Did year-round employees supporting a customer at its county facility create a BPOL definite place of business?

Plain-English summary

Virginia said the provider's 365-day employee presence at the client's facility appeared to create a definite place of business for county BPOL purposes. The provider delivered around-the-clock infrastructure support and maintenance entirely at the client site.

It owned or leased no Virginia property and kept no phone, mail, advertising, or administrative functions there. Those were relevant office indicators, but none was individually required.

A definite place could include space obtained from another entity and generally required a regular and continuous course of dealing for at least 30 consecutive days. Employees working at the client location every day of the year satisfied the central continuous-presence concern. The provider therefore could be subject to county BPOL tax.

What this means for you

• A customer site can become your BPOL definite place of business.
• Continuous assigned employees can outweigh the absence of a lease or local phone.
• The 30-day rule is a threshold, not the only factual test.
• Review each locality where staff work regularly at client facilities.

Common questions

Q: Must the provider own or lease the site?
A: No. A location obtained from another entity can qualify.

Q: Did the absence of local property, mail, and advertising prevent BPOL nexus?
A: No.

Q: How long were employees at the site?
A: The ruling said 365 days a year.

Citations and references

• Va. Code §§ 58.1-3700.1 and 58.1-3701.
• 23 VAC 10-500-200.
• 1978-79 Op. Va. Att'y Gen. 279.
• Virginia Public Documents 97-201 (April 25, 1997) and 01-215 (December 12, 2001).

Subject

Definite place of business; Consultant at location for more than 30 consecutive days.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 11-161

Original ruling text

September 20, 2011

Re: Request for Advisory Opinion

Business, Professional and Occupational License (BPOL) Tax

Dear *:

This is in response to your letter in which you request an advisory opinion as to whether a county may assess the Business, Professional and Occupational License (BPOL) tax on an entity contracted to provide support services for engineered software, hardware and other infrastructure purchased from the Taxpayer by the client.

The local license fee and tax are imposed and administered by local officials. Virginia Code § 58.1-3701 authorizes the Department to issue advisory opinions on local license tax issues. The following opinion has been made subject to the facts presented to the Department summarized below. Any changes in these facts or the introduction of new facts may lead to a different result.

The Code of Virginia sections, regulation and public documents cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site.

FACTS

The Taxpayer provides technology products and services to clients in Virginia and throughout the United States. It performs "around the clock" infrastructure support and maintenance services to a client located in * (the County). The Taxpayer's employees are located and perform all activities at the client's facility.

The Taxpayer does not own or lease any real or tangible property in Virginia. The Taxpayer does not maintain a telephone, it does not advertise to the public, and all administrative functions are performed at the headquarters location in * (State A). The Taxpayer requests an opinion as to whether its activities within the County are sufficient to establish a definite place of business, and therefore subject the Taxpayer to BPOL filing obligations.

OPINION

Virginia Code § 58.1-3700.1 defines a "definite place of business" as "an office or a location at which occurs a regular and continuous course of dealing for thirty consecutive days or more." A definite place of business can include a location leased or otherwise obtained from another entity on a temporary or seasonal basis. Some characteristics that may help determine whether the location is a definite place of business include, but are not limited to, the following on-site activities: (1) a continuous presence; (2) having an office with a phone; (3) the reception of mail; (4) having employees; (5) record keeping; (6) and advertising or otherwise holding oneself out as engaging in business at the particular location. See Public Document (P.D.) 97-201 (4/25/1997).

Although these activities are indicative of a definite place of business, all facts and circumstances concerning the nature of a taxpayer's operations must be considered. In this case, the Taxpayer does not advertise, own business personal property, or have a telephone at its customer's location. However, the Taxpayer does maintain a regular and continuous presence at its client's location for more than 30 consecutive days.

Pursuant to Title 23 Virginia Administrative Code (VAC) 10-500-200, when a service provider performs services at a location away from its established or principal office and does not maintain a continuous presence for more that 30 consecutive days at the other location, its definite place of business remains alt the established or principal office. See Example 7 of the regulation.

In 1978-79 Op. Va. Att'y Gen 279, the Attorney General determined that a continuous and regular course of dealings at a location would seem to constitute a definite place of business in such location when employees are "more or less" permanently assigned to such a location. In addition, the Department has previously ruled on a similar issue. In P.D. 01-215 (12/12/2001), the Department found that a computer consultant whose work was performed at client locations on a regular and continuous basis in several localities could establish a definite place of business at such locations without all of the characteristics enumerated in P.D. 97-201.

The Taxpayer's employees are at the client's location in the County 365 days a year. Based on the facts presented, it would appear that the Taxpayer has a definite place of business at the client's location and may be subject to the BPOL tax in the County.

If you have questions regarding this opinion, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4711805336.D