In my last blog, I highlighted the fact that the City of Richmond has a tax revenue shortfall. Now thanks to an advisory opinion request, a Virginia local government has shown how far it is willing to go for tax revenue. A Virginia local government (only described as a “City”) requested an advisory opinion from the state Tax Commissioner about whether loan proceeds from the Payroll Protection Program are considered gross receipts for purposes of the business, professional, occupational, and license tax (“BPOL Tax”). Thankfully, the state Tax Commissioner said that these loan proceeds are not gross receipts. It is now soapbox time. How could any Virginia local government think of taxing loan proceeds meant to help businesses continue to exist during a pandemic? Frankly, the locality should be embarrassed. While we do not know which locality is so depraved to think of taxing these loan proceeds, it simply highlights that legal counsel is necessary to have in an audit with a potentially overly aggressive auditor.
Christian Tennant is a Virginia tax attorney and former employee of the Virginia Department of Taxation. Mr. Tennant regularly speaks and writes on Virginia taxation. In his private practice he advises and represents businesses and individuals on a range of tax matters.