Pest control is crucial for maintaining healthy homes and businesses. However, navigating the tax implications of these services can be complex. This guide clarifies which Pest Control Services are taxable and nontaxable in Texas, helping both providers and consumers understand their obligations.
Taxable Pest Control Services
In Texas, many pest control services are subject to sales tax. These include services performed on structures like homes and businesses, as well as vehicles and vessels. Here’s a breakdown of taxable services:
- Inspections and Identification: Assessing infestations, whether confirmed or suspected, in structures, vehicles, or vessels is taxable. This includes written or oral reports, estimates, and contracts related to pest control.
- Treatment and Removal: Eliminating or controlling pests in structures, trees, shrubs, or other vegetation is subject to sales tax.
- Extended Warranties: Purchasing extended warranties for pest control services or related repairs on nonresidential properties is also taxable.
Materials and Equipment for Taxable Services
Generally, materials, supplies, and equipment used in taxable pest control services are subject to sales and use tax, even when the service is for a tax-exempt entity. However, service providers can use a resale certificate when purchasing chemicals from suppliers to avoid paying tax upfront.
Nontaxable Pest Control Services
Certain pest control services are exempt from sales tax in Texas. These exceptions typically involve services related to agriculture, wildlife management, and specific pest removal methods:
- Agricultural and Timberland Services: Pest control conducted on timberland or for agricultural purposes is not taxable.
- Bird Control with Birds of Prey: Using trained birds of prey for bird control is exempt.
- Chimney Cleaning: Removing pests or their nests during chimney cleaning is not taxable.
- Bee Removal from Yards: Removing bees from a yard is considered nontaxable, as it’s not classified as structural pest control or treatment of vegetation.
- Live Trapping: Using live traps to remove animals is nontaxable.
- Weed Removal from Waterways: Mechanically removing weeds from sewers, drainage systems, or bodies of water is exempt.
- Non-Pesticidal Barriers: Installing or maintaining non-pesticidal barriers is not taxable.
- New Residential Construction: Pest control services included in contracts for new residential construction or significant structural improvements are exempt. Proper documentation, such as an exemption certificate, is required.
Materials and Equipment for Nontaxable Services
Unlike taxable services, providers of nontaxable pest control services must pay sales and use tax on all materials, supplies, and equipment used, including chemicals.
Collecting and Remitting Sales Tax
Pest control providers must collect state and local sales tax on taxable services, even if no pests are found. The combined rate is 6.25% state tax plus up to 2% local tax, determined by the business location. A Sales Tax Rate Locator is available to confirm the correct rate. Exemption certificates are accepted from tax-exempt organizations and government entities.
Separating Taxable and Nontaxable Services
Businesses offering both taxable and nontaxable services must clearly separate charges on invoices. Tax is collected only on the taxable portion. The nontaxable service needs to be a distinct service commonly offered independently.
If taxable services are not billed separately and exceed 5% of the total price, tax is due on the entire amount. However, documentation can be provided later to adjust the tax based on the actual taxable portion. If the taxable portion is 5% or less, no tax is collected.
Subcontracting Pest Control Services
When subcontracting pest control services, a resale certificate can be provided to the subcontractor. The primary contractor then collects tax on the total service charge from the customer, including the subcontracted amount.
Conclusion
Understanding the tax regulations surrounding pest control services is essential for both providers and consumers in Texas. By distinguishing between taxable and nontaxable services and following proper procedures for collecting and remitting taxes, businesses can ensure compliance and avoid potential penalties. Consumers can also make informed decisions about pest control services, knowing which services are subject to tax. For further clarification, consult the Texas Comptroller’s website for detailed publications and rules regarding sales and use tax.
