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VSCPA Tax Advisory Committee Offers Comments on JLARC BPOL Study

June 20, 2018

The VSCPA Tax Advisory Committee has sent a comment letter to the Virginia Joint Legislative Audit and Review Commission (JLARC) on a study in progress regarding a potential change to the Virginia Business, Professional and Occupational License Tax (BPOL).

JLARC provided draft worksheets to the committee on the potential change in BPOL to calculate it on a net income basis. After reviewing the worksheets, the committee recommended that JLARC use Virginia Taxable Income as a starting point for C corporations and pass-through entities (PTE) and to calculate the equivalent starting point for sole proprietors.

The VSCPA wrote: “After considerable discussion, the Committee concluded that it was necessary to include the deduction for NOLs. The study was mandated because of the perception that a business tax on gross receipts is inequitable because businesses are subject to it whether or not the business is profitable. To disallow NOLs only partially ameliorates the issue — businesses would not be subject to tax in the loss year itself, but would not be able to carry over any such losses.”

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