Sales of landscaping and lawn maintenance services are subject to Wisconsin sales and use tax. The sale of tangible personal property transferred with such landscaping and lawn maintenance services is also taxable. The sale of snow removal services is not taxable.
Some service providers provide lawn maintenance services in the summer months and snow removal services in the winter months. This type of service may be provided on a written contract basis where the customer pays a set amount each month, regardless of which service is provided and how often.
This article will explain the tax treatment of each of these services.
Landscaping and Lawn Maintenance Services
The tax on landscaping services is provided in sec. 77.52(2)(a)20., Wis. Stats. (2007-08), which imposes tax on "[t]he sale of landscaping and lawn maintenance services including landscape planning and counseling, lawn and garden services such as planting, mowing, spraying and fertilizing and shrub and tree services."
"Lawn maintenance services" includes several different services. For example, mowing lawns, watering lawns, aerating lawns, and raking leaves are lawn maintenance services.
Section 77.52(2m)(b), Wis. Stats. (2007-08), provides that tangible personal property that is physically transferred to the customer in conjunction with the provision of landscaping services is a sale of the property separate from the service. Therefore, the seller may purchase any tangible personal property without tax for resale that it transfers to its customers with such landscaping and lawn maintenance services.
Example: Landscaper X is seeding a lawn for its customer for $1,000. Landscaper is selling (1) the landscaping service, and (2) the seed. Therefore, Landscaper X's charge of $1,000 to its customer is subject to sales tax. Landscaper X may purchase the seed without tax for resale.
Additional information is provided in
Sales and Use Tax Treatment of Landscaping, which includes examples of taxable landscaping services and nontaxable services.
Snow Removal Services
Snow removal services are not listed among the taxable services in sec. 77.52(2)(a), Wis. Stats. (2007-08). A seller's charge for snowplowing or sanding and salting roads, sidewalks, or parking lots is not subject to sales tax. The service provider is the consumer of any tangible personal property that it transfers to its customers with such services and is liable for sales or use tax on its purchase of such property.
Example 1: A person contracts with Company A to have its driveways and parking lots plowed and sanded during the winter months. Company A charges the person by the hour. No part of the charge by Company A is subject to sales tax. Company A must pay Wisconsin sales or use tax on its purchase of the sand used in providing the service.
Example 2: A person contracts with Company B to have its driveways and parking lots plowed and salted during the winter months. Company B charges the person based on the amount of salt used. No part of the charge by Company B is subject to sales tax. Company B must pay Wisconsin sales or use tax on its purchase of the salt used in providing the service.
One Contract for Lawn Maintenance Services and Snow Removal Services
When a service provider provides both taxable lawn maintenance services and nontaxable snow removal services for a single monthly fee, the service provider should make an allocation between the taxable and nontaxable amounts. In the months in which only snow removal services are provided, the service provider's charge is not taxable. In the months in which only lawn maintenance services are provided, the service provider's entire charge is taxable. In months in which both snow removal services and lawn maintenance services are provided, the service provider should make a reasonable allocation between the two services. Sales tax is due on the portion of the charges attributable to the lawn maintenance services.
Example: Service Company Z has a maintenance contract with the owner of an apartment building to provide lawn mowing and snow removal services for a monthly fee of $900. From June through October, only lawn mowing services were provided. From November through April, only snow removal services were provided. In May, snow removal services were provided once and lawn mowing services were provided twice.
For the months of June through October, Service Company Z's charge is subject to sales tax. For the months of November through April, Service Company Z's charge is not subject to sales tax. For the month of May, the one-third of Service Company Z's charge that relates to snow removal (i.e., $300) is not taxable, and the two-thirds of Service Company Z's charge that relates to lawn mowing (i.e., $600) is taxable.
November 8, 2010