The Albemarle County Board of Supervisors will hold two public hearings on Wednesday on proposed changes to the county’s tax codes, including raising the threshold for requiring business license fees and whether all-terrain vehicles and off-road motorcycles should be exempt from personal property taxation.
One of the proposed changes would exempt business owners who generate less than $25,000 in gross receipts per year from paying business license fees.
Currently, businesses with gross receipts greater than $5,000 but less than $100,000 are subject to a flat $50 license fee.
Supervisors voted in July 2016 to require out-of-county contractors who generate between $25,000 and $100,000 in gross receipts in Albemarle to pay a flat $50 license fee. The threshold had originally been $100,000 in gross receipts.
County Finance Director Betty Burrell said that last year’s change spurred this new proposal.
“When we looked at the code as it pertained to the out-of-county contractors and we had that amendment in front of the board last year, we realized, between that time and when we introduced this, that to really make it fair and equitable with the out-of-county contractors, that the in-county businesses should have the same threshold,” Burrell said.
Business with gross receipts of $100,000 or more are subject to a license tax, either as a flat amount or as a rate based on gross receipts, depending on the type of business.
Supervisor Norman Dill said he supports the threshold increase.
“I think the difference between $5,000 and $25,000 is, for many people, a difference between testing a business idea and really having a business,” he said.
He used examples of people making a food product that they would like to sell at the farmers market — or somebody who’s trying to see if they want to get in the antique business by buying and selling $5,000 worth of antiques — as businesses that could grow.
“It’s just enough to get their feet wet, but we want to encourage those kind of people to turn it into more of a real business that’s going to be something that’s a significant part of their income, and so $25,000 is much more of a reasonable threshold,” he said.
“While the Free Enterprise Forum believes the [business, professional and occupational licenses] gross receipts tax is anti-business and should be repealed completely, we applaud Albemarle’s effort to make it less onerous on small business,” said Neil Williamson, President of the Free Enterprise Forum. “These changes will assist businesses at their most vulnerable point as they are ramping up. Increasing the threshold will help startups get their legs under them before they are impacted by the BPOL requirements.”
According to county documents, Albemarle would lose about $62,000 in revenue if this proposed change was made, as there were 1,241 businesses with gross receipts of up to $25,000, based on 2017 filings.
An additional proposed change would exempt all-terrain vehicles and off-road motorcycles from personal property taxation.
“The information that we received was from voluntary registrants that created an inequity and, obviously, our goal is to tax fairly and equitably,” Burrell said.
Information about taxable tangible personal property comes from the Department of Motor Vehicles. Currently, the DMV does not require registration of all-terrain vehicles and off-road motorcycles, so there was voluntary registration by some owners. If approved, county staff members recommend that take effect on Jan. 1.
According to county documents, this proposal, if approved, would decrease county revenues by approximately $25,000.
Two other proposed changes would bring Albemarle into agreement with state code.
One proposal would allow businesses that cease operating in one year but attempt to settle existing, outstanding account balances in the next year to pay a license tax based on the estimate of the current year’s gross receipts instead of the previous year’s gross receipts. If passed by the board, this would take effect immediately.
The other proposed change would raise the original cost threshold under which a taxpayer may provide an aggregate estimate of the total cost of all such business tangible personal property from $250 to $500. This is a requirement by state code and will be effective immediately for the 2018 tax year.
Another change is an administrative correction that, if adopted, would go into effect immediately and would delete the “travel bureau or tour agent” reference from the retailer license listing because it is already listed as a “repair, personal, business and amusement” service.
“As the opportunities present themselves to further refine our tax code in a manner that creates fair and equitable taxation, we look for those and we try to offer those as recommendations to the board,” Burrell said about the overall changes.
The public hearings will begin at 6 p.m. in the Lane Auditorium of the Albemarle County Office Building.