Chap. 249.—An ACT to amend and re-enact section 188 of the Tax Code of Vir
ginia relating to licenses of merchants. [S B 77

Approved March 23, 1932

1. Be it enacted by the general assembly of Virginia, That sectior
one hundred and eighty-eight of the Tax Code of Virginia, be amendec
and re-enacted so as to read as follows:

Section 188. Merchants.—Every person, firm and corporation en-
gaged in the business of a merchant shail pay a license tax for the
privilege of doing business in this State to be graduated by the amount
of purchases made by him or it during the next preceding year, and all
goods, wares and merchandise manufactured by such merchant anc
sold or offered for sale, in this State, as merchandise, shall be con-
sidered as purchases within the meaning of this section; provided, that
this section shall not be construed as applying to manufacturers taxed
on capital by this State, who offer for sale at the place of manu-
facture, goods, wares and merchandise manufactured by them.

For every license to a merchant, firm, company, or corporation
engaged in the business of a merchant, the amount to be paid shall be
graduated as follows:

If the amount of purchases shall not exceed one thousand dollars,
the amount shall be ten dollars, when purchases exceed one thousand
dollars, but do not exceed two thousand dollars, the amount shall be
twenty dollars; and when purchases exceed two thousand dollars, but
do not exceed one hundred thousand dollars, the amount shall be
twenty dollars for the first two thousand and twenty cents on the one
hundred dollars on the excess from two thousand dollars to one hun-
dred thousand dollars, and when purchases exceed one hundred thou-
sand dollars, the amount shall be twenty dollars on the first two thou-
sand dollars, twentv cents on the one hundred dollars from two thou-
sand dolars to one hundred thousand dollars. and ten cents on the one
hundred dollars upon all in excess of one hundred thousand dollars.

To ascertain the amount of purchases it shall be the duty of such
merchant, on the first day of January of each year, or within ten days
thereafter, to make report in writing, under oath, to the commissioner
of the revenue for the county or city in which he was licensed, showing
purchases as herein defined, during the next preceding twelve months.
The form of the report required by this section shall be prepared by
the department of taxation, and furnished to each commissioner of
the revenue, and by him distributed to each merchant.

For the purpose of ascertaining the tax to be paid by a merchant
beginning business, his purchases shall be considered to be the amount
of goods, wares and merchandise bought to commence business with,
including goods, wares and merchandise manufactured by him to be
offered for sale at the place at which he conducts his business as a
merchant, provided such place is not the place of manufacture, also
including an estimate of purchases which the merchant will make be-
tween the date of the issuance of his license and the thirty-first of
December following, and including an estimate of the amount of
goods, wares and merchandise manufactured by him to be offered
for sale at the place at which he conducts his business as a merchant,
provided such place is not the place of manufacture.

If, after the close of the year for which the license is issued, the
merchant should elect not to renew it, but desires the privilege to sell
whatever remnant or purchase he may have on hand at the time, it may
be lawful for him to do so upon the payment of a license upon ‘said
remnant of merchandise to be regarded for purposes of revenue as
purchases. :

A merchant’s license, the tax on which would be fifty dollars or
more were it issued for the period of one year, may be issued quarterly,
as provided in section one hundred and thirty-five; but inasmuch as
every merchant’s license tax is measured by the purchases, no question
of proration can arise. ,

Each merchant shall keep his invoices and a record with ink of all
purchases, and from whom made, which record shall be open to
inspection and examination by the tax officers of the State, and the
report of purchases made by the merchant shall be taken from that
record; and he or his agents shall make oath to the correctness of the
report that the same is in accordance with said record, and that the
record has been accurately kept. It shall be the duty of the commis-
sioner of the revenue to examine the record of purchases required to
be kept by the merchant and to verify the merchant’s report of pur-
chases by that record.

Every merchant who does not keep the record herein provided for
shall be assessed with and pay a penalty of twenty-five dollars, in addi-
tion to such tax as may be ascertained as hereinafter provided. Every
merchant who does not keep the record herein provided for shall be
reported by the commissioner of the revenue to the examiner of rec-
ords, whose duty it shall be to ascertain the correct purchases of such
merchant by summoning the merchant before him and by such in-
vestigation and examination as he deems proper to make, to correctly
determine the true and correct purchases of such merchant, and when
this fact has been ascertained the examiner of records shall direct the
commissioner of revenue to assess such merchant with the State
license tax provided by law upon the purchases so ascertained, in addi-
tion to the penalty of twenty-five dollars hereinbefore provided for.
Such penalty shall in every such case be added by the commissioner
of the revenue to the license tax, and shall become a part thereof, and
shall be collected in the same manner as license taxes are collected:
provided, however, that any merchant who shall continue to violate
the law requiring such record to be kept, after receiving written notice
from the commissioner of the revenue or the examiner of records, shall
be subject to a further penalty of twenty-five dollars for each month
such violation of the law shall continue after the giving of such notice,
which penalty shall be assessed and collected in the same manner as
taxes are assessed and collected. ,

For the purpose of ascertaining the full, complete and correct pur-
chases of a merchant in any case where a full, complete and correct
report has not been made to the commissioner of the revenue, in the
opinion of the examiner of records, it shall be the duty of the examiner
of records to make such investigation and examination for that pur-
pose as may be necessary; and the examiner of records may summon
the merchant and any person whom he believes, or has reason to be-
lieve, can furnish information relative to the purchases of any mer-
chant; and any merchant or person so summoned failing to appear and
give testimony under oath shall be liable to a fine of not less than ten
dollars and not more than one hundred dollars, and each day’s refusal
or failure to furnish the information or to testify shall constitute a
separate offense; such fine may be recovered by presentment, indict-
ment or information to be prosecuted by the attorney for the Com-
monwealth in the circuit court of a county or in the corporation court
of a city, or in a circuit court of a city not having a corporation court.
When the full, complete and correct purchases of the merchant have
been ascertained in the manner herein provided it shall be the duty of
the examiner of records to make a report (upon forms prescribed and
furnished by the department of taxation) to the commissioner of the
revenue and the department of taxation. The commissioner of the
revenue shall notify the merchants whose purchases have been increased
and the commissioner shall, upon the blank form prescribed and fur-
nished by the department of taxation assess the State license tax pre-
scribed by law upon such increase of purchases and he shall deliver a
copy of the assessment to the county or city treasurer, a copy to the
department of taxation and shall retain in his office a copy. It shall
thereupon be the duty of the merchant to pay, and the duty of the treas-
urer to collect, the State license tax so assessed, the treasurer receipting
for said tax, and he shall deliver the receipt to the merchant, which
receipt, together with the license already issued the merchant by the
commissioner of the revenue, shall constitute the merchant’s license.
A merchant who fails or refuses to pay the State license tax assessed on
increased purchases within fifteen days from the receipt of the notice
required to be furnished him shall pay in addition to the State license
tax a penalty of twenty per centum thereon, and it shall be the duty of
the treasurer to immediately levy and distrain upon any property of
the merchant to collect the tax and penalty.

The sums imposed under and by virtue of this section shall be in
lieu of all taxes for State purposes on the capital actually employed
by said merchant or mercantile firm or corporation in said business,
except the registration fee and franchise tax, and except that such
merchant shall not be exempt from the payment of county, district, and
road or other levies on the amount of capital on hand on the first day
of January of each year and may be required to pay the usual city,
county, district, and road or other levies thereon, notwithstanding
this section.

Merchants’ capital, which is by law segregated for local taxation
exclusively, is hereby defined for purposes of local taxation as follows:
Inventory of stock on hand; the excess of bills and accounts receivable
over bills and accounts payable; money on hand and on deposit, and
all other personal property of any kind whatsoever, except tangible
personal property not offered for sale as merchandise, which tangible
personal property shall be reported and assessed as such.

Goods, wares and merchandise not belonging to a merchant which
are offered for sale by the merchant or by another person at the mer-
chant’s duly licensed place of business shall require such merchant to
take out the license of a commission merchant.

A manufacturer engaged in business in this State may, without a
merchant’s license, sell at the place of manufacture, the goods, wares
and merchandise manufactured by him. If a manufacturer desires
to sell, at a definite place or store, other than the place of manufacture,
the goods, wares and merchandise manufactured by him, then such
manufacturer must take out a merchant’s license, though this definite
place or store be located in the same county, city or town in which his
place of manufacture is established. When a manufacturer establishes
a place or store for the sale of his goods other than at his place of
manufacture, the amount of the State license tax is to be graded not
only by the amount of purchases made by such manufacturer for
others, but also by the goods, wares and merchandise manufactured
by him and sent from the place of manufacture to his store for sale;
and he is required to report not only the amount of goods purchased
by him from others and offered for sale, but also the amount of goods
manufactured by him either within or without this State and offered
for sale by him at his store or definite place in this State other than the
place of manufacture. The cost of manufacture shall be taken as the
purchase price of the goods, wares and merchandise in the case of a
manufacturer who is also a merchant within the meaning of the law.

A manufacturer taxable on capital by the State may, except as in
this section provided, sell and deliver at the same time to licensed
dealers or retailers, but not to consumers, anywhere in the State,
without the payment of any license tax of any kind for such privilege
to the State, or to any city, town or county.

A merchant, who has been duly licensed by the State, and duly
licensed by the city or town, if his place of business be in a city or
town, or in lieu of a license tax to the city or town, has been taxed by
the city or town on the capital employed in business, may, other than
at a definite place of business, sell and deliver at the same time to
licensed dealers or retailers, but not to consumers, anywhere in the
State, without the payment of any additional license tax of any kind
for such privilege to the State, unless otherwise provided by law.
No additional license, State or local, shall be required of any per-
son, firm or corporation licensed as a merchant in this State for engag-
ing in the business of selling goods, wares, or merchandise by sample.
where delivery is not made at the time of the sale and where the goods,
wares or merchandise subsequently delivered are not the samples.

Dealers in coal, wood or ice paying license tax under this section
may peddle the same from vehicles without paying additional tax.
But nothing in this section shall be construed as to require a license of
any person who may canvass any county or corporation to buy lambs,
pigs, calves, fowls, eggs, butter and such like small matters of sub-
sistence designed as food for man, but any person who shall keep a
place of business for the purpose of selling such articles in, or within
a half mile of any city or town in the State, shall take out license there-
for, as hereinbefore prescribed; provided that dealers in coal and
wood in cities of forty thousand inhabitants or more, who peddle the
same from vehicles shall pay an additional tax of fifty dollars for
each wagon thus used.

For every distributing house or place in this State (other than the
house or place of manufacture) operated by any person, firm or cor-
poration engaged in the business of a merchant in this State, for the
purpose of distributing goods, wares and merchandise among his or
its retail stores, a separate merchant’s license shall be required, and
the goods, wares and merchandise distributed through such distributing
house or place shall be regarded as purchases for the purpose of
measuring the license tax.