that FMCC used an 

accrual accounting method, meaning that FMCC recorded loans as 

receivables on a balance sheet when they were made, and "booked" 

revenue on an income statement when payments of interest and 

fees were due. In the event of a default on a loan, "revenue 

would be booked when the security [was] sold and the principal 

satisfied on the note," resulting in "either . . . a gain or a 

8 
loss on the loan." Loans approved and closed by the Richmond 

Branch were not "booked" there for Virginia or federal income 

tax, or any other, purposes. 

The expert testified that the "internal accounting system" 

relied on by the County to justify their attribution of gross 

receipts to the Richmond Branch, known as "MAPS" or "management, 

analysis, and performance system," was accurate but was a 

"contract revenue-based system." He stated that MAPS 

"associates revenue attributable to loans . . . and leases . . . 

that . . . come from the business that FMCC conducts with its 

dealers," allowing FMCC to determine at which dealers the loans 

"were completed," and which branches processed the loans. 

However, according to the expert, MAPS was "not an activity[-

]based system at all" and thus did not attribute revenue based 

on the activities or work of personnel at the Richmond Branch, 

or anywhere else, or even track "which office is responsible for 

what activities with respect to a particular loan[.]" The 

expert doubted whether "a system could be devised . . . to track 

and attribute revenue based on where services are performed," 

concluding "it would be very difficult to do." He explained 

that "[t]here's no way to take . . . one payment or . . . one 

dollar of interest . . . and take that and distribute it among 

all of the activities that may come into play on that loan." 

Thus, he concluded that it was "impossible or impractical to 

9 
utilize . . . the general rule" of attribution and that "payroll 

apportionment" was the appropriate method to determine the BPOL 

tax FMCC owed the County during the years in question. The 

expert explained that payroll apportionment reflects all the 

activities that generated revenues when FMCC loaned money to 

customers, received payments from customers, addressed inquiries 

from customers, and repossessed vehicles from customers. 

Having completed a payroll apportionment calculation, 

FMCC's expert stated that either the sum of $1,428,534 or 

$1,414,913 should be refunded to FMCC. He believed that FMCC 

erred in reporting gross receipts for all loans originating in 

the Richmond Branch and failing to take into account "that other 

offices [came] into play to administer those loans and those 

leases and the important functions that Dearborn provide[d] in 

order for the business to be viable." Explaining the deduction 

allowed in Code § 58.1-3732(B)(2), he also stated that FMCC 

failed to take the deduction "for receipts that [were] 

attributable to the conduct of business in other states where 

the company [was] liable for an income tax." 

A regional sales manager for FMCC testified that without 

the work of the various offices that dealt with loans 

originating in the Richmond Branch, FMCC would not collect the 

full amount due under its loan contracts. Similarly, FMCC's tax 

counsel opined that the service centers "add value" to the loans 

10 
because their activities "generat[e] monies." He further stated 

that tracking revenue based on services provided by FMCC was not 

possible. 

In contrast, the County's Commissioner of Revenue (the 

Commissioner) stated that FMCC provided "a product to their 

customers, the product being money in the form of loans.” He 

further testified that for purposes of BPOL taxation for a 

financial services company like FMCC, "[g]enerating gross 

receipts is the set of activities or things that a business does 

to actually get the receipt into the business," i.e., "the 

activities . . . directly related to creating the receivable" 

such as having "a customer sign on the dotted line and issue the 

loan, giv[ing] the money to the dealer so that customer can 

drive that car home." But, according to the Commissioner, 

"[c]ollecting gross receipts" is not a "set of activities . . . 

that a business does to actually get the receipt into the 

business" but is only a "necessary process of any business that 

has a receivable." He also stated that "[g]enerating is taking 

the necessary actions to create a receivable or to make the sale 

so that somebody pays you" and that "receipt occurs after 

somebody collects what they want to collect." FMCC's centers 

outside the Richmond Branch did not, in the Commissioner's 

opinion, "generate gross receipts." Nevertheless, he admitted 

that he had never seen a document that tracked FMCC's revenues 

11 
based on the location where services were provided. The 

Commissioner admitted that "there is no proper way to apportion" 

FMCC's gross receipts. 

Upon reviewing the evidence, presented through exhibits and 

testimony, the circuit court denied FMCC's application and 

dismissed it with prejudice. In a letter opinion incorporated 

in its final order, the circuit court found that FMCC's business 

was that of providing "retail financing, wholesale financing 

(also called 'floor plan financing'), and a . . . catchall 

category referred to as 'other financing.'" According to the 

court, "the Richmond Branch operated as a loan origination 

office" for all three types of financing, and "marketed and 

closed" primarily "consumer loans for individual new and used 

cars." 

The circuit court concluded that "the Richmond Branch's 

marketing and closing operations generated gross receipts in the 

form of interest and fees." FMCC then "recorded the loans as 

receivables and forwarded them to service centers for servicing 

and collection." The court found that MAPS "allowed the company 

to accurately track the gross receipts generated by each sales 

office," thereby attributing to the Richmond Branch only the 

gross receipts generated there. The court expressly rejected 

FMCC's argument that "the MAPS figures for the Richmond Branch 

were intended for internal management purposes only" and did not 

12 
reflect where the gross receipts were actually generated. 

Instead, the court found "that the MAPS figures accurately 

reflect the gross receipts generated as [a] result of the 

distinct efforts of the Richmond Branch." Thus, the court 

concluded that "[b]ecause the Richmond Branch generated gross 

receipts from a definite place of business in Chesterfield 

County, imposition of BPOL tax on the gross receipts generated 

[there is] consistent with" Code § 58.1-3703.1(A)(3)(a)(4). 

Although the circuit court also found that "[a]fter 

closing, loans generated by the Richmond Branch were transferred 

for portfolio management to 'service centers' organized and 

operated by FMCC in three other states[,]" it nevertheless 

concluded, "[t]he service centers neither created new loans nor 

added value to existing loans--they simply managed loans 

generated and closed by the Richmond Branch[; t]he service 

centers did not generate gross receipts." (Emphasis added.) 

Likewise, the court concluded that although the Richmond Branch 

was "overseen by a regional office . . . and by FMCC corporate 

headquarters," which provided "management policy" assistance to 

the Richmond Branch and were "known as 'cost centers,'" "neither 

office generated gross receipts." (Emphasis added.) 

Further, the circuit court found that no "gross receipts 

generated by the Richmond Branch were taxed by, or rendered 

subject to taxation by, any other jurisdiction," as "FMCC 

13 
reported none of the gross receipts taxed by [the] County for 

taxation in any other state." However, the parties did 

stipulate that for all the relevant tax years, "FMCC filed state 

income tax or income tax-like returns in 47 states and the 

District of Columbia." 

The circuit court, thus, also rejected FMCC's argument that 

the gross receipts must be "apportioned by payroll," concluding 

that "determination of the gross receipts generated by the 

Richmond Branch . . . is neither impractical nor impossible." 

The circuit court expressly noted that "MAPS[] provides a 

reliable and accurate accounting of the gross receipts generated 

by the Richmond Branch," and that none of the "service centers" 

or "cost centers" located elsewhere "generated gross receipts 

within the meaning of applicable BPOL guidelines," but only 

"served the interests of FMCC." Therefore, it held that "the 

assessments in this case were based solely on gross receipts 

generated by the Richmond Branch for services performed within 

the County." 

Also, the circuit court rejected FMCC's challenge to the 

assessments as violating the fair apportionment prong of the 

four-part Commerce Clause test for local taxation set forth in 

Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977). 

The circuit court determined that "the income attributed to the 

Richmond Branch was not 'out of all appropriate proportion' to 

14 
the business transacted in the locality," and that FMCC faced no 

risk of "double taxation." The circuit court, accordingly, 

entered an order denying FMCC's application, affirming the 

assessment (with the County's requested increase),5 and 

dismissing the action. We awarded FMCC this appeal. 

ANALYSIS 

Although FMCC raises multiple assignments of error 

challenging the circuit court's judgment, the dispositive issue 

is whether the circuit court erred in holding that the County 

properly attributed all gross receipts for loans that originated 

in the Richmond Branch to FMCC's services provided in the 

County, without apportionment or deduction. Because this issue 

presents a mixed question of law and fact, we conduct a de novo 

review. Luria v. Board of Dirs. of Westbriar Condo. Unit Owners 

Ass'n, 277 Va. 359, 365, 672 S.E.2d 837, 840 (2009). 

"In our review of the circuit court's application of the law to 

the facts, we give deference to the circuit court's factual 

findings and view the facts in the light most favorable to the 

[County], the prevailing party below." Id.

The provisions of Code § 58.1-3703(A) set forth the sole 

grant of authority for localities to levy BPOL taxes. In 

pertinent part, the statute states: 

 5

 The circuit court actually increased the County's BPOL 

assessment to $1,791,438.13, which is the subject of an 

15 
The governing body of any county, city or town 

. . . may levy and provide for the assessment and 

collection of county, city or town license taxes on 

businesses, trades, professions, occupations and 

callings and upon the persons, firms and corporations 

engaged therein within the county, city or town. 

See Code § 58.1-3702 ("The provisions of this chapter[, Chapter 

37, titled License Taxes, of Subtitle III, titled Local Taxes, 

of Title 58.1, titled Taxation,] shall be the sole authority for 

counties, cities and towns for the levying of the license taxes 

described herein.") 

When reviewing whether a particular subject of taxation, in 

this case, gross receipts, falls within a locality's statutory 

power to tax, we apply the rule that such 

[s]tatutes imposing taxes are to be construed most 

strongly against the government, and in favor of the 

citizen, and are not to be extended by implication 

beyond the clear import of the language used. Whenever 

there is a just doubt, "that doubt should absolve the 

taxpayer from his burden." 

City of Winchester v. American Woodmark Corp., 250 Va. 451, 456-

57, 464 S.E.2d 148, 152 (1995) (Woodmark I) (quoting 

Commonwealth Natural Res., Inc. v. Commonwealth, 219 Va. 529, 

537-38, 248 S.E.2d 791, 796 (1978)); accord Commonwealth v. 

Appalachian Electric Power Co., 193 Va. 37, 46, 68 S.E.2d 122, 

127 (1951). 

Nevertheless, "a tax assessment made by the proper 

authorities is prima facie correct and valid, and the burden is 

 

assignment of error. 

16 
on the taxpayer to show that such assessment is erroneous." 

Commonwealth v. American Radiator & Standard Sanitary Corp., 202 

Va. 13, 18, 116 S.E.2d 44, 47 (1960); see also Code § 58.1-

3984(A) (in proceedings to correct erroneous assessment of local 

levies, "the burden of proof shall be upon the taxpayer to show 

that . . . the assessment is . . . invalid or illegal"); LZM, 

Inc. v. Virginia Dep't of Taxation, 269 Va. 105, 109, 606 S.E.2d 

797, 799 (2005) (applying presumption of validity to an 

assessment of sales tax and stating that "the burden is on the 

taxpayer to show that such assessment was the result of 

'manifest error' or in 'total disregard of controlling 

evidence' ") (citation omitted); Department of Taxation v. Lucky 

Stores, Inc., 217 Va. 121, 127, 225 S.E.2d 870, 874 (1976) 

(holding in a challenge to the imposition of income taxes that 

"the taxpayer [was] confronted with a presumption of validity 

attached to the decision" of the taxing authority and that "the 

burden [was] on the taxpayer to prove that the assessment [was] 

contrary to law or that the [taxing authority] abused [its] 

discretion and acted in an arbitrary, capricious or unreasonable 

manner"). 

The General Assembly has imposed certain restrictions on 

the assessment of BPOL taxes. The provisions of Code § 58.1-

3706 impose limits on the rate of taxation that localities may 

impose on gross receipts. Further, any local ordinance "levying 

17 
such license taxes [must] include the provisions of [Code] 

§ 58.1-3703.1." Code § 58.1-3703(A); see also Code § 58.1-

3703.1(A). 

Code § 58.1-3703.1 contains the primary limitations 

governing BPOL taxation, and provides a "[g]eneral rule" for the 

situs of gross receipts in subsection (A)(3)(a): 

Whenever the tax imposed by this ordinance is 

measured by gross receipts, the gross receipts 

included in the taxable measure shall be only those 

gross receipts attributed to the exercise of a 

privilege subject to licensure at a definite place of 

business within this jurisdiction. 

Code § 58.1-3703.1(A)(3)(a). That subsection then specifies 

four different situs rules applicable to four types of 

businesses, including one for service businesses: "The gross 

receipts from the performance of services shall be attributed to 

the definite place of business at which the services are 

performed or, if not performed at any definite place of 

business, then to the definite place of business from which the 

services are directed or controlled." Code § 58.1-

3703.1(A)(3)(a)(4). 

Neither party contests that FMCC was a service business for 

purposes of Code § 58.1-3703.1(A)(3)(a)(4). Specifically, FMCC 

provided "[f]inancial services," meaning "the buying, selling, 

handling, managing, investing, and providing of advice regarding 

money, credit, securities, or other investments." Code § 58.1-

18 
3700.1; see also 23 VAC § 10-500-10 (defining "financial 

services" as "the buying, selling, handling, managing, and 

investing [of] money, credit, securities, or other investments 

for others, as well as providing advice to others on such 

matters") (emphases added); 23 VAC § 10-500-390 (providing a 

list of financial services, including "[i]nstallment financing," 

"[i]nventory financing," "[c]onsumer financing," and "[l]oan or 

mortgage companies"). Thus, the general rule of attribution set 

forth in Code § 58.1-3703.1(A)(3)(a)(4) applies to FMCC unless, 

as the licensee, it "has more than one definite place of 

business and it is impractical or impossible to determine to 

which definite place of business gross receipts should be 

attributed under the general rule." Code § 58.1-

3703.1(A)(3)(b). In that instance, gross receipts must be 

"apportioned between the definite places of business on the 

basis of payroll." Id.

Both parties, and the circuit court, also agreed that FMCC 

had several definite places of business outside the County that 

managed FMCC generally, oversaw the Richmond Branch's 

operations, and administered the loans originating at the 

Richmond Branch. See Code § 58.1-3700.1 (defining "definite 

place of business" to mean "an office or a location at which 

occurs a regular and continuous course of dealing for thirty 

consecutive days or more"). FMCC, however, disputes the circuit 

19 
court's holding that the gross receipts in question were solely 

"generated by the Richmond Branch for services performed within 

the County." Because, according to FMCC, most of the gross 

receipts were not "directly attributable to the taxable 

privilege exercised within [the County]" but rather to the 

performance of financial services at various FMCC offices across 

the nation, it contends that it was "impractical or impossible 

to determine to which definite place of business gross receipts 

should be attributed." Code § 58.1-3703.1(A)(3)(b). Thus, FMCC 

asserts that "the gross receipts of [FMCC's Richmond Branch 

must] be apportioned between the definite places of businesses 

on the basis of payroll," pursuant to Code § 58.1-

3703.1(A)(3)(b). 

Relying on language appearing in the Virginia 

Administrative Code, the County, however, contends that the 

financial service FMCC provided was "the 'selling' of 'money' 

through installment loans 'to others.' " 23 VAC § 10-500-10. 

FMCC's service centers and cost centers, according to the 

County, did not provide " 'financial services' to others." 

(Emphasis added.) Instead, argues the County, those out-ofstate centers merely served FMCC's interests by collecting the 

receivables generated when the Richmond Branch sold and closed a 

loan, with the terms and amount of repayment being fixed at 

closing. Thus, the County contends that only the Richmond 

20 
Branch's activities qualified as a financial service business 

that generated gross receipts. 

Because FMCC, as a financial services business, had 

definite places of business in multiple jurisdictions outside 

the County, this Court must determine, first, whether the 

circuit court erred in its application of the law to the facts 

of this case by holding that all the gross receipts taxed by the 

County were attributable "to the exercise of a privilege subject 

to licensure at a definite place of business within" the County. 

Code § 58.1-3703.1(A)(3)(a); see also 23 VAC § 10-500-10 

(defining "gross receipts" as "money . . . received . . . as a 

result of transactions with others . . . and that are derived 

from the exercise of the licensed privilege"). If we answer 

that question affirmatively, we then must decide whether the 

circuit court erred in holding that it was "neither impractical 

nor impossible" to attribute the gross receipts to the 

performance of services at a specific, definite place of 

business, and that payroll apportionment was not required. In 

other words, the questions are whether FMCC carried its burden 

to prove that the gross receipts taxed by the County were not 

attributable solely to the performance of financial services at 

a definite place of business in the County, Code § 58.1-

3703.1(A)(3)(a)(4), and whether the County's BPOL assessment 

must be "apportioned . . . on the basis of payroll" because "it 

21 
is impractical or impossible to determine to which definite 

place of business gross receipts should be attributed." Code 

§ 58.1-3703.1(A)(3)(b). 

In determining whether the gross receipts in question were 

attributable solely to FMCC services rendered in the County, we 

turn for guidance to this Court's decision in City of Winchester 

v. American Woodmark Corp., 252 Va. 98, 471 S.E.2d 495 (1996) 

(Woodmark II). In that case, the City of Winchester had imposed 

BPOL taxes on "100% of American Woodmark's revenues" although 

only its corporate headquarters were located in the City, and 

"manufacturing and distribution centers as well as service and 

sales offices" numbering "24 facilities in 13 different states" 

were also part of American Woodmark's business operations. Id.

at 103, 471 S.E.2d at 498. American Woodmark had alleged, and 

the trial court agreed, that the assessments violated the 

Commerce Clause "because the City had not fairly apportioned the 

assessments to tax only those gross receipts attributable to 

[its] business activities within the City." Id. at 101, 471 

S.E.2d at 497. In resolving this challenge, the Court applied 

the relevant Commerce Clause test, which requires that the BPOL 

tax apply "only to the 'portion of the revenues from the 

interstate activity which reasonably reflects the in-state 

component of the activity being taxed.' " Id. at 102, 471 

S.E.2d at 497 (quoting Goldberg v. Sweet, 488 U.S. 252, 262 

22 
(1989)). The Court concluded that "[c]ommon sense compels the 

conclusion that these [out-of-jurisdiction] operations added 

value to American Woodmark's business product and were revenue 

producing activities." Id. "[I]t [was] equally axiomatic that 

the value added to the product by the Winchester operations 

could not possibly produce 100% of the revenues." Id. Thus, in 

resolving American Woodmark's Commerce Clause challenge to the 

BPOL taxes, the Court held that "American Woodmark [had] met its 

burden of proof by presenting clear and cogent evidence that the 

income which the City through its assessments attributed to 

operations conducted in Winchester [were] 'out of all 

appropriate proportions to' and [had] 'no rational relationship' 

to the business transacted in Winchester." Id. Although a 

statutory challenge6 was not presented in Woodmark II but only a 

challenge under the Commerce Clause, the Court's holding, by 

implication in the context of the present case, means that the 

gross receipts the City had included in the taxable measure were 

not "only those gross receipts attributed to the exercise of a 

privilege subject to licensure at a definite place of business" 

in the City of Winchester. Code § 58.1-3703.1(A)(3)(a). See

 6

 The BPOL situs statute then in effect was former Code 

§ 58.1-3707, which limited the localities' power to tax based on 

"volume" to "the volume attributable to practice in" the 

relevant locality, with "volume" meaning "gross receipts or any 

other base for measuring a license tax which is related to the 

amount of business done." Former Code § 58.1-3707(A) and (D). 

23 
Woodmark II, 252 Va. at 103, 471 S.E.2d at 498 (holding that 

because the out-of-jurisdiction activities were "revenue 

producing," "[b]y definition, assessments based on 100% of 

American Woodmark's revenues included revenues realized from 

value produced in locations other than in the taxing 

jurisdiction"). 

Turning to the case before us, we recognize that when a 

consumer or dealer executed an installment loan contract with 

FMCC and the loan documents were returned to the Richmond Branch 

and then forwarded to a service center, FMCC's entitlement to 

monies (principal, interest, and fees) with respect to that 

particular loan was fixed by the loan contract's terms. In the 

County's nomenclature, money had been sold at that point, but 

FMCC had only a receivable, not gross receipts. As the County's 

Commissioner of Revenue acknowledged, "[t]here is" "a difference 

. . . between a gross receipt . . . and a receivable," and Code 

§ 58.1-3703.1(A)(3)(a)(4) renders that difference significant 

here. When, as in this case, the BPOL tax "is measured by gross 

receipts," the gross receipts that the County could include "in 

the taxable measure" were "only those gross receipts attributed 

to the exercise of" the licensed privilege, financial services, 

at a definite place of business in the County. Code § 58.1-

3703.1(A)(3)(a). And when financial services provided in other 

jurisdictions contribute to the derivation of the gross 

24 
receipts, those services must be accorded some proportion of the 

gross receipts, and the BPOL “taxable measure” reduced 

accordingly. 

Thus, we do not agree with the County's position that gross 

receipts were generated when, for example, a customer simply 

signed "on the dotted line" and the loan was made. The gross 

receipts derived from the exercise of FMCC's licensed privilege 

to conduct a financial services business – to provide 

installment and inventory financing – were not attributable 

solely to the performance of financial services at the Richmond 

Branch. To accept the County's position and the circuit court's 

holding would mean that all services necessary to FMCC's 

deriving gross receipts from its consumer installment and 

inventory financing operations were provided at the Richmond 

Branch. But, such are not the facts of this case. 

The money to sell to consumers and dealers through 

installment and inventory financing came from FMCC's 

headquarters in Michigan. Part of the headquarters' operations 

was the securing of capital so that money could be loaned to 

consumers to purchase vehicles and to dealers for floor-plan 

financing and physical plant improvements. FMCC's headquarters 

also obtained securitization of loan packages. The operations 

of FMCC's service centers included, among other things, helping 

consumers with administrative changes in their loans such as 

25 
changes of address and re-financings. FMCC also served its 

customers by titling vehicles, tracking loan repayment progress, 

providing statements, and logging payments. All these 

activities were an integral part of the financial service of 

installment and inventory financing and were proven by “clear 

and cogent evidence.” Woodmark II, 252 Va. at 103, 471 S.E.2d 

at 498. In other words, the operations of the Richmond Branch 

did not produce 100 percent of the gross receipts that the 

County taxed.7 See id.

Thus, we conclude that the circuit court erred in holding 

that all the taxed gross receipts were "attributed to the 

exercise of a privilege subject to licensure at [the Richmond 

Branch] within [the County]." Code § 58.1-3703.1(A)(3)(a). We 

find support for the conclusion we reach today in the rulings of 

the Virginia Department of Taxation (the Department). See Code 

§ 58.1-205(3) (directing courts to "accord[] judicial notice" to 

the Department's duly promulgated rulings). In Public Document 

(P.D.) 97-284 (June 25, 1997), the Tax Commissioner advised a 

 7

 Nothing in our analysis of Code § 58.1-3703.1(A)(3)(a) 

should be read to control when gross receipts may be taxed, but 

only which gross receipts, whenever taxable, a locality may tax 

under Code § 58.1-3703.1(A)(3)(a). Even though gross receipts 

may be reported based on the accrual method, see, e.g., Monument 

Assocs. v. Arlington Cnty. Bd., 242 Va. 145, 147-78, 408 S.E.2d 

889, 890 (1991), the BPOL taxable measure can only include 

"those gross receipts attributed to the exercise of a privilege 

subject to licensure at a definite place of business" in the 

taxing jurisdiction. Code § 58.1-3703(A)(3)(a). 

26 
locality with regard to the assessment of BPOL taxes on a 

business that operated a laboratory for collecting specimens. 

The business sent the collected specimens to facilities outside 

the locality for "actual testing," and the business' billing and 

collection operations occurred at its headquarters located in 

another state. The Tax Commissioner concluded that "both the 

collection and the testing of specimens [were] part of the 

services performed by the taxpayer." Thus, the locality could 

impose a BPOL tax on the gross receipts that were attributed to 

the specimens' collection, but not on the gross receipts 

attributable to the specimens' testing. The Tax Commissioner 

further stated that if it was "impossible or impractical to 

determine which gross receipts [were] attributed to the 

collection of the specimens and which gross receipts [were] 

attributed to the testing of the specimens," the locality should 

apportion gross receipts on the basis of payroll. 

The operations of FMCC's headquarters in securing capital 

for loans to consumers and dealers are comparable, for our 

purposes, to the laboratory's collecting of specimens. 

Obviously, specimens cannot be tested until they are collected 

and, similarly, loans cannot be made unless there is available 

capital. Moreover, loans, by definition, cannot be made without 

any mechanism for repayment and administrative changes. In 

short, those activities – obtaining capital, collecting 

27 
payments, and helping customers make changes in their loans – 

provide a financial service "to others." 23 VAC § 10-500-10. 

Thus, we reject the County's argument that FMCC's service 

centers "serve[d] only the taxpayer's interest, and no other," 

and thus did "not give rise to gross receipts." 23 VAC § 10-

500-60; see P.D. 99-92 (Apr. 30, 1999) (stating that a locality 

may attribute gross receipts to a "[b]usiness's 'bookkeeping' 

operation" if the bookkeeping "includes soliciting orders for 

coal, offering bookkeeping services to others, or engaging in 

transactions involving customers"); see also 23 VAC § 10-500-10 

(requiring that "financial services" be provided "to others"). 

The Tax Commissioner followed a similar rationale regarding 

attribution of gross receipts in P.D. 99-87 (Apr. 23, 1999). 

There, a locality requested an advisory opinion on the 

attribution of gross receipts regarding a financial services 

business that "originates loans and forwards all responsibility 

for loan servicing, customer relations and possible sale to an 

office of the business located in another locality or state." 

The Tax Commissioner stated that he lacked "sufficient facts to 

determine the definite place of business to which the receipts 

should be attributed," but did offer that "the receipts . . . 

appear to be derived from activities conducted at definite 

places of business both within and without your jurisdiction." 

(Emphasis added.) The Tax Commissioner, accordingly, directed 

28 
that the locality "ascertain the nature of the business 

activities conducted at the different places of business and the 

extent to which these activities contribute to the different 

types of receipts." This opinion, contemplating attribution of 

gross receipts to activities such as “loan servicing” and 

“customer relations” by a financial services business is 

inconsistent with the bright-line rule pressed by the County, 

which is that all gross receipts received by FMCC for the loans 

that originated and were closed at the Richmond Branch were 100 

percent attributable to that situs. 

Our conclusion is not altered by FMCC's internal accounting 

system, MAPS. As explained by FMCC's expert, that was a 

"contract revenue-based system" and did not track gross receipts 

based on financial services rendered to others. Even the 

Commissioner of Revenue admitted that he was not aware of any 

document that tracked FMCC's revenues based on the location 

where financial services were provided. Therefore, the fact 

that MAPS assigned revenue to the Richmond Branch does not 

determine where gross receipts properly were attributable 

pursuant to Code § 58.1-3703.1(A)(3)(a). 

Further, the circuit court erred in concluding that it was 

not "impractical or impossible to determine to which definite 

place of business gross receipts should be attributed" under the 

rule that the "gross receipts from the performance of services 

29 
shall be attributed to the definite place of business at which 

the services are performed." Code § 58.1-3703.1(A)(3)(a)(4) and 

(b). As already noted, there was uncontradicted evidence that 

MAPS tracked revenues by contract, but did not track the 

financial services performed over the life of the loan. And, 

FMCC's expert testified that "[t]here's no way to take . . . one 

payment or . . . one dollar of interest . . . and take that and 

distribute it among all of the activities that may come into 

play on that loan." Therefore, having concluded that the facts, 

as found by the circuit court, demonstrated that financial 

services outside the County contributed to the realization of 

FMCC's gross receipts, we further conclude that it would be 

impossible or, at least, impractical to perform that process on 

every one of the approximately 20,000 loans processed annually 

by the Richmond Branch, spanning the tax years of 2001, 2002, 

2003, and 2004. See P.D. 04-80 (Aug. 25, 2004) (holding that 

"payroll apportionment" is "the most appropriate method of 

assessing the Taxpayer for BPOL purposes" "[g]iven the 

Taxpayer's multistate activities and the fact that its 

accounting procedures are contract driven, rather than service 

driven"); accord P.D. 05-117 (July 19, 2005) (same). 

Accordingly, we hold that because the gross receipts in question 

were attributable to services performed outside the County, and 

that "it is impractical or impossible to determine to which 

30 
definite place of business gross receipts should be attributed," 

FMCC's BPOL tax assessment must be calculated using payroll 

apportionment. See Code § 58.1-3703.1(A)(3)(b). 

Finally, when FMCC's BPOL tax assessment is re-calculated, 

FMCC's entitlement to a deduction under Code § 58.1-3732(B)(2) 

must be determined. That statute provides that "[a]ny receipts 

attributable to business conducted in another state or foreign 

country in which the taxpayer (or its shareholders, partners or 

members in lieu of the taxpayer) is liable for an income or 

other tax based upon income" "shall be deducted from gross 

receipts . . . that would otherwise be taxable." Code § 58.1-

3732(B)(2). FMCC contends that the stipulation to its filing 

"income or income-like tax returns in 47 states and the District 

of Columbia" means that it was entitled to deduct all gross 

receipts "attributable to business conducted" in those states. 

Cf. 23 VAC § 10-500-80(A)(2) ("A Virginia taxpayer is liable for 

an income or other tax based upon income if the taxpayer files a 

return for an income or income-like tax in that state or foreign 

country.") While a "taxpayer . . . need not actually pay any 

tax to take the deduction," 23 VAC § 10-500-80(A)(2), a taxpayer 

may deduct gross receipts attributable to business conducted in 

another state only if the taxpayer demonstrates that it 

"actually reports those receipts . . . on its out-of-state 

31 
income tax returns."8 P.D. 07-142 (Sept. 5, 2007) (emphasis 

added).

CONCLUSION 

For the foregoing reasons, we will reverse the judgment of 

the circuit court and remand the case for further proceedings.9

Reversed and remanded. 

SENIOR JUSTICE LACY, with whom SENIOR JUSTICE CARRICO joins, 

dissenting. 

The majority opinion holds that to determine the Business, 

Professional, and Occupational (BPOL) license tax assessment for 

the Richmond Branch of Ford Motor Credit Company (FMCC or the 

company), an international lending institution, Chesterfield 

County must apportion the gross receipts generated by the 

Richmond Branch1 by the payroll apportionment method based on 

FMCC’s entire payroll. To reach this result, the majority holds 

that (1) even though the company itself considers its gross 

receipt revenues as generated by the location where the loan 

contract was originated and designates other locations and their 

activities as “cost” or “service” centers, other activities of 

 8

 We express no opinion regarding FMCC's entitlement to a 

deduction under Code § 58.1-3732(B)(2) or regarding what portion 

of FMCC's payroll should be included in a payroll apportionment 

calculation. 

9

 In view of the Court's decision, it is unnecessary to 

address the remaining assignments of error. 

1

 FMCC produced an exhibit showing that the amount of the 

gross receipts generated by the Richmond Branch ranged from 4.0 

32 
the company, such as those directed at collecting monies owed 

the company pursuant to an executed contract, are activities 

contributing to the “realization” or the “derivation” of the 

company’s gross receipts, a standard not heretofore applied by 

this Court or the Tax Commissioner; and (2) because the company 

only utilizes a tracking system that assigns gross receipts to 

the site at which the contract securing those receipts is 

executed, it is “impractical or impossible” to determine what 

part of the gross receipts revenue came from the locations at 

which these other activities and services were conducted. 

I cannot join the majority opinion for the following 

reasons. First, as the majority recites, the Richmond Branch of 

FMCC “was tasked with contacting and training dealers to 

increase vehicle sales and the number of loans made by FMCC, 

approving loan applications, determining loan interest rates, 

and providing programs and training for dealers concerning 

FMCC’s financing programs.” The company’s gross receipts, fees 

and interest are generated and established at the time the loan 

contract is executed. These executed contracts are the result 

of activities undertaken by the Richmond Branch. 

In my opinion, collection activities of a company do not 

add value or generate any further gross receipts. This view is 

 

percent to 5.3 percent of the company’s total gross receipts for 

the years in question. 

33 
consistent with the views of the Tax Commissioner as set out in 

the guidelines promulgated and opinions rendered for the 

application of the BPOL tax. See Virginia Department of 

Taxation, Business, Professional and Occupational License Tax: 

2000 BPOL Guidelines (Jan. 1, 2000) (hereinafter BPOL 

Guidelines). In Chapter 1 of the BPOL Guidelines the “[s]itus 

of gross receipts” is defined as “the definite place of business 

that generated taxable gross receipts.” (Emphasis added.) 

Section 2.4 of the BPOL Guidelines provides that “[a]ctivities 

of a taxpayer which serve only the taxpayer’s interest, and no 

other, do not give rise to gross receipts.” BPOL Guidelines

§ 2.4. The collection activities at issue here, in my opinion, 

do not benefit the borrower and do not generate or add value to 

the product whose sale produces gross receipts for the company. 

These collection services are only a cost of doing business for 

the lending company. 

Our case law has recognized services or activities that 

enhance the product delivered to the consumer as services that 

generate gross receipts. For example, in City of Winchester v. 

American Woodmark Corp., 252 Va. 98, 471 S.E.2d 495 (1996) 

(Woodmark II), the products manufactured and sold were cabinets. 

We determined that American Woodmark’s cabinet manufacturing and 

distribution centers, as well as its service and sales offices, 

added value to its product and generated revenue. Id. at 103, 

34 
471 S.E.2d at 498. These activities enhanced American 

Woodmark’s product bought by the consumer. Id. In this case, 

the collection activities cited by the majority do not in any 

way enhance the loan or its interest and fees “purchased” by the 

consumer. Similarly, although the majority looks to the 

corporate headquarters as providing the funds for the loans, the 

record also contains evidence that those funds were generated by 

offices, such as the Richmond Branch, that originated the loans. 

Further, neither the evidence, the company nor the majority 

identifies any enhancement or value added by the regional center 

to which the Richmond Branch office reported. 

The majority’s holding also relies heavily on a distinction 

between a “receipt” and a “receivable.” Certainly, the actual 

funds generated by the loan contracts are received at locations 

other than the Richmond Branch. Applying this distinction, 

however, leads to a curious result. If the assessment of the 

BPOL tax depends on the actual receipt of the gross receipts 

there could be no assessment at the Richmond Branch because the 

payments are sent elsewhere. This has never been suggested as 

part of the law governing the application of the BPOL tax. More 

important, the receipt of the interest and fees is a collection 

activity, not a generation activity. Nevertheless, using this 

distinction, the majority concludes that such financial 

collection services are activities that “contribut[e] to the 

35 
realization of gross receipts” and, thus, are relevant 

activities for BPOL assessment purposes. This is not the 

standard that we have heretofore applied. As recited above, for 

BPOL assessment purposes, an activity must have “produc[ed]” the 

gross receipts or “added value” to the product sold. Woodmark 

II, 252 Va. at 103, 471 S.E.2d at 498. “Realization” or actual 

receipt of a company’s gross receipts has not been, and I submit 

should not be, the standard. 

The second reason I cannot join the majority relates to the 

burden of proof that must be applied in this case. Even if one 

accepts the thesis that these auxiliary activities generate some 

part of the company’s gross receipts, the company still carries 

the burden of showing that it is “impractical or impossible” to 

determine attribution of the gross receipts. Code § 58.1-

3703.1(A)(3)(b). In this case, the company itself relied upon 

an accounting and tracking system (MAPS) that it had devised for 

tracking revenue – assigning the revenue to the originating 

locations, such as the Richmond Branch, and designating the 

collection activities and other services as “cost centers.” The 

majority discounts this accounting system because the system is 

a “contract revenue-based system” and because a company witness 

testified that it would be “very difficult” to create a system 

allocating gross receipts to these other services. That a 

system might be difficult to create does not make it impractical 

36 
or impossible to create. There is no evidence that FMCC, 

sophisticated enough to create its extensive accounting system, 

MAPS, ever attempted to apportion the gross receipts based on 

its new theory of revenue generation, even though it could 

identify those locations which it now claims are not cost 

centers but revenue centers with regard to gross receipts 

originated by the Richmond Branch. Although the company clearly 

identifies which of these “cost centers” were involved with the 

Richmond Branch,2 the majority allows FMCC to use the payroll 

allocation method based on FMCC’s entire national and 

international payroll for assessing the BPOL tax due on the 

gross receipts originating at FMCC’s Richmond Branch. 

In summary, for the years 2001 through 2004, FMCC paid 

Chesterfield County $1,515,935.05 in BPOL taxes based on the 

gross receipts reported by FMCC for the Richmond Branch. In 

this lawsuit, FMCC seeks a refund of $1,414,913.05, 

approximately 93 percent of those payments, based on the 

application of the payroll apportionment method, using all 

employees on FMCC’s payroll regardless of their location or 

 2

 The offices identified by FMCC included the home office in 

Dearborn, Michigan; a regional office in Chantilly, Virginia; 

loan administration offices in Baltimore, Maryland, Nashville, 

Tennessee, and Omaha, Nebraska; a national recovery center in 

Mesa, Arizona; and a bankruptcy specialist office in Livonia, 

Michigan. Other than the home and regional office, these other 

locations were engaged in administering the loans generated by 

the Richmond Branch. 

37 
connection to the loans, fees and interest generated by the 

Richmond Branch. In my opinion, FMCC is not entitled to such a 

refund because the gross receipts at issue were generated by the 

Richmond Branch as originally reported by FMCC, and even under 

the majority’s approach of “contribut[ing] to the realization” 

of the gross receipts at issue, FMCC did not carry its burden to 

justify the use of the payroll apportionment method of 

assessment including its entire national and international 

payroll. Accordingly, I respectfully dissent. 

 

38