Woods Rogers PLC’s Tax Group Successful in Lynchburg Business License Tax Decision

On March 12, 2008, Judge Perrow of the Lynchburg Circuit Court issued a letter opinion in the matters of English Construction Company, Inc. v. City of Lynchburg and W.C. English, Inc. v. City of Lynchburg granting the taxpayers’ motions for summary judgment and holding that the City of Lynchburg cannot levy a business license tax against gross receipts of a contractor attributable to definite places of business outside of Lynchburg, even if the other jurisdiction in which the definite place of business is located does not assess a business license tax.

This decision undercuts the widespread practice of local tax officials in the Commonwealth to assess the business license tax against all of the gross receipts of a contractor based in their jurisdiction, unless the contractor could show that the gross receipts were actually taxed in another jurisdiction.

While this decision is legal precedent only in Lynchburg, contractors throughout the Commonwealth may want to (1) review their records to determine if they have paid the business license tax to their home jurisdiction based upon gross receipts from definite places of business outside of their home jurisdiction, and then (2) consider whether to challenge such assessments applying the sound rationale of Judge Perrow’s opinion.

For further information on this significant business license tax decision and its potential impact on your contracting business’s bottom line, please contact Neil V. Birkhoff, Esq., Chair of the Tax Group at Woods Rogers and counsel of record in the English decisions at 800-552-4529 or birkhoff@woodsrogers.com.