Business Taxes

Business Taxes

Business License

All individuals, persons, firms, or corporations who engage in or conduct any trade, profession, occupation, or calling in the City of Winchester, including individuals who receive 1099 forms or are self-employed, are required to file an application for a City of Winchester Business License. Business licenses are in addition to and do not preclude or replace the need for certain applicants to meet all requirements of any State licensing. In addition, applicants must comply with all City of Winchester and State regulations.

The Business, Professional and Occupational License (BPOL) is a tax on the privilege of conducting business and engaging in certain professions, trades, and occupations. Rates vary with business type and most licenses are based upon gross receipts. You must file and pay within 30 days of starting business and renew annually on or before March 1st. You may need more than one license depending upon nature of business activity.

Prior to issuance of a business license, registrant must obtain zoning approval, if not an out-of-jurisdiction contractor.

Helpful Resources

Business License Renewal

Contractors

All contractors must send a copy of your state certification with the business license application. If you do not have a state certification, you must sign the Contractors’ Affidavit.

All contractors must submit a copy of the Contractor's Certificate of Workers' Compensation Insurance Acknowledgement (61A).

Monthly Excise Taxes (Meals, Admissions & Lodging)

Meals

Every restaurant, caterer, convenience store, bakery, grocery delicatessen or other entity engaged in the business of selling ready-to-eat prepared food and drinks must register and collect meals tax from customers for the entire month, and file and remit payment by the 20th of the following month.

Definitions

Local Excise Meals Tax

The City of Winchester imposes a 6% tax on the purchaser of every meal served, sold, or delivered by a food establishment, vendor or a caterer located in the City whether consumed on the premises or not. (City Code Article VI Meals Tax Section 27-20)

Meal

Meal shall mean any prepared food and/or drink, including alcoholic beverages, offered or held out for sale by a food establishment for the purpose of being consumed by an individual or group of individuals at one time to satisfy the appetite and which is ready for human consumption. Consumption can be on or off the seller’s premises.

Purchaser

The purchaser shall be any person who purchases a meal.

Restaurant/Food Establishment

Any place, in the City of Winchester, in or from which food or food products are prepared, packaged, sold or distributed. A restaurant is any eating or drinking establishment-whether stationary or mobile, temporary or permanent- that is primarily engaged in the business of selling meals for which a charge is made.

Examples include: Cafes, Cafeterias, Canteen trucks or wagons, Catering Businesses, Bars, Coffee Shops, Diners, Dining Rooms, including Hotel and Motel dining rooms, Ice cream or other food product stands, Lunch counters, Private or Social Clubs, Salad bars, Snack Bars, Street Carts and Food Trucks.

Taxation shall be the locality in which sales are made (where the place of business is located) without regard to the locality of delivery or possible use by the purchaser.

Seller

Any business, organization, establishment, restaurant, or caterer selling a meal as defined in this guide, or the person operating such business.

Common Questions Regarding Meals Taxes

What is the City Excise tax on meals?

The State Code of Virginia provides for local jurisdictions to impose an excise tax on meals. As such, the City Council of Winchester has levied a 6% tax on the amount paid for meals purchased from any food establishment.

Who pays the Tax?

This tax is collected from the purchaser at the time the meal is purchased. This 6% tax is held in trust by the seller. The 20th of each month the seller remits the tax, collected for the previous month, on forms provided by the office of the Commissioner of the Revenue.

What are the responsibilities of the seller?

  1. Obtain a valid business license from the Commissioner of the Revenue.
  2. Complete an application for a Meals Tax Account with the office of the Commissioner of the Revenue.
  3. Collect 6% on all taxable sales of meals.
  4. Complete the monthly Meals Tax Return, pay and mail this by the 20th of each following month. Remittance must be on forms prescribed by the Commissioner of the Revenue.
  5. Keep complete, detailed and accurate records of gross receipts from all sales, whether taxable or not for a period of two years. The record shall include the amount charged the purchaser, the date of each purchase, and the taxes collected.

How does a Seller register to collect the tax on meals?

The first step in this process is to obtain a business license to conduct business in the City of Winchester. The business license application contains a section for meals tax registration.

The Commissioner’s office will provide a set of remittance forms along with filing instructions.

Meals Taxable Items 

The following examples, while not all-inclusive, may guide you as you determine the food and drink items that are taxable.

  • All prepared food or drink
  • Alcoholic Beverages sold with or without food
  • Soft Drinks sold with or without food
  • Individual pastries or snacks
  • Ice cream cones
  • Individual servings from salad bars or a deli counter
  • Prepared pizzas or pizza slices
  • All other prepared food or drink sold that is to be consumed at one time
  • Hot foods, sandwiches, salad bar items from a salad bar, prepackaged single-serving salads and non-factory sealed beverages

Meals Tax Exempt Items

The following are exempt and therefore not subject to Meals Tax:

  • Factory prepackaged food and factory-sealed beverages, alcoholic or non-alcoholic sold for off-premises consumption
  • Food and beverages sold in grocery stores, supermarkets or convenience stores that are not prepared food or beverages for immediate consumption
  • Factory prepackaged foods
  • Total sales of less than fifty cents
  • Food Stamp sales or W.I.C. sales
  • Theatre sales of non-alcoholic beverages, popcorn and candy
  • Factory prepackaged candy, gum, nuts, and other items of this nature
  • Factory prepackaged donuts, ice cream, crackers, chips, cookies, and items of this nature, not sold as part of a meal
  • Food sold in bulk. A bulk sale is any item that would exceed the normal portion sold for premises consumption. An example is a whole cake or a gallon of ice cream. However, a bulk sale shall not include any food or beverage that is catered or delivered by a food establishment for off-premises consumption.
    • Items sold by count:  A bulk sale consists of six or more individual non-prepackaged food items of the same category. For example, a customer who purchases five of the same items or fewer (e.g. truffles, pastries, cookies, donuts), will be subject to meals tax. If the customer purchases six or more of the same items, the sales will not be subject to meals tax. 
    • Items sold by weight: A bulk sale consists of the sale of a single items weighing more than one-half pound. For example, a customer who purchases one-quarter pound of non-prepackaged fudge or candy will be subject to meals tax, while a purchase of one pound will not.
  • Sales of Gift Certificates
  • Re-sellers must provide our office with a copy of the completed Virginia State ST-10

Filing and Payment Information

Meals tax filings to be submitted monthly with on the proper forms. Remittance shall accompany each submission. In order to be considered timely, the filing must be received in the Commissioner’s office by the 20th of each month, OR postmarked on or before the 20th by a third-party postal carrier (e.g. USPS, FedEx or UPS). We cannot use in-house printed postage marks for purpose of timely verification.

If the 20th falls on a weekend, holiday, or day that City Hall is closed for other reasons, the filing deadline is extended to the next business day.

Late filings are subject to a 10% late filing penalty, and if not paid within 30 days, an additional 10% late payment penalty. In addition, interest of 10% per year or .833% per month, begins 21st of each month after the due date and is applied to the outstanding tax and penalty.

Additional Information

  • Tips and Service Charges – Tips given by purchasers, if they are not required by the seller, are not subject to meals tax. However, if a tip is automatically assessed by the seller, this amount is subject to the 6% meals tax.
  • Meals furnished to employees as part of their compensation when no charge is made to the employee are not subject to meals tax.
  • Schools, Day Care Centers, College or Universities, Hospitals, Elderly Homes, Non-profit Educational Facilities are exempt from meals taxes.
  • Non-Profit Educational, Religious, Charitable or Benevolent Organizations selling on an occasional basis as a fundraising activity are exempt from meals taxes.
  • Vending Machine Sales are exempt from meals taxes.

Virginia State Sales Tax Questions must be directed to www.tax.virginia.gov.

Admissions

Any business that regularly or occasionally charges admission fees for amusement or entertainment – including restaurant cover charges – must register and collect admissions tax from customers for the entire month, and file and remit payment by the 20th of the following month.

Lodging

Every hotel, motel, bed & breakfast, or other lodging place that, for compensation, furnishes lodging to transients must register for transient occupancy tax. This includes operators through online rentals such as AirBNB and VRBO. Transient occupancy tax is charged to customers and must be filed and remitted by the 20th of the following month.

Uniform Statewide Transient Occupancy Tax Return

Beginning October 1, 2022, third-party accommodations intermediaries became responsible for filing and paying local lodgings taxes in Virginia. To promote uniformity among localities, the Commissioner of the Revenue Association of Virginia developed a TOT filing form that can be remitted to any locality in the Commonwealth. Its use is not limited to accommodations intermediaries, however. Anyone wishing to file their Transient Occupancy Tax manually may submit it with a check.

Short-Term Rental Quarterly

If your business is engaged in daily or short-term rental of tangible personal property, you may need to register and collect short-term rental tax from customer for the entire month, and file and remit payment each quarter. (April 20th, July 20th, October 20th, January 20th).

Business Tangible Personal Property

Tangible personal property, as defined by state code, is all personal property not otherwise classified as intangible personal property, merchants’ capital, or as short-term rental property (Code of Virginia, § 58.1-3500). In general, tangible personal property is a moveable item that is real, material, substantive, and not permanently affixed to any real property.

Business tangible property includes property owned by the business, property owned personally and used in the business on a full- or part-time basis, property received as a gift, property that is leased or rented, and property that is fully depreciated or expensed for federal tax purposes. Examples of business tangible property include furniture, fixtures, computer equipment, heavy equipment, and vehicles. In addition, machinery and tools (M&T) used in manufacturing, winery, mining, water well drilling, processing or reprocessing, radio or television broadcasting, dairy, dry cleaning, or laundry business are also subject to local taxation (Code of Virginia, § 58.1-3703).

The filing deadline is May 1.

Who Must File?

Any individual, partnership, corporation or other entity owning or using tangible property located within the City of Winchester on January 1st, which is used or available for use in any trade or business, must file a return.

What is Tangible Personal Property?

Tangible Personal Property is everything other than real estate. It includes furniture, fixtures, tools, machinery, computers, telephone equipment leasehold improvements (e.g. signs, canopies), leased equipment, hand tools, non-licensed vehicles and trailers, and any other equipment used in a business to earn income. Application software is not subject to local personal property taxes.

What is Original Cost?

Total Original Cost includes all costs incidental to acquiring and placing an asset in use, including but not limited to the purchase price, freight, labor, and installation.  Original cost means the cost paid by the original purchaser of such property from the manufacturer or dealer.

What About Failure to File or Late Filing?

Any taxpayer who is required to file a return and neglects to do so will be subject to a statutory assessment made by the City of Winchester. Failure to file by the due date will result in a 10% late filing penalty.

When Will I Receive a Bill?

Bills will be mailed in the late fall and are due December 5 of each year. 


 

Instructions

Part 1: Corrections to Taxpayer Information

Make any necessary corrections to your name, address, and Federal Identification/Social Security Number.

Part 2: Property Schedule

  • Furniture & Fixtures: Enter the total original cost (whether capitalized or expensed) of  all furniture, fixtures, equipment or computer equipment used in the business or profession.
  • Machinery & Tools: This section applies only to machinery and tools used directly in the manufacturing or mining process. If you are unsure, please contact our office.
  • If you do not own or use any property in your business, indicate "NONE." and provide a written explanation.
  • Fully depreciated items MUST be included if still owned on January 1st.
  • Reporting "SAME AS LAST YEAR" will not be accepted.

Part 3: Itemized Property Schedule

Attach a detailed itemized list with your return, using either Schedule B or a computer generated schedule. List must include description of business personal property, original cost, and year of acquisition. If using a custom schedule, please include your business name, address and account number.

Part 4: Leased Equipment Schedule

If you lease or rent any personal property from others, complete Schedule C or attach a leased equipment schedule as required by Code of Virginia §58.1-3518. List all leased equipment located in the City of Winchester whether or not you are responsible for payment of personal property tax.

Part 5: Declaration by Taxpayer and Verification

Please read and sign the declaration, including contact information. Verify you have provided all information as incomplete returns will not be accepted.

Appeals

Appeal Process for Correction of BPOL Assessment

Any taxpayer who reasonably believes that any assessment of that taxpayer, for business professional and occupational license subject to activity engaged in by the taxpayer, is incorrect may apply to the Commissioner of the Revenue for correction of such assessment.

The application for correction must contain the following:

  • Taxpayer name, any taxpayer identification number or account number, taxpayer address and daytime telephone number of the taxpayer;
  • A copy of the assessment in question;
  • A separate, concise summary of the activity in which the taxpayer engaged. The details shall include the date the taxpayer began such activity and the source(s) of all gross receipts derived from the activity;
  • A statement setting forth the basis on which the taxpayer denies liability for such license to engage in such activity;
  • A statement of the specific relief sought;
  • Any additional information used to determine the taxpayer’s claim, such as contact information for any professional upon which the taxpayer has relied as a resource for determining erroneous assessment;
  • The name of the contact person to arrange an inspection of the business premises where the activity occurred;
  • Copies of Federal and State income tax returns and all supporting schedules and forms attached thereto for the past three years;
  • A request for a conference with the Commissioner of the Revenue, should the taxpayer desire one.

It is within the discretion of the Commissioner of the Revenue to determine whether a conference will be beneficial in reviewing the application. Any conference will be informal without adhering to rules or procedure established for adversarial proceedings. The taxpayer need not have legal counsel present although if he/she elects to include any representatives or attendees, the taxpayer must notify the Commissioner of the Revenue in advance. If the taxpayer arrives at the meeting with representatives and has not provided advance notice the meeting may, at the option of the Commissioner of the Revenue, be rescheduled.

The Commissioner of the Revenue may require submission of additional information or documents as he/she deems necessary to properly evaluate the application.

Within forty-five (45) days of receipt of a complete application for correction, the Commissioner of the Revenue will thoroughly review and analyze said application and notify, in writing the taxpayer of his/her determination. Should the Commissioner of the Revenue need to extend the period of time in which to consider the application, due to its complexity, the taxpayer will be notified, in writing, of the expected date that a determination will be rendered.

It should be understood that if additional business gross receipts or separate occupations are discovered during the review process, the Commissioner of the Revenue will, under law, assess additional business, professional or occupational license even though it was not originally part of the appeals application.

The taxpayer is welcome to contact the Commissioner of the Revenue with questions or concerns during the process of the appeal. 

Within ninety (90) days from the date of the final local determination, you have the right to file an appeal to the Tax Commissioner at PO Box 2475, Richmond, Virginia 23218-2475 pursuant to Virginia Code section §58.1-3983.1