Virginia Administrative Code › Title 23 - TAXATION › Agency 10 - DEPARTMENT OF TAXATION › Chapter 500 - BUSINESS, PROFESSIONAL AND OCCUPATIONAL LICENSE TAX REGULATIONS › Section 23VAC10-500-160 - Situs of gross receipts for a contractor

Current through Register Vol. 40, No. 24, July 15, 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.