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Are snow and ice services taxable?

Are snow and ice services taxable?

By Martin Tirado, CAE

A year ago I was reading the Wisconsin sales tax report bulletin (fascinating material), and noticed an article clarifying that snow services were not sales taxable according to Wisconsin law. First thing I checked was my home agreement for snow plowing with my contractor. Sure enough, he was charging sales tax. I made a polite call to notify him of this law; he appreciated it and said he was not aware. This fall, my contractor sends me my contract for 2011-12 with pre-payment terms. No sales tax. Perfect, it’s now officially duty free.

This triggers additional thought around sales tax related to other outdoor maintenance services. Are snow services taxable in other states and provinces in North America? What about other outdoor services, notably landscaping. Interestingly, in Wisconsin, landscaping is subject to sales tax. Seasonal or ‘one contract’ agreements get slightly more complicated, requiring contractors to divide the landscape and snow services separately into what service they are performing related to sales tax. Wisconsin’s law and examples are noted here: http://www.revenue.wi.gov/taxpro/news/101108a.html.

Can a contractor get any value of marketing snow services as ‘duty free’? I don’t know, but if nothing else, it saves contractors the time and energy from filing the paperwork and financial tracking that is tied to paying sales taxes.

I’m still interested in why snow services are exempt from sales tax. Wisconsin law is lengthy in describing the situations where sales tax is exempt, but not much detail beyond that. I’m also interested in finding out if this is universally the case throughout North America. Let me know in the comments section if snow services in your state or province are subject to sales tax.

Martin Tirado, CAE is Executive Director of SIMA.

Last modified on Wednesday, 04 April 2012 04:46
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6 comments

  • Comment Link Friday, 24 February 2012 17:12 posted by Martin Tirado

    Bob, so why wouldn't landscaping design/build, and tree planting, be non-taxable as that's a permanent improvement that adds value? OH seems confusing.

    Another topics that could open a can of worms are state/provincial lien laws. I'm not aware of anywhere (yet) where snow services could be lienable.

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  • Comment Link Friday, 24 February 2012 01:25 posted by Kent Peddie

    Ontario taxes snow removal at 13%, (which is comprised of a 5% federal tax and 8% provincial tax).

    Up until 2 years ago the tax rate was federal only, so the extra 8% was a pretty big shock for our residential clients.

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  • Comment Link Wednesday, 22 February 2012 16:30 posted by Robert Smart

    Martin,

    You have opened up a can of worms, especially here in Ohio. Landscape installation and service is taxable. Hardscaping is non-taxable, however hardscape services like cleaning are taxable. Lighting installation is non-taxable but the service or maintenance of the system is taxable. Sprinkler System installation is non-taxable but service work is taxable. Tree work is taxable. Fertilization is taxable, and of course the big answer.........Snow and Ice Management is all taxable because it is a service. The state of Ohio basically says that a permanent improvement or fixture that ads value to the property is non taxable, but all service related work is taxable. I am sure that over time this will all change as they discover they can receive more tax dollars off of other major components that we as contractors supply our clients.
    The biggest problem is the lack of responsible contractors that actually collect tax or better yet collect it and don't file it with the state. We have run across many instances over the years where our pricing has looked higher due to the fact that we collect the tax and file it properly with the state. Somehow the state needs to find a way to monitor this poor practice.
    The tax laws are constantly changing here in Ohio, just like one year they passed a law that all equipment purchases were tax exempt! This lasted about 6 months and then they changed the tax law back, especially after they found out how many contractors went out and purchased new equipment during this non-taxable period of time.
    Well, hope you all are as confused as we are now that you read my post.

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  • Comment Link Wednesday, 22 February 2012 14:18 posted by Deb Mattson, CSP

    CT is taxable...just like everything else!

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  • Comment Link Tuesday, 21 February 2012 18:10 posted by Paul Vanderzon

    LOL thats funny Scott, here in Quebec we have to charge 5% GST (Federal Sales Tax) then add that to the initial amount and then charge 9.5% PST (Provincial Sales Tax) for all snow services. This year it was very complicated since the PST went up 1% on January 1, 2012. Our company has collected $239,600.00 in sales tax this season. Its really not a big deal for commercial accounts because they get all their sales tax back. It is a real problem in the residential market. A $310.00 seasonal contract goes up to $356.42 after tax. It can be very difficult for a legitimate company to compete with others who are willing to do it for cash. It is a huge problem in my market and we are at a very big disadvantage. Thank you Martin for bringing this up.

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  • Comment Link Tuesday, 21 February 2012 17:14 posted by Grandview

    In NY just about everything is taxable. "Duty Free" around here,people think of Canada with us so close to the boarder!

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