It pays to read the fine print to be sure that you understand which gross receipts (revenues) are subject to BPOL (Business, Professional and Occupational License) taxes – it may be fewer than you think. One key point is not to pay taxes on revenue that is being taxed in other states or a foreign country – that’s double taxation and companies may exclude those revenues when calculating their revenue subject to BPOL.
How do you determine what revenues to report in each county? The general rule for companies providing services, such as many government contractors, is that revenue “belongs” to a given Virginia county if the services are performed at a definite place of business within that county. Revenue for services performed at a location that is not a definite place of business will “belong” to the county with a definite place of business where the work was directed and controlled.
What about contracts where services are performed at a definite place of business in more than one county or state? If it is impractical or impossible to determine to which definite place of business the revenue should be allocated, revenue may be apportioned based on the business’s payroll apportionment.
Companies may also exclude from revenue their state retail sales and use taxes, certain revenue from the reselling of hardware/software to a federal or state government, as well as revenue from software developed within the county.
Questions? Watkins Meegan tax professionals can help you wade through the rules to ensure that you are not over-reporting revenue.