LAWN CARE AND LANDSCAPING IOWA SALES TAX ISSUES. Terry O Neill Taxpayer Service Specialist

Transcription

1 LAWN CARE AND LANDSCAPING IOWA SALES TAX ISSUES Terry O Neill Taxpayer Service Specialist

2 Subject to Iowa Sales Tax? Lawn Care? Landscaping? YES

3 Taxable Lawn Care mowing trimming watering fertilizing seeding sodding killing insects, moles, weeds, or fungi

4 What is a Lawn? cemetery grounds golf courses parks grass surrounding residential or commercial buildings or structures Taxable, unless the property owner is exempt.

5 What Isn t a Lawn? ditches vacant lots railroad right-of-way isolated patch of grass or weeds Care is not taxable.

6 What Property Owners Are Exempt? Some examples are: Governmental entities Public schools Private, nonprofit educational institutions Nonprofit hospitals, hospices, and museums

7 Are All Nonprofits Exempt? No, most nonprofit organizations are taxable, including: Churches Most charitable organizations Social clubs and similar organizations

8 Does Everyone Need to Collect Sales Tax? Yes, unless: owner is the only one providing services; owner is a full-time student; and total gross receipts for a calendar year is less than $5,000.

9 QUIZ QUESTION #1 I m mowing the grass at a church-owned cemetery. Do I need to collect sales tax? Yes. Churches are taxable & a cemetery is considered a lawn.

10 Landscaping Defined Arrange or modify natural condition of land Public or private use or enjoyment This is taxable.

11 Taxable Landscaping Excavating Planting Pruning Placing sand, rock, wood chips

12 What Isn t Taxable? Landscape Architect services separately stated and billed registered under Iowa Code section 544B.2 For a Building or Structure that is new construction reconstruction alteration expansion, or remodeling Sales Tax

13 QUIZ QUESTION #2a Construction of a new building was completed in January. I m hired in April to do the landscaping. Do I collect sales tax? No. The service is performed in connection with new construction. 13

14 QUIZ QUESTION #2b Construction of a new building was completed in May. I m hired in September to do the landscaping. Do I collect sales tax? Yes. The service is NOT performed in connection with new construction. 14

15 What About Materials? fertilizer chemicals sod seed dirt trees shrubbery bulbs sand woodchips rock other similar items Tax Free if purchased for resale.

16 Materials For Resale Parties agree materials sold separately from the service Definite quantity or amount sold for a specific price Must be itemized on the bill Sales tax is charged on both materials and labor

17 When Purchased For Resale The service provider must give the supplier a valid Iowa Sales Tax Exemption Certificate

18 Billing Materials For Resale LAWN CARE IOWA INVOICE LAWN CARE IOWA INVOICE Box Van Meter, Iowa PH: Des Moines PH: Sioux City PH: Waterloo PH: Box Van Meter, Iowa PH: Des Moines PH: Sioux City PH: Waterloo PH: Mrs. IMA Customer Elm Street Adel, IA INVOICE NO CUSTOMER NO X-1-94 URA Customer Main Street Zwingle, IA INVOICE NO CUSTOMER NO A-2-88 DATE: TIME: APPLICATOR: am Joe Worker PLEASE RETURN THIS PORTION WITH PAYMENT DATE: TIME: APPLICATOR: am Janet Worker PLEASE RETURN THIS PORTION WITH PAYMENT Charge: $ % Sales Tax: $ 3.00 AMOUNT DUE $53.00 Charge: $ % Sales Tax: $ % Regular Local Option $ 3.00 AMOUNT DUE $ TERMS: DUE UPON RECEIPT OF INVOICE Accounts that are not paid in 30 days will have a FINANCE CHARGE of 1 1/2 % per month on the unpaid balance or a minimum of 50c WHICHEVER IS GREATER ADDED TO THE ACCOUNT. This is an annual percentage rate of 18%. Charges for Material Applied: $ Labor and Equipment Charge: $ Materials Applied: Fertilizer, Crabgrass control, Broadleaf weed control Amount of Material Applied: 40 Gallons TERMS: DUE UPON RECEIPT OF INVOICE Accounts that are not paid in 30 days will have a FINANCE CHARGE of 1 1/2 % per month on the unpaid balance or a minimum of 50c WHICHEVER IS GREATER ADDED TO THE ACCOUNT. This is an annual percentage rate of 18%. Labor Charge: $ Chemicals - 31 LBS: $ Fertilizer - 51 LBS $ Materials Applied to Lawn - 4 Bushels $ 40.00

19 Jenny s Lawn Care Mow, trim, labor lbs. Seed Local option 1%.80 6% tax 4.80 total due: $85.60 Bill s Lawn Care Mow, trim, seed tax 5.60 Total due: $85.60 Retailer of materials and labor BUYS MATERIALS TAX EXEMPT Retailer of taxable labor PAYS TAX ON MATERIALS

20 When retailers fail to itemize Landscape Materials separately from exempt labor, the total bill is taxable

21 QUIZ QUESTION #3 I don t separately itemize materials on my bill to the customer. Can I buy those materials exempt from sales tax? No. Separately itemized bills are one requirement of purchasing tax free for resale. 21

22 Can Landscapers be Contractors? YES When providing both labor and materials to build a structure, for that portion of the job.

23 What is a Structure? retaining walls lawn lighting systems lawn irrigation systems pools walks drives decks fences fountains any other item permanently attached to real property

24 concrete railroad ties wood bricks stone pavers pipe conduit Building Materials

25 Sales Tax When You Work as a Contractor You are the consumer of building materials. Supplier = pay tax You must pay sales tax on all building materials to your suppliers. You must include this sales tax expense as part of the bid price for the project. Customer = no tax No sales tax is charged to the customer on materials or labor.

26 QUIZ QUESTION #4 I have a contract to build a retaining wall. Can I purchase the stones I use to construct the wall tax free for resale? No. Contractors are the final consumer of building materials.

27 On Our Web Site Landscaping and Lawn Care publication Call us: 8 a.m. - 4:15 p.m. CT or (Iowa, Omaha, Rock Island, Moline) us at idr@iowa.gov

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