Virginia Law

A. The uniform ordinance provisions establish two thresholds; one for license fees and another for license taxes. The following chart gives an overview of the thresholds' application to the exemption based on gross receipts and the limitation on the license fee based on a locality's population:

B. The thresholds indicate that, except as specifically provided in § 58.1-3706 of the Code of Virginia and except for the fee authorized in § 58.1-3703 of the Code of Virginia, no local license tax imposed pursuant to the provisions of Chapter 37 (§ 58.1-3700 et seq.) of Title 58.1 of the Code of Virginia, except those specified in §§ 58.1-3712, 58.1-3712.1 and 58.1-3713, or any other provision of Title 58.1 of the Code of Virginia or any charter, shall be imposed on any person whose gross receipts from a business, profession or occupation subject to licensure are less than:

1. $100,000 in any locality with a population greater than 50,000; or

2. $50,000 in any locality with a population of 25,000 but no more than 50,000.

The license tax = equals $0 if the threshold is not met. Some localities may be grandfathered with respect to applicable license tax rates once thresholds have been met. See Appendix D.

C. Any business with gross receipts of more than $100,000, or $50,000, as applicable, may be subject to the tax at a rate not to exceed the rate set forth for the classifications listed:

1. For contracting, and persons constructing for their own account for sale, 16 cents per $100 of gross receipts;

2. For retail sales, 20 cents per $100 of gross receipts;

3. For financial, real estate and professional services, 58 cents per $100 of gross receipts; and

4. For repair, personal and business services, and all other businesses and occupations not specifically listed or excepted in § 58.1-3706 of the Code of Virginia, 36 cents per $100 of gross receipts.

D. Additionally, § 58.1-3703 A of the Code of Virginia provides that no license tax may be assessed on any amount of gross receipts of a business upon which a license fee is charged.

E. It is within the discretion of localities to impose flat license taxes, in addition to or in lieu of the license fee, however, a locality cannot fashion a flat tax that violates the threshold or the rate caps set in § 58.1-3706 of the Code of Virginia.

F. The tax rates and rate thresholds for license taxes as indicated in § 58.1-3706 of the Code of Virginia do not apply to those items regarding taxation on the severance of coal, gas or oil as specified in §§ 58.1-3712, 58.1-3712.1 and 58.1-3713 of the Code of Virginia, or any other provision in Chapter 37 (§ 58.1-3700 et seq.) of Title 58.1 of the Code of Virginia where a special taxing provision exists; for example, those taxes assessed upon the following taxpayers: (i) wholesalers, governed by § 58.1-3716 of the Code of Virginia; (ii) public service companies, which are governed by § 58.1-3731 of the Code of Virginia; (iii) carnivals, circuses and speedways, which are governed by § 58.1-3728 of the Code of Virginia; (iv) fortune-tellers, which are governed by § 58.1-3726 of the Code of Virginia; (v) massage parlors; (vi) itinerant merchants or peddlers, which are governed by § 58.1-3717 of the Code of Virginia; (vii) permanent coliseums, arenas, or auditoriums having a maximum capacity in excess of 10,000 persons and open to the public, which are governed by § 58.1-3729 of the Code of Virginia; (viii) savings institutions and credit unions, which are governed by § 58.1-3730 of the Code of Virginia; (ix) photographers, which are governed by § 58.1-3727 of the Code of Virginia; and (x) direct sellers, which are governed by § 58.1-3719.1 of the Code of Virginia.

G. The rate limitations and thresholds set forth in § 58.1-3706 of the Code of Virginia regarding license taxes do not apply to the license fee, authorized in § 58.1-3703 of the Code of Virginia. The license fee is subject to separate thresholds, as follows: localities with populations of less than 25,000 may assess businesses a license fee not to exceed $30. Localities with populations of 25,000 or more may assess businesses a license fee not to exceed $50.00. For purposes of the license fee threshold, population may be based on the most current final population estimates of the Weldon Cooper Center for Public Service of the University of Virginia. A locality may impose a fee for issuing a BPOL license upon all businesses for each licensable privilege in which they engage. Businesses paying a BPOL tax on other than a gross receipts basis or paying a flat BPOL tax are also subject to the license fee.

H. Additionally, § 58.1-3703.1 A 1 of the Code of Virginia provides that any locality with a population greater than 50,000 may waive the license requirements provided for in that section for businesses with gross receipts of less than $100,000.00.

I. Additionally, § 58.1-3706 E of the Code of Virginia provides that in any case in which the Department of Mines, Minerals and Energy (DMME) determines that the weekly U.S. Retail Gasoline price (regular grade) for PADD 1C (Petroleum Administration for Defense District - Lower Atlantic Region) has increased by 20% or greater in any one-week period over the immediately preceding one-week period and does not fall below the increased rate for at least 28 consecutive days immediately following the week of such increase, then, notwithstanding any tax rate on retailers imposed by the local ordinance, the gross receipts taxes on fuel sales of a gas retailer made in the following license year shall not exceed 110% of the gross receipts taxes on fuel sales made by such retailer in the license year of such increase (See 23VAC10-500-100). For license years beginning on or after January 1, 2006, every gas retailer shall maintain separate records for fuel sales and nonfuel sales and shall make such records available upon request by the local tax official. The provisions of this subsection shall not apply to any person or entity (i) not conducting business as a gas retailer in the county, city, or town for the entire license year immediately preceding the license year of such increase or (ii) that was subject to a license fee in the county, city, or town pursuant to § 58.1-3703 of the Code of Virginia for the license year immediately preceding the license year of such increase. The DMME shall determine annually if such increase has occurred and remained in effect for such 28-day period. The DMME shall report its findings concerning gasoline price increases pursuant to this subsection no later than January 30 of each year to the Virginia Petroleum, Convenience and Grocery Association; the Virginia Municipal League; and the Virginia Association of Counties.