ST 1995-02 - Building Management - UPDATED November,
2004- Supercedes Information Release Dated October, 1995
The proper application of sales and use tax to building
managers has been a recurring question over the years. The
inclusion of “landscaping and lawn care services,” “private
investigation and security services,” “exterminating
services,” “building maintenance and janitorial services,”
and “snow removal services” as services subject to sales and
use taxes has made this question of greater interest.
For purposes of this information release, a building manager
is a person (corporation, partnership, individual, etc.) who
has complete responsibility for the operation of a commercial
property under contract with the property owner.
A common example of this would be an office building owned by
a limited partnership. The partnership contracts with a
building management company to keep the property in good
repair, provide housekeeping and security for the tenants,
mow the lawn and landscape the grounds, sweep and plow the
parking lot, collect rents, remodel offices, etc. The manager
submits a monthly invoice to the owners and is reimbursed all
authorized expenditures and paid a fee for the management
service.
For sales and use tax purposes, the building manager is the
consumer of everything purchased to provide the management
service. The transaction between the manager and the owner is
a “building management service” which is not currently
subject to sales tax. Even though, as part of the overall
management service, the manager is performing lawn care,
security, housekeeping, etc., the manager does not need a
vendor’s license and should collect no sales tax from the
owner.
The building manager, however, must pay sales or use tax on
all tangible personal property purchased to provide the
management service. For example, the manager must pay sales
tax when purchasing light bulbs, cleaning supplies,
maintenance tools, restroom supplies, furniture, and so
forth.
The manager must pay sales tax when purchasing taxable
services. Examples of taxable services include: hiring a
security company to provide guards and/or monitor the
security system, having a nursery landscape the grounds,
retaining an exterminator to spray for insects, having a
cleaning company clean carpets, or getting personnel from a
temporary employment agency. Any work actually performed by
employees of the building manager has no sales or use tax
consequences.
If you have any questions regarding this matter, contact our
Taxpayer Services Center at 1-888-405-4039, or e-mail us
through our website at tax.ohio.gov.
OHIO RELAY SERVICES FOR THE
HEARING AND SPEECH IMPAIRED
Telephone: 1-800-750-0750