AGENDA DATE: 6/1/2016
TITLE:
Title
Business License Ordinance Amendments.
BODY
SUBJECT/PROPOSAL/REQUEST: Schedule a Public Hearing to Consider Proposed Business License Ordinance Amendments
ITEM TYPE: Consent Action Item
STAFF CONTACT(S): Foley, Letteri, Kamptner, Herrick, Burrell, Lamb
PRESENTER (S): N/A
LEGAL REVIEW: Yes
REVIEWED BY: Thomas C. Foley
BACKGROUND: Upon review of the County’s business license ordinance, the Finance Department is recommending updates and improvements to seven sections of Chapter 8, Licenses, of the Albemarle County Code. These proposed revisions are intended both to improve the County’s collection practices and to bring the County Code into compliance with recent changes in state law.
STRATEGIC PLAN: Goal 4: Economic Prosperity -- Foster an environment that stimulates diversified job creation, capital investments, and tax revenues that support community goals
DISCUSSION: The proposed regulations attached would revise seven sections of Chapter 8 (Licenses) of the Albemarle County Code. Many of the proposed revisions are needed to stay current with recent changes to state law.
• Sec. 8-402 -- BPOL License Fee -- due date -- Requires payment of business, professional, and occupational license (BPOL) tax with the application in the case of any license not based on gross receipts, in conformance with Virginia Code § 58.1-3703.1(A)(2)(B).
• Sec. 8-403 - BPOL License Fee - proration -- Repeals the proration of license taxes based on a flat rate for beginning businesses. Proration is not required under Virginia Code § 58.1-3710.
• Sec. 8-406 - BPOL Penalty - Allows a 10% penalty for the failure to file a business license application. The proposed ordinance language tracks the applicable enabling language of Virginia Code § 58.1-3703.1(A)(2)(d).
• Sec. 8-502 - BPOL Penalty - Deletes the 50% additional penalty for the fraudulent or evasive failure to obtain a business license. The proposed ordinance would still maximize allowable collections under Virginia Code § 58.1-3703.1(A)(4)(b).
• Sec. 8-600(E) - Removes the allowed deduction for alcoholic beverages flat tax from the BPOL tax on retail gross receipts. This is a system driven change. The current system does not have the capability to allow for this deduction.
• Sec. 8-603(C) - BPOL -- threshold for out-of-County contractors -- Lowers from $100,000 to $25,000 the minimum gross receipts threshold over which out-of-County contractors must submit to County BPOL taxes, as enabled in Virginia Code § 58.1-3715(A). This proposed amendment would allow the County to collect BPOL revenue that would otherwise go to other localities.
• Sec. 8-620 - BPOL Rate -- Federal Research and Development Contractors -- Adds a new classification for federal research and development contractors to the BPOL ordinance: Virginia Code § 58.1-3706(D) provides a special (low) $0.03 BPOL tax rate for certain principal or prime contractors receiving identifiable federal appropriations for research and development services. Though County staff is already correctly assessing these businesses in accordance with state law, incorporating this section into the County Code would make it less likely to be overlooked in the future.
BUDGET IMPACT: While the budgetary impact of these proposed amendments is difficult to predict with any certainty, the following are staff’s best estimates of the impact of each proposal:
• License Fee due date (§ 8-402 ) - no loss or gain
• Proration of license taxes based on a flat fee rate for beginning businesses (§ 8-403 ) - approximately $1,000 gain
• BPOL Penalty (§ 8-406) - $150,000 one-time gain
• Deletes the 50% additional BPOL penalty (§ 8-502) - no loss or gain
• Deduction for alcoholic beverages flat tax (§ 8-600(E))- no loss or gain
• Minimum gross receipts threshold for out of county contractors (§ 8-603(C)) - $10,250 gain
• Federal Research & Development Classification (§ 8-620) - No effect
RECOMMENDATION:
Recommendation
Staff recommends that the Board schedule and advertise a public hearing for July 6, 2016 to consider the attached proposed ordinances.
ATTACHMENTS:
A - Proposed Ordinance - Chapter 8 (Licenses)