Maintaining a lush and healthy lawn requires dedicated effort and often, the assistance of professional Lawncare Services. Understanding the tax implications of these services is crucial for both providers and consumers. This guide provides a detailed overview of taxable and nontaxable lawncare services.
Understanding Taxable Lawncare Services
Most professional lawncare services are subject to sales and use taxes. This includes services that enhance or maintain the health and appearance of lawns, yards, ornamental plants, and trees.
Taxable services typically encompass:
- Planting and Maintenance: This includes planting, transplanting, and removing plants, as well as mowing, trimming, and edging grass or ground cover. Regular lawn maintenance like fertilizing and watering also falls under this category.
- Tree Care: Services like pruning, bracing, spraying, and general tree maintenance are considered taxable.
- Plant Health Care: Diagnosing, treating, and preventing plant diseases are also subject to tax.
- Flower Garden Maintenance: Planting and maintaining flower gardens, including tasks like weeding, fertilizing, and deadheading, are taxable services.
Nontaxable Lawncare Services
Certain lawncare activities are exempt from sales and use tax. These exemptions generally apply to services performed for specific purposes or under certain conditions.
Nontaxable services include:
- Utility and Infrastructure Maintenance: Mowing pipeline or highway rights-of-way and trimming trees around power lines are typically exempt.
- Agricultural Operations: Harvesting, cultivating, mowing, and fertilizing farm or forest land are not considered taxable lawncare services.
- Cemetery Maintenance: Mowing services provided in cemeteries are generally exempt from tax.
It’s important for service providers to clearly distinguish between taxable and nontaxable services on invoices. If charges are combined, the entire amount may be deemed taxable if the taxable portion exceeds 5%. Proper documentation can help avoid this issue.
Special Considerations for Landscape Designers, Architects, and the Self-Employed
Landscape Designers and Architects: Professional services provided by landscape designers and architects, such as consultations, research, and design plan preparation, are generally not subject to sales and use tax. However, any associated landscaping services they perform are taxable. Clear separation of charges is essential.
Self-Employed Individuals: Self-employed individuals providing lawncare services without employees or partners and with gross receipts of $5,000 or less in the past four calendar quarters may be exempt from collecting sales tax. This exemption ceases if income exceeds the threshold, requiring tax collection in the following quarter. The exemption resumes once income falls below $5,000 for four consecutive quarters.
Construction and New Residential Landscaping
Construction Activities: Landscaping services do not include construction or repair of structures like decks, fences, or pools, or the installation of sprinkler systems. These fall under different tax rules for construction or remodeling.
New Residential Structures: Landscaping for new residential properties, including model homes, is generally not taxable when purchased by a contractor or homebuilder. However, landscaping for non-residential structures within a development, such as sales offices, is taxable. Landscapers should obtain certification from contractors to confirm the nontaxable status of the work.
Materials, Supplies, and Equipment
Resale Certificates: Landscapers can use resale certificates when purchasing materials like fertilizer, plants, and soil for taxable lawncare services, as these materials are transferred to the customer. Tax is typically paid on supplies and equipment used by the landscaper, such as lawnmowers and tools.
Subcontracting: When hiring a third party for landscaping services, the primary provider should issue a resale certificate to the subcontractor and collect tax from the customer on the total charge.
Conclusion
Navigating the tax complexities of lawncare services can be challenging. Understanding which services are taxable and nontaxable is crucial for both service providers and consumers. This guide provides a comprehensive overview to ensure compliance and accurate tax practices within the lawncare industry. Always consult with a tax professional for specific guidance related to your individual circumstances.
