Ezel / Tax Rulings / VA
VA P.D. 12-167 BPOL Tax 2012-10-23

Was an individual paid to provide foster-care services from a home necessarily engaged in a business subject to county BPOL tax?

Short answer: The ruling did not decide that the individual was engaged in a taxable business. The facts showed that a tax-exempt foster-care provider paid the individual to perform services at a definite place of business in the county, but Virginia said the record was insufficient to determine whether the activity met the BPOL definition of a continuous and regular course of dealing for livelihood or profit. The county had to make that factual determination.

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This page answers the general question as of 2012. Ezel answers yours, under current Virginia tax law, with citations.

Currency note: this ruling is from 2012
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Virginia Tax Commissioner advisory opinion on a locally administered county BPOL question. It did not determine that the subcontractor was taxable; the county had to decide whether the actual activities met the statutory definition of a business. Contract terms, regularity, profit purpose, public representations, tax filings, and later local or state law can change the result. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

Virginia did not decide whether the paid in-home foster-care activity was a licensable business. A foster-care provider contracted with the government, was exempt from federal income tax under IRC § 131, and paid an individual to perform foster-care services from a definite place of business in the county.

BPOL applies to the privilege of doing business within a locality. The statute defined a business as a continuous and regular course of dealing requiring a person's time, attention, and labor for livelihood or profit, rather than an irregular or isolated transaction. Advertising or filing documents required only of a trade or business created rebuttable presumptions.

The Department found the supplied facts insufficient to decide whether the individual's foster-care activities met that definition. The county had to make the factual determination.

Common questions

Q: Did the prime foster-care provider's federal tax treatment settle the subcontractor's BPOL status?
A: No. The ruling focused on whether the individual's own activities met Virginia's definition of a business.

Q: What facts can suggest that a person is operating a business?
A: The statute cited advertising or otherwise holding oneself out to the public and filing trade-or-business tax documents as rebuttable indicators.

Q: Did the advisory opinion order the county to assess or cancel tax?
A: No. It left the business-status determination to the county.

Citations and references

  • Va. Code §§ 58.1-3701 and 58.1-3700.1.
  • IRC § 131.

Subject

Taxpayer performs subcontracts foster care services for a fee

Source

Original ruling text

October 23, 2012

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 locality may assess the Business, Professional and Occupational License (BPOL) tax on an individual that provides care for one or more mentally and emotionally disabled individuals within his home and is paid by an entity that is not subject to income tax. I apologize for the delay in responding to your letter.

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 change in facts or the introduction of new facts may lead to a different result.

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

FACTS

A foster care provider has a contract with the government for providing foster care services to mentally and emotionally disabled individuals. The provider is exempt from federal income tax under Internal Revenue Code (IRC) § 131. The provider subcontracts foster care services and compensates an individual (the "Taxpayer") who performs the services at a definite place of business in * (the "County"). The County requests an opinion as to whether the Taxpayer is subject to the BPOL tax.

OPINION

The BPOL tax is a tax on the privilege of doing business within a locality. The term "business" is defined in Va. Code § 58.1-3700.1 as:

a course of dealing which requires the time, attention and labor of the person so engaged for the purpose of earning a livelihood or profit. It implies a continuous and regular course of dealing, rather than an irregular or isolated transaction . . . The following acts shall create a rebuttable presumption that a person is engaged in a business: (i) advertising or otherwise holding oneself out to the public as being engaged in a particular business or (ii) filing tax returns, schedules and documents that are required only of persons engaged in a trade or business.

Based on the information provided, it is unclear whether the Taxpayer is engaged in a licensable business. The County would need to determine whether the Taxpayer's foster care activities meet the definition of a business in Va. Code § 58.1-3700.1.

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

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4815053916.B

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