This article explains the sales and use tax treatment of janitorial and other related services. The department previously published an article in the June 1980
Sales and Use Tax Report stating that routine and repetitive janitorial services are not taxable. This article provides additional guidance.
Routine and Repetitive Janitorial Services
Routine and repetitive janitorial services (e.g., vacuuming carpets, washing windows, dusting and cleaning desks, file cabinets, and bathroom fixtures, etc.) are not taxable.
"Janitorial services," as used in this article, means a variety of cleaning services in a building to both tangible personal property and real property, performed under a single contract or agreement.
"Routine and repetitive," as used in this article, does not include janitorial services performed for a customer only once.
Example 1: Individual contracts with Cleaning Company to clean and vacuum her home on a weekly basis, including the bathroom fixtures, floors, appliances, furnishings, and windows. Cleaning Company is providing routine and repetitive janitorial services to Individual.
Example 2: Cleaning Company contracts with Building Owner to clean and vacuum its office building nightly, including the bathroom fixtures, floors, furnishings, and windows. Cleaning Company is providing routine and repetitive janitorial services for Building Owner.
Example 3: Builder contracts with Cleaning Company to clean a newly remodeled home, including bathroom and kitchen fixtures, appliances, floors, and windows. This is a one-time service. Cleaning company is not providing repetitive janitorial cleaning services for Builder.
Specialized or Non-Repetitive Cleaning Services
Specialized or non-repetitive cleaning services to tangible personal property are taxable. Specialized or non-repetitive services to real property are not taxable.
Example 1: Cleaning Company contracts with Building Owner to clean carpets on a quarterly basis in its building. Cleaning Company is providing specialized cleaning services to tangible personal property (i.e., carpet). Therefore, the charges for these services are taxable.
Example 2: Cleaning Company contracts with Building Owner to clean the windows on a quarterly basis in its building. Cleaning Company is providing specialized cleaning services to real property (i.e., windows). Therefore, the charges for these services are not taxable.
If a service provider makes a single charge for cleaning tangible personal property and real property, the service provider should make a reasonable allocation of the charge between the amount for cleaning tangible personal property (taxable) and the amount for cleaning real property (nontaxable). Using the number of hours spent performing each of the services is an example of a reasonable way to make this allocation.
If there is a single charge for providing both taxable and nontaxable services and the seller does not make an allocation, the entire charge is subject to tax, unless the Department of Revenue determines that another method more accurately reflects the tax.
Example 1: Cleaning Company charges Individual $100 to clean her home. The charge is for a one-time cleaning service. Cleaning Company does not clean the home routinely and repetitively. Cleaning Company determines that it spent two hours cleaning tangible personal property (i.e., cleaning bathroom fixtures, carpeting, and appliances) and three hours cleaning real property (i.e., cleaning floors, walls, light fixtures, and windows). Of the $100 charge, $40 is taxable, as computed below:
Two hours taxable services
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= 40% x $100 total charge = $40
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Five total hours
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Example 2: Cleaning Company is hired by Contractor to clean an office building after it was remodeled. The charge is for a one-time cleaning service. Cleaning Company charges Contractor $20 per hour and spends 100 hours cleaning the office building. Cleaning Company determines that it spent 25 hours cleaning tangible personal property and 75 hours cleaning real property. Cleaning Company's $500 charge ($20 X 25 hours) for cleaning tangible personal property is taxable.
Example 3: Cleaning Company provides janitorial services for Car Dealer under a single contract. The contract indicates that Cleaning Company will clean the bathrooms, empty the trash containers, and vacuum the carpet nightly in Car Dealer's showroom and offices. In addition, the contract also provides that twice per year, the carpets will be cleaned. All of the above services will be provided for $15,000 per year. The $15,000 annual charge is not taxable since the services are routine and repetitive janitorial services.
Example 4: Same facts as
Example 3, except that charges for each service provided under the single contract are separately stated as follows: $14,000 for the nightly cleaning and $1,000 for the semi-annual carpet cleaning. Even though the charges are separately stated for each of the services provided under the single contract, the charges are not taxable since the services are routine and repetitive janitorial services.
Example 5: Same facts as
Example 4, except that the semi-annual carpet cleaning of $1,000 is NOT included in the overall janitorial services contract. Instead, Car Dealer contacts Cleaning Company when Car Dealer wants the carpets to be cleaned. Cleaning Company charges Car Dealer $500 each time it clean the carpets in the showroom and offices. The amounts charged for the janitorial services are not taxable because the services are routine and repetitive. However, the $500 charge for each carpet cleaning is taxable, since the carpet cleaning is specialized and is not part of the overall janitorial services contract.
September 26, 2014