Virginia's Burdensome BPOL Tax Remains Active

Date: March 03, 2015

After more than 200 years, Virginia business owners are still paying a price for a business license.

A centuries-old business tax is undergoing review in Virginia as several proposals for exemptions and deductions pop up across the state.

The business, professional and occupational license (BPOL) tax has been an unpopular part of setting up shop in Virginia for years. Its origins date back to the War of 1812, when the tax was established as a means to pay off Virginia’s war debts.

One of the biggest issues businesses have with the BPOL tax today is that the percentage is based on gross receipts, not profit.

“You could have a business that deals in high commodities, or you’ve had a lot of expenses that year but at the end of the year, you’re still going to have to pay this tax on your gross receipts,” NFIB Virginia State Director Nicole Riley explains.

Also referred to as a gross receipts tax, BPOL is a complicated tax because localities have the right to calculate, impose and collect it individually. As one of only five states with a remaining BPOL tax, Virginia small businesses are ready for repeal.

BPOL Burdens Business Owners

Some small business owners have come to view the tax as a charge for operating in the state. Instead of being rewarded for creating jobs in Virginia, business owners feel punished by the tax, and lawmakers fear more established companies could move to states where taxes are lower.

“It’s just a bad business tax,” says Riley. “It’s a really egregious tax on businesses, particularly small businesses.”

Riley adds that the tax is particularly burdensome to new businesses and startups, many of which don’t turn a profit for the first few years they are in business.

In 2013, all 39 cities, 49 counties (out of 95) and 99 towns of the Commonwealth of Virginia imposed BPOL taxes, according to the Weldon Cooper Center for Public Service.

The Fight to Repeal

Repealing the outdated tax is complicated. So far, localities have been given the authorization by the state to limit the BPOL tax to boost economic growth in three ways: by enacting exemptions for new businesses for the first two years they are in business in that locality; by providing exemptions for businesses that did not make a profit the previous year; and by changing the way in which that locality calculates and collects the BPOL tax by basing the percentage off of income instead of gross receipts.

“It’s a difficult fight because so many localities rely on the funding,” says Riley. “What we have been able to accomplish over the past couple of years is to chip away at it.”

However, Riley says more exemptions won’t entirely lift the burden of the BPOL tax.


Related Content: Small Business News | Virginia

Subscribe For Free News And Tips

Enter your email to get FREE small business insights. Learn more

Get to know NFIB

NFIB is a member-driven organization advocating on behalf of small and independent businesses nationwide.

Learn More

Or call us today
1-800-634-2669

© 2001 - 2024 National Federation of Independent Business. All Rights Reserved. Terms and Conditions | Privacy