Are Landscaping Services Subject To Sales Tax In Florida

A state-by-state analysis of charging sales tax on services

When state legislatures in the United States implemented the first sales revenue enhancement laws to boost revenues in the 1930s, the American economy depended on the manufacture and sale of concrete appurtenances. Typically, early sales taxation laws allowed simply the revenue enhancement of "tangible personal property" (TPP), rather than taxing services.

As the Us has shifted from a manufacturing-based economy to a service-based economy, many states started to impose sales and use tax on services too. Many businesses that provide services are still unaware of these statutory changes—some mistakenly believe they don't have to pay whatsoever sales revenue enhancement at all, even if they're selling services all over the U.s.a..

Every state taxes services in its ain way

This guide is designed to provide an overview of the complexity of sales tax on services by state.

Five U.S. states (New Hampshire, Oregon, Montana, Alaska, and Delaware) practice not impose any general, statewide sales taxation, whether on goods or services. Of the 45 states remaining, four (Hawaii, South Dakota, New Mexico, and Westward Virginia) tax services by default, with exceptions only for services specifically exempted in the law.

This leaves 41 states — and the Commune of Columbia — where services are not taxed by default, but services enumerated by the land may be taxed. Every 1 of these states taxes a unlike gear up of services, making it difficult for service businesses to understand which states' laws require them to file a return, aswell as which specific elements of their services are taxable.

Categories of taxable services

No 2 states revenue enhancement exactly the same specific services, but the general types of services being taxed can be divided roughly into 6 categories.

Services to TPP: Many states have started to taxation services to tangible personal property at the same charge per unit every bit sales of TPP. These services typically ameliorate or repair property. Services to TPP could include anything from carpentry services to car repair.

Services to real property: Improvements to buildings and land autumn into this category. One of the about usually taxed services in this surface area is landscaping and lawn service. Janitorial services too fall into this category.

Business services: Services performed for companies and businesses fall into this category. Examples include telephone answering services, credit reporting agencies and credit bureaus, and extermination services.

Personal services: Personal services include a range of businesses that provide personal grooming or other types of "self-comeback." For instance, tanning salons, massages not performed by a licensed massage therapist, and animal grooming services can be considered "personal services."

Professional services: The least taxed service expanse, in large office considering professional groups have powerful lobbying presences. Professional services include attorneys, physicians, accountants, and other licensed professionals.

Amusement/Recreation: Admission to recreational events and amusement parks, likewise every bit other types of entertainment. Some states that tax very few other services, similar Utah, nevertheless tax access charges to virtually sporting and entertainment events.

How to use this US sales revenue enhancement map

Remember that inside each category of services, states can still have drastically dissimilar regulations. For instance, both Florida and Iowa are marked as taxing "business concern services," even though Iowa taxes a wide range of these services and Florida simply taxes security and detective services.

For more than details almost the specific tax liability of your business in individual states, consult country Departments of Revenue for boosted data.

Services taxability map of United States

Summary of service revenue enhancement of The states states

Rules to follow when evaluating sales tax on services

ane. Avoid making assumptions

Many companies assume services delivered in conjunction with goods sold (e.chiliad., pond pool and pool cleaning, computers and maintenance, construction materials and installation) aren't taxable, but that's often non the case. Delaware, Hawaii, New Mexico, and South Dakota tax well-nigh services. Still others, similar Texas and Minnesota, are actively expanding service taxability.

Businesses that sell services across multiple states need to know where those services are discipline to sales tax. The fact that sales tax laws frequently modify makes it challenging to remain in compliance.

2. Remember that sales tax rates tin (and practise) change

States regularly alter product and service taxability rules, and the onus of staying on top of changes is on businesses. For case, Washington state lawmakers decided to tax martial arts and mixed martial arts classes in the fall of 2015. Ii years later, many of those services were once more exempt. Failure to correctly apply sales tax rates and rules to products and services can atomic number 82 to costly errors.

Knowing which charge per unit to accuse and which sales tax rules utilise is especially challenging for companies that sell goods or services in multiple states. No two states have the aforementioned sales tax laws.

3. Empathize your nexus exposure

Most states at present require sure out-of-state sellers to register with the tax authority and then collect and remit sales taxation. What's challenging is figuring out which states crave which businesses to exercise so. That depends on nexus — the connectedness between a business and a state that triggers a sales taxation collection obligation.

Having a concrete presence in a country always triggers nexus, but thanks to the U.s. Supreme Court determination in Due south Dakota v. Wayfair, Inc. (June 21, 2018), nexus can besides be created past economic activity lone (economic nexus). As of June 2020, 43 states and the District of Columbia require out-of-state businesses with a sure volume of sales or number of transactions in the state to collect and remit sales tax.

Determining nexus is the first footstep toward sales tax compliance.

4. Services sold with taxable goods tin complicate sales revenue enhancement

Many businesses that provide client support, installation, or warranty services in conjunction with the sale of a concrete good demand to hire an army of accountants to determine what'south taxable and what's exempt. If y'all sell service contracts separately or in tandem with sales of tangible goods, you may be liable to collect sales taxation.

While Hawaii, New Mexico, and South Dakota generally tax all sales of services, many other states taxation some services just not others. The claiming for businesses is determining which services are taxable in states where they accept nexus (an obligation to collect sales tax). In some states, businesses must charge sales tax on services provided in conjunction with sales of concrete goods.

five. The truthful object test tin help make up one's mind service taxability

When a sale includes both a production and a service, some states use a true object test to decide the taxability of the transaction. If the main purpose of the transaction (the true object) is the sale of taxable property or equipment, the entire transaction is subject to sales tax. If the primary purpose of the transaction is instead the sale of an exempt service, the entire transaction is generally exempt.

Combined sales of products and services are more common in some industries than others, notably the construction, manufacturing, and medical industries. For example, an insulin monitor oft accompanies the sale of diabetes treatment. In this example, the product is secondary to the service, and taxability is based on the real object of the transaction — the service provided.