Information Release

This archived Information Release has been superseded by a later release. It is archived here for historical/reference purposes ONLY. For the most current Information Releases, please refer to the main "Information Releases - Current Releases" index.

ST 2003-02 - Landscaping, Lawn Care Services, and Snow Removal - January, 2004 - Revised

This release deals with the application of Ohio sales and use tax to landscaping, lawn care, and snow removal services. It revises and replaces the revised release issued in January 2003 so as to incorporate changes made to the law relating to snow removal in Am. Sub. H.B. 95 (effective 7/1/2003). R.C. 5739.01 (B)(3)(g) includes landscaping and lawn care service in the definition of "sale" or "selling," which makes the provision of these services subject to the Ohio sales and use tax.

R.C. 5739.01 (B)(5) states that "the provision of landscaping and lawn care service and the transfer of property as part of that service is never a construction contract."

R.C. 5739.01 (DD) defines "landscaping and lawn care service" as:

". . . the services of planting, seeding, sodding, removing, cutting, trimming, pruning, mulching, aerating, applying chemicals, watering, fertilizing and providing similar services to establish, promote, or control the growth of trees, shrubs, flowers, grass, ground cover, and other flora, or otherwise maintaining a lawn or landscape grown or maintained by the owner for ornamentation or other nonagricultural purpose."

R.C. 5739.01(B)(3)(u) includes snow removal in the definition of "sale" or "selling," which makes the provision of that service subject to the Ohio sales and use tax on and after August 1, 2003. That section of the law also defines "snow removal service" as "... the removal of snow by any mechanized means …".

Further, the law stipulates that landscaping, lawn care, and snow removal service does not include the providing of such services by a person who has less than five thousand dollars in sales of such services during the calendar year.

R.C. 5739.01(D)(5). This section provides, "A person who makes sales of any of the services listed in division (B)(3), of this section is the consumer of any tangible personal property used in performing the service. The purchase of that property is not subject to the resale exception under division (E)(1) of this section."

R.C. 5739.02(B)(43)(m). This section provides an exception from the sales tax when the purpose of the purchaser is, "To use tangible personal property to perform a service listed in division (B)(3) of section 5739.01 of the Ohio Revised Code, if the property is or is to be permanently transferred to the consumer of the services as an integral part of the performance of the service."

The following is a summary of typical questions being asked along with the Department's responses based on the provisions of the Ohio Revised Code. The responses should be used as a guide to understanding the application of the law.

A) IF I AM PROVIDING A LANDSCAPING, LAWNCARE OR SNOW REMOVAL SERVICE, WHAT TYPE OF LICENSE DO I NEED AND HOW DO I OBTAIN THIS LICENSE?

A person in the business of providing landscaping, lawn care or snow removal service must obtain a Service Vendor’s License by contacting the Department of Taxation, not the County Auditor’s office. There is a $25 application fee. Application for a Service Vendor’s License is to be made on the form ST1-S which can be obtained from the Department’s website ("Forms"-"Sales & Use") or by telephoning 1-800-282-1782.

B) IF I MAKE OVER-THE-COUNTER SALES AND PROVIDE LANDSCAPING, LAWN CARE OR SNOW REMOVAL SERVICE, CAN I REPORT BOTH TYPES OF SALES UNDER THE SAME LICENSE?

NO.

You must report your over-the-counter sales under a regular county vendor’s license (covers sales made at your business location) and your sales of landscaping, lawn care, and snow removal services under the service vendor’s license.

The reason for this separation is that your over-the-counter sales will be taxed at the rate in effect in the county where your business is physically located while your service sales will be taxed at various rates based on the county where the service is received by the consumer. The state must allocate local taxes back to the counties where you perform taxable services.

C) IS REGISTRATION BASED ON THE AMOUNT OF SALES GENERATED BY THESE SERVICES?

YES.

If you were in the business last year and your gross sales from these services were $5,000 or more, you must register as a service provider, collect and remit sales tax.

If you were in the business last calendar year with total sales of these services being less than $5,000 and you are not sure if your sales will be $5,000 or more this year, you must register and begin collecting the tax when your sales equal or exceed $5,000.

If it is reasonable to expect that your total sales will be $5,000 or more, you must register as a service provider.


D) WHAT IS THE "PRICE" USED IN CALCULATING THE SALES TAX?

The total amount billed to your customer for the taxable services is the "price" and would include the cost of miscellaneous supplies consumed by the service provider.

If, however, you are providing a nontaxable service (e.g., excavation work, consulting, soil testing, etc.) in the same transaction, you must separately charge for this service or else it will be considered part of the landscaping or lawn care service and become part of the "price" for calculating the tax.


E) WHAT TAX RATE DO I CHARGE?

If you are providing a service, you must charge tax at the rate in effect in the county where the consumer receives benefit of that service, i.e. the location of the job.

If you provide landscaping or lawn care service to a single consumer at different locations in more than one county, you must separate the charges for each location and collect the tax based on the rate in effect in each county.


F) HOW WILL I REPORT THE TAX COLLECTED ON THESE SERVICES?

As a service vendor, you will file a sales tax return each month (Form UST-1) which will break down your sales and tax on a county-by-county basis.

Returns must be filed even if no sales are made or no tax is due. If you temporarily discontinue your business because of the seasonal nature of the work, you must continue filing returns when due. If you "go south for the winter," we would suggest that you file these "no sales, no tax due" returns early or have a responsible individual file the returns when due to avoid any delinquency.

You are entitled to a vendor discount when returns are received (not postmarked) by the Department and payable to the Treasurer of State on or before the due date with full payment of the amount due.

Failure to file returns on time and/or remit the amount due with filed returns subjects you to an additional charge of 10% of the tax due or $50, whichever is greater, interest, and/or a 50% penalty.


G) ARE THE FOLLOWING ACTIVITIES CONSIDERED LANDSCAPING OR SNOW REMOVAL SERVICES?

NOTE

Those activities indicated as NOT being landscape or snow removal services are instead sales and/or installation of tangible personal property, construction contracts, or personal/professional services. As such, they may be subject to the sales and use tax under other provisions of the law.

YES	NO
Installing, watering, fertilizing, trimming, and otherwise maintaining indoor plants (interiorscape).	Installing an underground sprinkling system.
Digging a hole for planting a tree.	Digging a pond or ditch.
Installing a stone or wooden wall around a flowerbed.	Installing a fountain on a foundation.
Installing fountains (no foundations) that re-circulate water as part of larger projects.	Providing drawings, recommendations, blueprints or consulting services.
Installing a rock garden.	Installing driveways, sidewalks, patios, gazebos or decks.
Installing a trellis.	Installing fences.
Removing a tree. (See question K below.)	Installing swimming pools.
Delivering and spreading of top soil.	Installing retaining walls for erosion purposes.
Providing finish grading.	Installing lighting.
Installing planter boxes.	Delivering and spreading of fill dirt.
Removing stumps. (See Question K below.)	Excavating and rough grading.
Trimming and shredding tree limbs.	Installing drain pipe/tubing.
Installing stone instead of mulch.	Applying chemicals to lakes or ponds to control insects? (See Question W below.)
Applying chemicals to lakes or ponds to control the growth of algae or other plant life.	Removing trash (paper, cans, bottles, abandoned vehicles, discarded appliances and furniture, etc.) from a lot.
Tilling or otherwise preparing the soil for "nonagricultural" purposes? (See Question L below.)	Installing railroad ties or landscape timbers as a retaining wall for a gravel or stone driveway.
Maintaining golf courses.	testing soil
Planting shrubs, flowers, grass or ground cover for an extra fee by a cemetery association.	Using no mechanized means to remove snow (e.g. only using a snow shovel).
Maintaining a cemetery plot for an extra fee by a cemetery association.
Removing leaves.
Removing thatch.
Removing snow using a snow blower or a snowplow on a vehicle.

H) I AM RECLAIMING LAND. AM I PROVIDING A LANDSCAPING AND LAWN CARE SERVICE?

Charges for land reclamation would be landscaping and lawn care services. Sales or use tax should be charged on these services unless the customer has a valid claim of exemption. As with all other sales, you must separate your taxable charges from your non-taxable charges when you are engaged in both a taxable and non-taxable activity

I) MUST I CHARGE TAX WHEN I AM APPLYING CHEMICALS TO LAWNS OR OTHER PLANTS?

If chemicals are being applied to stimulate plant growth, protect plants from vermin or disease, retard plant growth, or otherwise promote and control plant life, you are providing a lawn care service and this service would be subject to tax.

If the chemicals are being applied to a lawn to control vermin (e.g., fleas, ticks, moles, etc.), that may infest a building or structure or the area surrounding a building or structure, and be harmful to pets or humans, you are not providing a lawn care service. You are, however, providing an exterminating service and you would be required to collect tax.

See questions "M" through "P" regarding the taxability of your purchases.


J) IF I AM TRIMMING TREES OR CONTROLLING VEGETATION ON RIGHTS-OF-WAY, AM I PROVIDING A LANDSCAPING AND LAWN CARE SERVICE?

YES.

K) IF I AM CLEARING LAND OF TREES AND OTHER FORMS OF PLANT LIFE, MUST I CHARGE SALES TAX?

If you are clearing land (e.g., removing trees, bushes or other plants) prior to housing or commercial development, you are not providing a landscaping service. You would not be performing this work to establish or maintain a landscape. Therefore, you would not charge sales tax.

If you are removing trees, bushes or other plants in order to make room for expansion of a driveway, a room addition, construction of a deck or patio, changes to existing landscape, etc., you are not providing landscaping service. (It is to be noted that this determination is contrary to the earlier Information Releases and results from a reconsideration of the matter.) If, however, the work entails enhancement or change (e.g., removing dead trees) after the site-preparation is complete, this constitutes a landscaping service.


L) WHAT IS A "NONAGRICULTURAL" PURPOSE?

We consider the raising of plants for purposes other than sale to be a nonagricultural purpose. An example would be having a vegetable garden or flower garden in which an individual raises vegetables or flowers for personal use or to give away to family and friends. In addition, any landscaping and lawncare service performed for a golf course is a taxable service.

M) AM I ENTITLED TO CLAIM EXEMPTION ON THE PURCHASE OF EQUIPMENT AND SUPPLIES USED IN PROVIDING THESE SERVICES?

You can claim exemption on the purchase of items such as trees, shrubs, mulch, fertilizers, herbicides, fungicides, insecticides, salt, etc. that are permanently transferred to the consumer as an integral part of providing taxable landscaping and lawn care services.

You can also claim exemption on the purchase of chemicals that are applied to the area surrounding a building or structure in an effort to eradicate vermin (e.g., fleas, ticks, chiggers, etc.) that are harmful to pets or humans. In such a case, you are providing an exterminating service and may claim exception on the materials permanently transferred to the consumer as an integral part of the performance of that service.

You cannot claim exemption on equipment and tools that are used in providing landscaping, lawn care or snow removal service nor can you claim exemption on other consumable items used in providing the service. Examples are shovels, rakes, shears, saws, and other hand tools; spreaders, sprayers, hoes, mowers, de-thatchers, tillers, tractors, backhoes, cherry pickers, box graders and similar equipment and attachments. Fuel used to operate any of the equipment would be subject to the sales tax if a motor fuel tax refund were obtained.

Other types of equipment that are taxable include, but are not limited to, over-the road motor vehicles (e.g., cars, trucks, and trailers), warehouse equipment, uniforms, etc.

N) CAN I CLAIM EXEMPTION ON LICENSED MOTOR VEHICLES?

NO.

O) CAN I CLAIM EXEMPTION ON EQUIPMENT REPAIRS?

NO.

Since the equipment is being used in a taxable manner, all repairs would be subject to the tax, irrespective of when the equipment was purchased.

P) HOW DO I CLAIM EXEMPTION ON MY PURCHASES?

If you are licensed as a service vendor, you are entitled to claim exemption on your purchases of items transferred permanently to the consumer as an integral part of the performance of your service. You must provide your suppliers with properly completed exemption certificates indicating the proper statutory claim for exception.

Blank exemption certificates can be purchased from any printer or office supply store or can be downloaded from our website at tax.ohio.gov. There are two types - unit and blanket. A unit certificate is issued for a single purchase. A blanket certificate is issued for multiple purchases from the same supplier. The statutory reference for claiming exception from the tax for items permanently transferred in the performance of this service is found in R.C.5739.02(B)(43)(m) and reads:

To use tangible personal property to perform a service listed in division (B)(3) of section 5739.01 of the Revised Code, if the property is or is to be permanently transferred to the consumer of the service as an integral part of the performance the service.

If you are purchasing a taxable item after you have issued a blanket certificate of exemption, you must advise the supplier that the item is taxable. Otherwise, you will be responsible for payment of the tax to the Treasurer of State through a consumer's use tax account or you may be assessed the tax plus penalty and interest.

Tangible personal property purchased for the purpose of being resold "over-the-counter" to customers may be purchased under a "resale" claim of exemption.

Q) IF THE PURCHASER IS CLAIMING EXCEPTION OR EXEMPTION FROM THE TAX, WHAT EVIDENCE MUST I OBTAIN?

If the purchaser is never subject to the tax (e.g., the service is provided to and billed to a state agency, XXX County, City of YYYY, etc.), you must clearly indicate the identity of the purchaser on the sales invoice.

If the purchaser is claiming that the use of the service is not subject to the sales or use tax (e.g., purchased for resale, a sale to an exempt organization, reclamation of strip mined land, etc.), you must have a properly completed exemption certificate on file.

R) WHAT IS MY TAX OBLIGATION IF I DONATE MATERIAL TO A CHARITY OR GIVE MATERIAL AWAY?

If you donate items to charity or give items to customers as a courtesy or through a promotion, you are the consumer of the items and you must pay use tax on your cost of the items.

S) IF I REPLACE AN ITEM COVERED UNDER WARRANTY, MUST I CHARGE TAX OR DO I OWE TAX?

If you charge your customer for replacing an item under warranty, you would collect sales tax on the amount charged (this would most likely be the deductible amount). If, however, you replace an item under warranty without additional charge, you would not be collecting sales tax nor would you owe tax on your purchase of the replacement material.

T) CAN A LANDSCAPER CLAIM "RESALE" WHEN PURCHASING A LAND-SCAPING SERVICE FROM ANOTHER LANDSCAPER?

YES.

If a landscaper (Party A) is subcontracting part of a landscape project out to another landscaper (Party B), Party A's purchase from Party B will be exempt based on the "resale" exception. Party A must provide a properly completed exemption certificate to Party B. If more than one subcontractor is used, Party A must provide exemption certificates to the other subcontractors.

U) CAN A DEVELOPER, LANDLORD, BUILDING MANAGER, CONDOMINIUM ASSOCIATION OR CONSTRUCTION CONTRACTOR CLAIM EXEMPTION BASED ON "RESALE" ON THE PURCHASE OF LANDSCAPING SERVICE OR SNOW REMOVAL SERVICE?

NO.

The developer, landlord, building manager, condominium association, or construction contractor is considered the consumer of the landscaping service or snow removal purchased in the development of land or maintenance of the property.

V) WHAT ARE MY RESPONSIBILITIES IF THE CONSUMER REFUSES TO PAY THE TAX?

As a vendor or seller, you are responsible for charging, collecting and remitting the sales or use tax. The sales or use tax charged by you is a legal charge against the consumer which can be collected by you through all legal means.

W) IF I AM APPLYING CHEMICALS TO A POND FOR INSECT CONTROL, MUST I CHARGE SALES TAX?

If the pond is next to a building or structure and the chemicals are being applied to keep insects from infesting the building or structure or impeding the enjoyment of the area surrounding the building or structure, you are providing an exterminating service, which is subject to the sales tax.

If the pond is not next to the building or structure or is at such a distance that insects from the pond will not cause infestation of the building or structure, you are considered a construction contractor. This means that you will not charge sales tax to your customers but that you will owe sales or use tax on the purchase of the chemicals.

X) IF I AM APPLYING SALT TO REMOVE SNOW, MUST I CHARGE SALES TAX?

In general, the application of salt in conjunction with mechanized snow removal is taxable as snow removal. However, if you are only being paid to apply salt by hand (non-mechanized means), such service would not be subject to sales tax. Please note that you must pay sales tax on your purchase of the salt in that situation.

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If you have any questions regarding this information release, please contact our Taxpayer Service Center at 1-888-405-4039, or e-mail us through our web site: tax.ohio.gov.

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