Tax Type
BPOL Tax
Description
Certified home inspectors for BPOL tax purposes.
Topic
Local Power to Tax
Local Taxes Discussion
Date Issued
10-25-2002
October 25, 2002
Re: Request for Advisory Opinion
Business, Professional and Occupational License (BPOL) Tax
Dear *****:
This is in response to your e-mail regarding the classification of "certified home inspectors" for BPOL tax purposes.
The local license fee and tax are imposed and administered by local officials. §58.1-3701 of the Code of Virginia authorizes the department to promulgate guidelines and issue advisory opinions on local license tax issues. The following opinion has been made subject to the facts presented to the department as summarized below. Any change in these facts or the introduction of facts by another party may lead to a different result.
While addressing the questions raised in your letter, this response is intended to provide advisory guidance only, and does not constitute a formal or binding ruling. Copies of the Code of Virginia, regulations and public documents cited are included for reference purposes. These and other reference documents are also available online in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.state.va.us.
FACTS
Home inspectors provide a building inspection service for buyers or other interested parties involved in real estate transactions. They generally evaluate all aspects of a building's structure and prepare a written report based on their evaluation for their clients.
Chapter 723 of the Acts of Assembly 2001 provided for the inclusion of home inspectors under those professions and occupations regulated by the Virginia Department of Professional and Occupational Regulation (the "Board"), effective July 1, 2003. Under this statute, provision is made for the certification of home inspectors. In order to hold oneself out as a "certified home inspector," one must meet "the criteria of education, experience, and testing required by this chapter and regulations of the Board and must be certified by the Board." Code of Virginia § 54.1-500.
"Certified home inspection," means any inspection of a residential building for compensation conducted by a certified home inspector. A certified home inspection shall include a written evaluation of the readily accessible components of a residential building, including heating, cooling, plumbing, and electrical systems; structural components; foundation; roof; masonry structure; exterior and interior components; and other related residential housing components. A certified home inspection may be limited in scope as provided in a home inspection contract, provided such contract is not inconsistent with the provisions of this chapter or the regulations of the Board. Id.
Currently, home inspectors are not regulated and are classified in your jurisdiction as a "business service" for BPOL tax purposes. You ask if the new certification requirements would alter their classification to that of either "contractor," since they are inspecting building construction, or that of "professional services" as a provider of a real estate service.
OPINION
Contractors
The definition of a contractor for local licensure is clearly spelled out in Code of Virginia § 58.1-3714(D). It includes a comprehensive list of work activities that a person contracts to perform, including work on buildings or structures, paving, excavation, sewer work, electrical work and plumbing work. It does not include home inspection or inspection of any kind. Based on the statutory definition, it is my opinion that a certified home inspector would not be classified as a contractor for BPOL tax purposes.
Real Estate Services
Real estate services fall into the professional services classification category under the provisions of Chapter 37 of the Code of Virginia. The 2000 BPOL Guidelines state that: "any person rendering a service for compensation as lessor, buyer, seller, agent or broker is providing a real estate service, unless the service is specifically provided for under another section of these Guidelines." 2000 BPOL Guidelines § 5.4.3.1. Unless a certified home inspector is a lessor, buyer, seller, agent or broker, he would not be classified as providing a real estate service. Indeed, under the proposed regulations issued by the Board for Asbestos, Lead and Home Inspectors, a certified home inspector is specifically prohibited from engaging in such activity.1 I note, as well, that the new certified house inspectors are regulated by the Board for Asbestos, Lead and Home Inspectors, not the Real Estate Board or the Real Estate Appraiser Board.
Business Service
"Repair, Personal, Business and Other Services" is a catchall classification for services not clearly identified as "financial, real estate or professional services." The 2000 BPOL Guidelines omit providing definitions for such services because "this classification applies to all services that are not classified as financial, real estate or professional services." 2000 BPOL Guidelines § 5.5.1. Because certified home inspectors are not in the list of services enumerated in the Guidelines under the classifications of financial, real estate or professional services, it is my opinion that certified home inspectors should be classified as a business service.
If you have any questions regarding this opinion, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
Sincerely,
Kenneth W. Thorson
Tax Commissioner
AR/42817H
1The proposed regulation promulgated by the Board for Asbestos, Lead and Home Inspectors states: "The certificate holder [certified home inspector] shall not represent any of the parties to the transfer or sale of a residential building on which he has performed a certified home inspection." Proposed 18 VAC 95-4040(A) (3).
Rulings of the Tax Commissioner