Keener v. Irby
| Decision Date | 08 November 2021 |
| Docket Number | 20-0488 |
| Court | Virginia Supreme Court |
| Parties | JOHN KEENER D/B/A MOUNTAINEER INSPECTION SERVICES, LLC, Petitioner v. MATTHEW IRBY, STATE TAX COMMISSIONER OF WEST VIRGINIA, Respondent |
West Virginia Association of Home Inspectors
SYLLABUS BY THE COURT
1. "Interpreting a statute or an administrative rule or regulation presents a purely legal question subject to de novo review." Syllabus point 1, Appalachian Power Co. v. State Tax Department of West Virginia, 195 W.Va. 573, 466 S.E.2d 424 (1995).
2. "Interpretations of statutes by bodies charged with their administration are given great weight unless clearly erroneous." Syllabus point 4, Security National Bank & Trust Co. v. First West Virginia Bancorp, Inc., 166 W.Va. 775, 277 S.E.2d 613 (1981).
3. "The primary object in construing a statute is to ascertain and give effect to the intent of the Legislature." Syllabus point 1, Smith v. State Workmen's Compensation Commissioner, 159 W.Va. 108, 219 S.E.2d 361 (1975).
4. "When a statute is clear and unambiguous and the legislative intent is plain, the statute should not be interpreted by the courts, and in such case it is the duty of the courts not to construe but to apply the statute." Syllabus point 5, State v. General Daniel Morgan Post No. 548, Veterans of Foreign Wars, 144 W.Va. 137, 107 S.E.2d 353 (1959).
5. "A statute that is ambiguous must be construed before it can be applied." Syllabus point 1, Farley v. Buckalew, 186 W.Va. 693, 414 S.E.2d 454 (1992).
6. "Where a person claims an exemption from a law imposing a license or tax, such law is strictly construed against the person claiming the exemption." Syllabus point 2, State ex rel. Lambert v. Carman, State Tax Commissioner, 145 W.Va. 635, 116 S.E.2d 265 (1960).
7. Syllabus point 4, in part, Appalachian Power Co. v. State Tax Department of West Virginia., 195 W.Va. 573, 466 S.E.2d 424 (1995).
8. "A regulation that is proposed by an agency and approved by the Legislature is a 'legislative rule' as defined by the State Administrative Procedures Act, W.Va. Code, 29A-1-2(d) [1982], and such a legislative rule has the force and effect of law." Syllabus point 5, Smith v. West Virginia Human Rights Commission, 216 W.Va. 2, 602 S.E.2d 445 (2004).
Petitioner John Keener d/b/a Mountaineer Inspection Services, LLC ("Mr. Keener") appeals from an order entered June 4, 2020, by the Circuit Court of Taylor County. In that order, the circuit court determined that home inspectors do not meet the professional services tax exemption in West Virginia Code section 11-15-8 (eff. 2008) and that home inspection services are not professional services pursuant to West Virginia Code of State Rules section 110-15-8.1.1.1 (eff. 1993) (sometimes referred to as "Section 110-15-8.1.1.1"). The circuit court also concluded that the four-part test set forth in Section 110-15-8.1.1.1 creates a mandatory four-part test, and not a balancing test as determined by the Office of Tax Appeals ("OTA") and as argued by Mr. Keener.
On appeal, Mr. Keener urges this Court (1) to recognize the services rendered by home inspectors as professional services for purposes of the tax exemption in West Virginia Code section 11-15-8, (2) to conclude that the language of Section 110-15-8.1.1.1 creates a balancing test, not a mandatory, four-part test, and (3) to find that a four-year degree is not required to be deemed a professional. Having considered the briefs submitted on appeal, the appendix record, the parties' oral arguments, and the applicable legal authority, we agree with the circuit court's ruling that home inspection services do not qualify as professional services under West Virginia law. We also agree with the circuit court's ruling regarding the four-year degree requirement. However, we find that the circuit court erred in concluding that each part of the four-part test must be met to be classified as a professional. Accordingly, for the reasons set forth below, we affirm, in part, and reverse, in part, the rulings made by the circuit court.[1]
Mountaineer Inspection Services, LLC ("Mountaineer") is a single-member limited liability company with its principal place of business located in Taylor County, West Virginia. Mr. Keener, Mountaineer's sole member, is certified by the West Virginia State Fire Marshal to perform home inspection services. To obtain this certification, he passed a National Home Inspector Examination, completes at least eighty hours of instruction, completed high school, presented proof of general liability insurance, provided fingerprints, presented proof of a valid West Virginia business license, and completes sixteen hours of continuing education each year. See generally W.Va. C.S.R. § 87-5-4 (eff. 2006) and W.Va. C.S.R. § 106-6-4 (eff. 2021).
Between January 1, 2011, and September 30, 2015, Mountaineer, by and through Mr. Keener, failed to collect and remit consumers sales and service taxes to the West Virginia Tax Department ("Tax Department").[2] In December of 2015, the Tax Department issued Mr. Keener a notice of assessment stating that he owed $31, 137.96 in taxes and $5, 048.24 in interest, for a total of $36, 186.20. After receiving this notice, Mr. Keener filed a petition for reassessment with the OTA on February 5, 2016. Both parties agreed to waive an evidentiary hearing, and instead, they submitted the case to the OTA by filing briefs. Throughout the proceedings below, Mr. Keener maintained that he was exempt from collecting consumers sales and service tax because he and his home inspection company provided professional services-an exemption detailed in West Virginia Code section 11-15-8.[3]
On October 4, 2018, the OTA issued its Final Decision and affirmed the Tax Department's assessment, concluding that home inspection services are not professional services for purposes of West Virginia Code section 11-15-8. However, the OTA rejected the notion that West Virginia Code of State Rules section 110-15-8.1.1.1 requires a four-year degree for an activity to be considered professional, and further concluded that Section 110-15-8.1.1.1 cannot be characterized as a mandatory four-part test.
Both Mr. Keener and the Tax Department appealed the OTA's Final Decision.[4] Upon consideration of the briefs submitted by the parties, the circuit court entered a final order on June 4, 2020, affirming in part and reversing in part the decision of the OTA. The circuit court concluded that home inspection services do not qualify as professional services for purposes of the tax exemption in West Virginia Code section 11-15-8; that the OTA erroneously ruled that a four-year college degree is not a requirement for an activity to be classified as a professional service; and that the OTA erred by ruling that Section 110-15-8.1.1.1 sets forth a balancing test as opposed to a true four-part test. Mr. Keener now appeals the June 4, 2020 decision of the circuit court.
This case is before this Court on appeal from the circuit court's order affirming in part, and reversing in part, a decision of the West Virginia Office of Tax Appeals.
In an administrative appeal from the decision of the West Virginia Office of Tax Appeals, this Court will review the final order of the circuit court pursuant to the standards of review in the State Administrative Procedures Act set forth in W.Va. Code § 29A-5-4(g) [1988]. Findings of fact of the administrative law judge will not be set aside or vacated unless clearly wrong, and, although administrative interpretation of State tax provisions will be afforded sound consideration, this Court will review questions of law de novo.
Syl. pt. 1, Griffith v. ConAgra Brands, Inc., 229 W.Va. 190, 728 S.E.2d 74 (2012). Accord Syl. pt. 1, Ashland Specialty Co. v. Steager, 241 W.Va. 1, 818 S.E.2d 827 (2018).
West Virginia Code section 29A-5-4 (eff. 1998) provides:
Therefore findings of fact from the OTA will not be set aside or vacated unless clearly wrong, and, although administrative interpretation...
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