Materials and other tangible personal property purchased for use in landscaping are taxable, whether purchased by a landscaper, subcontractor, or customer. The sales tax paid by landscapers becomes an expense that can be transferred to the customer as part of the overall capital improvement charge. Landscaping services that are subject to sales tax are maintenance, service, and repair of real estate. The installation of tangible personal property that does not qualify as a capital improvement is also taxable.
Some examples of garden repair and maintenance services are mowing lawns, repairing fences, trimming hedges, and removing snow, just to name a few. Purchases of materials Companies that provide landscaping services are considered contractors under the law. Therefore, the landscaper is responsible for paying sales or use tax on materials that are installed on the real estate. Collection of customer taxes A contractor who provides gardening services for an end-user must collect 6.625% sales tax on the gross sales receipt.
However, at the contractor's choice, the actual cost of the materials used and on which the contractor paid taxes may be indicated separately on the invoice. The separate statement of the actual cost of materials would not be subject to tax collection. Whenever a contractor performs a taxable service, if the customer is billed a lump sum, the entire receipt is taxable. If the contractor separately states the actual cost of the materials of the taxable labor, the customer will only be charged tax on the part of the labor.
Excavation and rough grading services provided to new construction are not subject to tax. However, excavation and leveling services that are performed as an integral part of landscaping work are subject to tax. Excavation and grading services provided to landscapers for landscaping work are subject to sales tax unless the landscaper issues a genuine resale certificate to the excavating contractor.
Most states state that it is mandatory to have a sales tax permit, or a license for the company to participate in the sale of goods and services. There are also other exceptions when landscape designers enter into contracts for organizations that are exempt from sales tax under G. XYZ is the property owner and therefore the final consumer of landscaping services, and must pay tax on the amount charged by ABC Landscaper. When Bob's Landscaping purchases material from its supplier that will be resold to Bob's customer at his retail store, Bob's Landscaping must present a completed and signed Resale Certificate (ST) to his supplier at the time of purchase of the material.
In each of the following examples, the landscaper is a contractor and sales are exempt from sales tax to the landscaper's customer. XYZ is the property owner and therefore the final consumer of landscaping services, and must pay tax on the amount charged by GC for landscaping services. Repair and maintenance services The Sales and Use Tax Act imposes taxes on charges for maintenance, service, and repair of real property. It is not intended to be used as a statutory norm, but merely as a general guide to sales and use taxes as it relates to landscape designers.
Examples ABC Landscaper has a contract with the landlord for the installation of planting materials, such as trees and shrubs, into existing construction. Typically, landscape designers act as contractors and are consumers of tangible movable property (material) purchased by them for use in the performance of their contracts. Bob's Landscaping is considered the consumer of all material purchased to perform the services for which he was contracted and sales or use tax must be paid on the total price paid to his seller (s) for the materials. Landscaping services provided to new construction, residential real estate, and industrial, commercial, or revenue-generating properties are subject to sales and use tax.
Services are not taxable for customers and the landscaper is considered the consumer of all mulch, seeds, grass, and any other material purchased to perform the services for which Bob's Landscaping was contracted. . .