Virginia has a unique locality‑based taxation model in which businesses are taxed by the jurisdictions in which they operate, based on gross receipts earned within those localities. This structure is administered through the Business, Professional and Occupational License (BPOL) tax.
What Is the Basis of the BPOL Tax?
Established businesses, professions, trades and occupations are assessed a license tax based on their gross receipts for the prior year. Different rules may apply for new businesses, real estate contractors and wholesale merchants.
The rate of tax varies by industry classification (business license category) and locality. While the Virginia legislature established maximum rates per license category, each locality may set its own rates within those limits. The tax is generally self‑reported and remitted to the local jurisdiction through an annual business license tax return, with filing and payment requirements varying by locality.
Who Is Subject to BPOL?
With certain limited exceptions, all businesses, including home‑based businesses, may be subject to the BPOL tax. Requirements will vary by locality, but generally:
- Businesses must register with the locality’s Commissioner of Revenue (or Tax Administration office) within 60 – 75 days of beginning operations.
- Failure to register within the required timeframe may result in a late‑filing penalty, typically around 10%.
- Statute of limitations for unfiled returns can be as long as six years.
- The BPOL license must be renewed annually, with both the filing and payment due by March 1.
What Are Common Issues or Errors?
Common issues and errors frequently seen in reporting Virginia Business License (BPOL) taxes include:
- Overlooked or misunderstood deductions.
- Improperly sourcing gross receipts to the correct locality when operations span multiple jurisdictions.
- Misclassification of business activities.
How Can Cherry Bekaert Assist?
Cherry Bekaert’s State & Local Tax team includes skilled professionals with significant experience handling BPOL compliance, refund claims and audit representation. Our advisors have assisted taxpayers across a wide range of industries and have consistently identified savings and opportunities that others may overlook. In addition, the team has extensive experience helping businesses resolve past delinquencies and successfully work with local tax authorities to bring accounts back into full compliance.
