Bulletin Number
VTB 80-4
Tax Type
General Provisions
Description
Contractors' Registration and Licenses
Topic
Persons Subject to Tax
Date Issued
08-04-1980
DATE: August 4, 1980
SUBJECT: Contractors' Registration and Licenses
Under existing State law, every contractor whose total gross contracts in this State for the year preceding the license tax year amounted to $1,000 or more and every contractor beginning business in this State who accepts or anticipates contracts which will amount to $1,000 or more before December thirty one of the license tax year must purchase a State contractors' license from his local commissioner of the revenue. See § 58-300, Code of Virginia.
Additionally, contractors are subject to local license tax laws and also certain contractors have always been subject to the qualification and registration requirements of the State Registration Board for Contractors.
Furthermore, under the provisions of § 58-298 of the Code, each applicant for a State contractors' license must furnish the commissioner of the revenue proof that he is registered as a contractor or submit a statement supported by an affidavit that he is not required to be registered as a contractor with the State Registration Board for Contractors. Therefore, the registration or licensing requirements of the State Board are pertinent to the issuance of State contractors' licenses.
The Virginia Contractors' Registration Law was substantially amended by the 1980 session of the Virginia General Assembly and question has arisen in regard to the effect of the amendments upon the issuance of State and local contractors' licenses. The purpose of this tax bulletin is to clarify such effect.
1980 Changes in the Virginia Contractors' Registration Law effective July 1, 1980
1. Prior to 1980 changes, a "contractor" was defined by § 54-113, for purposes of the State Board as anyone engaged in contracting who bid upon or engaged in any one contract of $60,000 or more or whose total contracts within any twelve-month period amounted to $400,000 or more. The limitation amounts were virtually eliminated by 1980 changes and the definition of a "contractor" now includes anyone who performs a contract for as much as $1,500.
2. Prior to 1980 changes, anyone engaged in business as a "contractor" as defined by § 54-113 was required to register with the State Board. Now, anyone engaged in business as a "contractor" under the new definition is required to obtain either a Class A contractors' regulatory license or a Class B contractors' regulatory license from the State Board. This is in addition to State contractors' licenses issued pursuant to § 58-297 - 303.1, local contractors' licenses issued pursuant to § 58-266.1, and any local regulatory license that may be required by local ordinances adopted pursuant to § 54-145.2.
Class A Contractors' License (issued by the State Board)
A Class A contractors' license (the old certificate of registration) is required for any job of $40,000 or more or when the volume of work is $300,000 or more within any twelve month period. See § 54-113.
Effective, July 1, 1980, those contractors that hold current certificates of registration are considered licensed as Class A contractors by the State Board. See § 54-129.1.
Class B Contractors' License (issued by the State Board)
A Class B contractor's license (a new class of registration) is required for small jobs of $1,500 to $40,000 each, by contractors whose total annual volume is less than $300,000.
Home improvement contractors who are registered as such under prior law (simple post card registration of home improvement contracts under prior provisions of § 54-145.2) at July 1, 1980, are considered licensed as Class B contractors by the State Board. See § 54-129.3.
3. All licensed contractors, whether they are class A or Class B, are subject to the regulatory authority of the State Registration Board for Contractors. See § 54-132.1 and 54-133.
Class A contractors are subject to the qualification and examination requirements of the State Board (similar to requirements for old certificate of registration). See § 54-129.1. Those contractors are exempt from qualification and examination requirements of local ordinances adopted pursuant to § 54-145.2.
Class B contractors are required by the State Board only to furnish the business name, place of business, place of residence, the name of the registered agent, where applicable, and evidence of qualification under any local ordinances adopted pursuant to § 54-145.2. No examination is required by the State Board for a Class B license, but examination may be required by local ordinances adopted pursuant to § 54-145.2.
4. A Contractors' Transaction Recovery Fund, which works similar to a bond, has been established by the State Board and is administered by the State Board. Each licensed contractor, Class A and Class B, is required by the State Board to contribute $25.00 to the fund, which establishes a means of recovery to the public when a judgement has been awarded by a court against a licensed contractor. See §§ 54-145.3 through 54-145.3:9.
5. It is a Class I misdemeanor for anyone to bid on or engage in work as a "contractor" without obtaining the appropriate Class A or Class B license from the State Board. See § 54-128.
Effect of changes in the Virginia Contractors' Registration Law upon the issuance of State and local contractors' licenses.
1. Commissioners of the revenue, beginning July 1, 1980, must require all applicants for State contractors' licenses (revenue licenses issued pursuant to § 58-300) with contract volume of $1,500.00 or more to furnish proof that they have obtained either a Class A or Class B contractor's license from the State Registration Board for Contractors or to submit written statements supported by affidavit that they are not "contractors," as defined in § 54-113.
It is anticipated that due to the newness of changes in the Virginia State Contractors' Regulatory Law, commissioners of the revenue may receive applications for State contractors' licenses from contractors who have not obtained required Class B license from the State Board. Since a Class B contractors' license will be issued by the State Board upon submission of a completed "Application for Class B Contractors' License", commissioners of the revenue may obtain and mail such applications to the State Board in lieu of withholding the issuance of State contractors' licenses. This will be considered proof of registration for purposes of § 58-298, if the commissioner of the revenue retains a file copy of the application mailed to the State Board.
2. The new requirements for Class A and Class B contractors' licenses have no effect upon the issuance of local contractors' licenses pursuant to § 58-266.1.
3. The new requirements for Class A and Class B contractors' licenses have no effect upon the issuance local regulatory licenses under local ordinances adopted pursuant to § 54-145.2 except that Class A contractors are exempt from any local requirements for examination or other evidence of proficiency by applicants.
Tax Bulletins