BOARD OF SUPERVISORS BUSINESS MEETING ACTION ITEM

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1 Date of Meeting: October 21, 2015 BOARD OF SUPERVISORS BUSINESS MEETING ACTION ITEM #15i SUBJECT: ELECTION DISTRICT: Proposed Amendments to the Codified Ordinance of Loudoun County, Chapter Persons Subject to Tax; Chapter Mixed Beverage License Tax, Assessment of Tax, Payment; and Chapter Penalty for Delinquency Countywide CRITICAL ACTION DATE: October 21, 2015 CONTACTS: Robert S Wertz, Jr., Commissioner of the Revenue J Philip McAleavy, Deputy Commissioner Business Tax PURPOSE: Loudoun County Ordinance requires that businesses with a mixed beverage license from the state Alcohol Control Board obtain a mixed beverage license with the County annually by July 1. Ordinance describes the penalties for delinquency and the due date for payment. Ordinance denotes the amount of taxes due based on classification. This item recommends the annual license period be changed to a calendar year beginning January 1, 2016, with a due date for filing and tax payment of March 1. RECOMMENDATIONS: Finance/Government Services and Operations Committee (FGSOC): At its October 13, 2015 meeting, the FGSOC voted 4-0-1(Supervisor Reid absent for the vote) to recommend to the Board of Supervisors that staff be directed to advertise a public hearing on December 9, 2015 to discuss amending Chapter 856- Mixed Beverage License Tax of the Codified Ordinance of Loudoun County, to change the annual period of the tax to begin on January 1 and change the due date for filing and payment of the tax to March 1. This change would become effective December 31, In the first year, the tax period would be prorated for the period June 1 to December 31, 2016 for any entity that was assessed and paid the mixed beverage tax for the annual license period beginning July 1, Staff: Staff concurs with the recommendation to amend Chapter 856- Mixed Beverage License Tax of the Codified Ordinances of Loudoun County. BACKGROUND: Under of the Code of Virginia, the governing body of each county, city or town in the Commonwealth may assess and collect a mixed beverage license tax on any

2 Item #15i, Proposed Amendments to Chapter 856 of the Codified Ordinance Board of Supervisors Business Meeting October 21, 2015 Page 2 entity authorized by the Alcohol Control Board to manufacture, bottle or sell alcoholic beverages. (See Attachment 1) of the Code describes the local taxes that may be collected and the maximum rate for each tax. (Attachment 2) Under the current Ordinances and (Attachment 3) the annual mixed beverage license period begins July 1, and the due date for the tax is July 31. Ordinance describes the amount of tax, based on the seating capacity at tables or specific type of entity (Attachment 4). The proposed amendment to the ordinances will align the filing and due dates with the annual license filing for Business, Professional, and Occupational License (BPOL) tax, and will align with the taxable period for BPOL and Business Personal Property Tax (BPPT). ISSUES: The change from a fiscal to calendar year license period will require proration of existing accounts previously billed for the July 1, 2015 through June 30, 2016 license period. Filing and payment for the remainder of calendar year 2016 (due on March 1, 2016) will represent the prorated bill for July 1, 2016 through December 31, Mixed Beverage licenses issued in 2017 will align with BPOL and BPPT annual filings. FISCAL IMPACT: The update will involve a 50% increase in the mixed beverage taxes collected for fiscal year 2016, but no changes in the amount collected for subsequent years. Based on the mixed beverage license renewals mailed for fiscal year 2016, the taxes collected will increase by approximately $26,250. ALTERNATIVES: 1. Recommend the ordinance amendment proposed by the Commissioner of the Revenue. 2. Do not recommend the ordinance amendment proposed by the Commissioner of the Revenue. DRAFT MOTIONS: 1. I move that the Board of Supervisors approve the recommended changes to ordinances , and , as shown in attachments 3 and 4 of the Action Item for the October 21, 2015, Board of Supervisors Business Meeting. OR 2. I move for an alternate motion. ATTACHMENTS: 1. Code of Virginia, , Local licenses 2. Code of Virginia, , Taxes on local licenses 3. Loudoun County Ordinances, and Loudoun County Ordinance,

3 Local licenses. A. In addition to the state licenses provided for in this chapter, the governing body of each county, city or town in the Commonwealth may provide by ordinance for the issuance of county, city or town licenses and to charge and collect license taxes therefor, to persons licensed by the Board to manufacture, bottle or sell alcoholic beverages within such county, city or town, except for temporary licenses authorized by Subject to , the governing body of a county, city or town may classify licenses and graduate the license taxes therefor in the manner it deems proper. B. No county, city or town shall issue a local license to any person who does not hold or secure simultaneously the proper state license. If any person holds any local license without at the same time holding the proper state license, the local license, during the period when such person does not hold the proper state license, shall confer no privileges under the provisions of this title. Code 1950, 4-38; 1952, c. 535; 1970, cc. 627, 734; 1976, c. 496; 1978, c. 190; 1982, cc. 66, 527; 1984, c. 180; 1990, c. 707; 1992, c. 350; 1993, c ATTACHMENT 1 A1

4 Taxes on local licenses. A. In addition to the state license taxes, the annual local license taxes which may be collected shall not exceed the following sums: 1. Alcoholic beverages. -- For each: a. Distiller's license, if more than 5,000 gallons but not more than 36,000 gallons manufactured during such year, $750; if more than 36,000 gallons manufactured during such year, $1,000; and no local license shall be required for any person who manufactures not more than 5,000 gallons of alcohol or spirits, or both, during such license year; b. Fruit distiller's license, $1,500; c. Bed and breakfast establishment license, $40; d. Museum license, $10; e. Tasting license, $5 per license granted; f. Equine sporting event license, $10; g. Day spa license, $20; h. Motor car sporting event facility license, $10; i. Meal-assembly kitchen license, $20; j. Canal boat operator license, $20; k. Annual arts venue event license, $20; and l. Art instruction studio license, $ Beer. -- For each: a. Brewery license, if not more than 500 barrels of beer manufactured during the year in which the license is granted, $250, and if more than 500 barrels of beer manufactured during the year in which the license is granted, $1,000; b. Bottler's license, $500; c. Wholesale beer license, in a city, $250, and in a county or town, $75; ATTACHMENT 2 A2

5 d. Retail on-premises beer license for a hotel, restaurant or club and for each retail off-premises beer license in a city, $100, and in a county or town, $25; and e. Beer shipper's license, $ Wine. -- For each: a. Winery license, $50; b. Wholesale wine license, $50; c. Farm winery license, $50; and d. Wine shipper's license, $ Wine and beer. -- For each: a. Retail on-premises wine and beer license for a hotel, restaurant or club; and for each retail offpremises wine and beer license, including each gift shop, gourmet shop and convenience grocery store license, in a city, $150, and in a county or town, $37.50; b. Hospital license, $10; c. Banquet license, $5 for each license granted, except for banquet licenses granted by the Board pursuant to subsection A of for events occurring on more than one day, which shall be $20 per license; d. Gourmet brewing shop license, $150; e. Wine and beer shipper's license, $10; f. Annual banquet license, $15; and g. Gourmet oyster house license, in a city, $150, and in a county or town, $ Mixed beverages. -- For each: a. Mixed beverage restaurant license, including restaurants located on the premises of and operated by hotels or motels, or other persons: (i) With a seating capacity at tables for up to 100 persons, $200; (ii) With a seating capacity at tables for more than 100 but not more than 150 persons, $350; and (iii) With a seating capacity at tables for more than 150 persons, $500. ATTACHMENT 2 A3

6 b. Private, nonprofit club operating a restaurant located on the premises of such club, $350; c. Mixed beverage caterer's license, $500; d. Mixed beverage limited caterer's license, $100; e. Mixed beverage special events licenses, $10 for each day of each event; f. Mixed beverage club events licenses, $10 for each day of each event; g. Annual mixed beverage amphitheater license, $300; h. Annual mixed beverage motor sports race track license, $300; i. Annual mixed beverage banquet license, $75; j. Limited mixed beverage restaurant license: (i) With a seating capacity at tables for up to 100 persons, $100; (ii) With a seating capacity at tables for more than 100 but not more than 150 persons, $250; (iii) With a seating capacity at tables for more than 150 persons, $400; k. Annual mixed beverage motor sports facility license, $300; and l. Annual mixed beverage performing arts facility license, $300. B. Common carriers. -- No local license tax shall be either charged or collected for the privilege of selling alcoholic beverages in (i) passenger trains, boats or airplanes and (ii) rooms designated by the Board of establishments of air carriers of passengers at airports in the Commonwealth for on-premises consumption only. C. Merchants' and restaurants' license taxes. -- The governing body of each county, city or town in the Commonwealth, in imposing local wholesale merchants' license taxes measured by purchases, local retail merchants' license taxes measured by sales, and local restaurant license taxes measured by sales, may include alcoholic beverages in the base for measuring such local license taxes the same as if the alcoholic beverages were nonalcoholic. No local alcoholic beverage license authorized by this chapter shall exempt any licensee from any local merchants' or local restaurant license tax, but such local merchants' and local restaurant license taxes may be in addition to the local alcoholic beverage license taxes authorized by this chapter. ATTACHMENT 2 A4

7 ASSESSMENT OF TAX; PAYMENT. The tax imposed by this chapter shall be assessed for all or any portion of a calendar year during which the licensee may sell mixed alcoholic beverages. The tax shall become due and payable on or before July 31 March 1 of each license tax year. In all cases where the person has received from the Alcoholic Beverage Control Board a mixed beverage license for establishments located within the County, upon which a license tax is imposed under this chapter, after July 1March 1 of any license tax year, such license tax shall become due immediately upon such person's receiving such mixed beverage license, and payment shall be made within thirty days of the time such person received such mixed beverage license PENALTY FOR DELINQUENCY. There shall be a penalty of ten percent of the sum of the tax added to all mixed beverage license taxes imposed under this chapter that are unpaid after the due date, i.e. July 31March 1 of each license year. Any such penalty when so assessed shall become a part of the tax. In the case of any person who is in his first license tax year and who has received a mixed beverage license after July 1March 1 of any taxable year, the same penalty shall be added to all taxes imposed under this chapter that are unpaid for more than thirty days after such person has received a mixed beverage license. (Ord Passed ) ATTACHMENT 3 A5

8 PERSONS SUBJECT TO TAX. Persons holding mixed beverage licenses for establishments located within the County and not located within municipalities having a similar tax to that hereby assessed are hereby assessed with an annual license tax upon the sale of mixed alcoholic beverages as defined in Chapter 1 of Title 4.1 of the Code of Virginia of 1950, as amended, in the following sums: (a) Persons operating restaurants, including restaurants located on premises of and operated by hotels or motels, shall be assessed the following: (1) Two hundred dollars ($200.00) per year for each restaurant with a seating capacity at tables for fifty to 100 persons; (2) Three hundred fifty dollars ($350.00) per year for each restaurant with a seating capacity at tables for more than 100 but not more than 150 persons; and (3) Five hundred dollars ($500.00) per year for each restaurant with a seating capacity at tables for more than 150 persons. (b) A private nonprofit club operating a restaurant located on the premises of such club shall be assessed three hundred fifty dollars ($350.00) per year. (c) For the license tax year beginning January 1, 2016 and ending December 31, 2016, persons operating restaurants, including restaurants located on premises of and operated by hotels or motels who have already been assessed and paid a license fee for the period beginning July 1, 2015, shall be assessed the following additional license fee: (1) One hundred dollars ($100.00) for license year 2016 for each restaurant with a seating capacity at tables for fifty to 100 persons; (2) One hundred seventy five dollars ($175.00) for license year 2016 for each restaurant with a seating capacity at tables for more than 100 but not more than 150 persons; and (3) Two hundred fifty dollars ($250) for license year 2016 for each restaurant with a seating capacity at tables of more than 150 persons. (d) A private nonprofit club operating a restaurant located on the premises of such club shall be assessed ($175.00) for license year ATTACHMENT 4 A6