If you do landscaping or lawn or plant care, you should be collecting sales and use taxes. Landscaping and lawn and plant care services include any work you do to maintain or improve lawns, yards and ornamental plants and trees.
You should collect state tax, plus any local tax (city, county, special purpose district or transit) on the total charge for these services. See Publication 94-105, Local Sales and Use Tax Collection – A Guide for Sellers, for additional information.
Taxable landscaping and lawn care services include the following:
The following landscaping and lawn care services are not taxable:
You should separately state charges for nontaxable services from charges for taxable services. Otherwise, your total charge will be presumed taxable if the taxable portion is greater than 5 percent. You or your customer may overcome the presumption through documentary evidence that establishes the percentage related to nontaxable services. Your invoices or contracts should clearly identify the services you perform.
The professional services of landscape designers and architects are not subject to sales and use tax. These services include consultations, research, preparation of design plans and other engineering or architectural services. You should separate your charge for nontaxable professional services from any charges for taxable landscaping services, or the total charge will be presumed taxable if the taxable portion is greater than 5 percent. Again, you or your customer may overcome the presumption through documentary evidence.
Lawn care and landscaping (other than pest control services requiring a license) are nontaxable when done by a self-employed individual who:
If your income from landscaping and lawn care exceeds $5,000 during the most recent four calendar quarters, you must begin collecting tax on these services on the first day of the quarter after the threshold is exceeded. When your gross income from these services falls to $5,000 or below for the most recent four calendar quarters, the exemption resumes on the first day of the next quarter.
Landscaping services do not include the construction or repair of decks, retaining walls, fences or pools, or the installation of underground sprinkler systems. These activities are either new construction, or repair or remodeling of real property. Be sure to separate landscaping charges from charges for new construction or for repair or remodeling because different rules apply.
Nonresidential real property repair or remodeling is a taxable service. The service provider must collect sales tax on the total charge to the customer for materials, labor and other expenses. The service provider may issue a resale certificate to the supplier when purchasing materials transferred to the customer. Refer to Rule 3.357 regarding Real Property Repair, Remodeling, and Restoration; Real Property Maintenance.
No tax is due on labor to repair or remodel residential real property or to build new structures (residential or nonresidential). The type of contract determines how tax is paid on the materials incorporated into the realty. If the construction contract is lump sum (one charge, including labor and materials), the contractor pays tax when purchasing the materials and does not collect tax from the customer. If the contract is separated (separate charges for labor and materials), the contractor collects sales tax from the customer on the charges for materials but not for labor. A separated contractor may purchase the building materials tax-free by issuing a resale certificate. Refer to Rule 3.291 on Contractors.
Landscaping and lawn care are not taxable when purchased by a contractor or homebuilder as part of the improvement of real property with a new residence. This exclusion applies to the construction of model homes and speculative homes that will be sold for residential use, but not to an improvement being used as an office. For example, tax is due on landscaping of a sales office, even if it's located in the residential development. If you landscape a new residential structure for a contractor, you are responsible for billing and collecting tax until the contractor provides certification stating that the service is part of an improvement of real property with a new residential structure. If it is later determined that the work does not qualify as nontaxable, the person who issued the certification will be held liable for the tax.
The landscaping materials used for new residential structures are taxable. In a lump sum contract (one amount for materials and labor), the landscaper pays tax when purchasing the materials and does not collect tax from the customer. If the contract is separated (separate charges for materials and labor), the landscaper collects tax from the contractor or homebuilder on the charge for materials and can give a resale certificate when purchasing materials.
Give a resale certificate to the supplier when purchasing fertilizer, plants, flowerbed edging, herbicides, and processed dirt, sand and gravel used in taxable landscaping or lawn care. These materials are transferred to the care, custody and control of your customer as part of your taxable service. When landscaping a new residential structure for a contractor or homebuilder, keep in mind the difference between lump sum and separated contracts in paying or collecting tax on these materials.
You must pay sales tax on the supplies and equipment used in landscaping and lawn care. There is no exemption for the purchase or rental of wheelbarrows, lawn mowers, string trimmers, gloves and other equipment, tools, and supplies.
Sometimes you may hire a third party to provide some of the landscaping services that you sell. In that case, give the third party a resale certificate instead of paying sales tax and collect tax from your customer on the total charge, including the third party's charge.