Feb 17, Dear : FACTS:

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1 Feb 17, 1994 TAA 94A-015 Re: Sales Tax - Private Investigative Services Performed by Insurance Investigators Sections (1)(k)1.; (15)(17); (2), F.S. Rule 12A (2)(a), (3)(a)1., F.A.C. Dear : This is in response to your letter dated August 11, 1993, requesting a Technical Assistance Advisement, regarding the taxability of an investigative agency performing insurance investigation services. I apologize for the long delay in responding to your letter. FACTS: You state in your letter that your investigative firm provides 99% of your services to insurance companies only. The services your firm provides include: fire investigation, case review, examinations relative to product liability and defects, construction inspections relative to defective products or workmanship, code violations, and inspections of losses as related to weather. In your previous letter dated May 7, 1993, you stated that the primary investigative activity is that of surveillance, video taping, and interviews, and a secondary activity is that of public information record checks. You further state that your firm is classified as a class code 6411 on an Industry Verification Statement issued by the Florida Department of Labor and Employment Security, a copy of which you included with your letter. In our telephone conversation on September 8, 1993, you

2 stated that your firm is licensed as a private investigative agency because no one issues a license for an insurance investigator. You also stated that you are a one man operation, but have two associates in Miami who are private investigators and work for you on a contract basis, doing surveillance, interviews and whatever. STATUTORY/REGULATORY AUTHORITY: Section (1), F.S., as amended by Section 16 of Chapter , L.O.F., provides in part: "Sales, storage, use tax. - It is hereby declared to be the legislative intent that every person is exercising a taxable privilege who... furnishes any of the things or services taxable under this chapter... "(1) For the exercise of such privilege, a tax is levied on each taxable transaction or incident, which tax is due and payable as follows: "(k) At the rate of 6 percent on charges for all: "1. Detective, burglar protection, and other protection services (SIC Industry Numbers 7381 and 7382)..." Section (15)(17), F.S., provides the following definitions: "(15) `Private investigative agency' means any person who, for consideration, advertises as providing or is engaged in the business of furnishing private investigations. "(17) `Private investigation' means... the investigation by a person or persons for the purpose of obtaining information with reference to any of the following matters: "(a) Crimes or wrongs... against the United States or any state or territory of the United States... "(b) The identity, habits, conduct, movements, whereabouts, affiliations, associations, transactions, reputation, or character of any society, person, or group of persons. "(c) The credibility of witnesses or other persons. "(d) The whereabouts of missing persons, owners of abandoned property or escheated property, or heirs to estates.

3 "(e) The location or recovery of lost or stolen property. "(f) The causes and origin of, or responsibility for, fires, libels, slanders, losses, accidents, damage, or injuries to real or personal property. "(g) The business of securing evidence to be used before investigating committees or boards of award or arbitration or in the trial of civil or criminal cases and the preparation therefor." Section (2), F.S., provides: "Inapplicability of parts I through IV of this chapter. - This chapter shall not apply to: "(2) Any insurance investigator or adjuster licensed by a state or federal licensing authority when such person is providing services or expert advice within the scope of his license." Rule 12A (2)(a), F.A.C., in pertinent part, provides a definition of the services provided by detectives or investigative agencies: "Detective... services are... those services which are rendered to obtain evidence or other information for legal, business, or personal purposes of a kind typically performed by detective or investigative agencies, and include, but are not limited to, the following services which are subject to the State's sales and use tax: " Detective agency services;... " Investigators, private;..." Rule 12A (3)(a)1., F.A.C., provides: "(a) For the purpose of this rule, detective agency services and private investigator services which require licensure under Chapter 493, F.S., are taxable. Services which do not require licensure are taxable when performed in furtherance of a taxable service. Services which do not require licensure are not taxable when free standing and not performed in furtherance of a taxable service.

4 "1. Example: A private investigator performs data base retrieval or courthouse records retrieval, neither of which is an activity requiring a private investigator license under Chapter 493, F.S. If these services are free standing, and have no relevance to the performance of a taxable service, they are not taxable. If these services are in furtherance of the performance of a taxable service, the entire charge is taxable." DETERMINATION: TAA 93A-005, which you refer to in your letter, was issued to a specific business with regards to its own specific questions and activities and can not be relied upon by another business in its application of sales tax to its activities, since the two business may or may not be doing the same types of taxable or exempt transactions. Rule 12A (2)(a), F.A.C., quoted above, provides us with the definition of detective services. These are generally found in SIC codes Services which require licensure under Chapter 493, F.S., are further examples of these services. Rule 12A (3)(a), F.A.C., provides that private investigative services that require licensure under Chapter 493, F.S., are subject to sales tax. It is the position of the department that sales tax on those services provided by industries listed under Standard Industry Code classification 7381 are taxable, which industries include detective agencies and private investigators, and the tax is to be collected by the detective agencies, private investigative agencies, and private investigators, who are required to be licensed under Chapter 493, F.S. By example in the above quoted Rule, it provides that those services which do not require licensure under Chapter 493, F.S., AND which are not required in the furtherance of a taxable service are not subject to sales tax, even though performed by a licensed private investigator, private investigative agency, or detective agency. Detective agency services or private investigative services which require licensure under Chapter 493, F.S., are taxable, unless the services are specifically exempt. Therefore, if you

5 are required by law to be licensed under Chapter 493, F.S., then you would be required to collect sales tax on those services that require licensure under Chapter 493, F.S., regardless that those services are performed for insurance companies, agents, brokers, etc. This response constitutes a Technical Assistance Advisement under s , F.S., which is binding on the Department only under the facts and circumstances described in the request for this advice as specified in s , F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised that subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this advice is based may subject similar future transactions to a different treatment than expressed in this response. You are further advised that this response and your request are public records under Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s , F.S. Your name, address, and any other details which might lead to identification of the taxpayer must be deleted by the Department before disclosure. In an effort to protect the confidentiality of such information, we request you notify the undersigned in writing within 15 days of any deletions you wish made to the request or the response. Sincerely, Sharon Blair Technical Assistant SB/pb Enclosure