Should I Charge Sales Tax on Snow Removal?
- Sales Tax
- Dec 5, 2016 | Laura McCamy
The Farmer’s Almanac predicts that the winter of 2016-2017 will be stormy. As the days get ever shorter and the cold descends on the northern United States, the sight of snowflakes fluttering to the ground has the snow removal industry seeing dollar signs.
If you’re ready to fire up your snowplow, you might not be thinking about whether you need to charge sales tax on snow removal. But you should.
When Not to Charge Sales Tax on Snow Removal
Snow removal is a service. Some states don’t levy a sales tax on services; some add sales taxes to only certain services; and some don’t tax services at all.
It's important to understand the rules wherever you live. They can get confusing For example, as in Minnesota and Wisconsin, you can clear driveways and sidewalks in Pennsylvania without adding sales tax. But removing snow from Pennsylvanian roofs and gutters is considered building maintenance, which makes it a taxable service.
In Ohio, your first $5,000 of snow removal work is tax-free; after that, you will need to add sales tax. So kids can exercise their entrepreneurial spirit by charging the neighbors to clear their driveways after it snows without registering and paying sales tax. But companies that provide this service full-time will end up having to charge and remit sales tax on their services.
When to Charge Sales Tax on Snow Removal
Snow removal is taxable in many states. In New Jersey, for instance, it's a taxable service. Snowplowing is a service subject to sales tax in New York. Connecticut classifies snow removal as a maintenance service, which is taxable (though the state lets enterprising kids off the hook -- casual and occasional shoveling is not subject to sales tax). Washington considers plowing a construction service and, therefore, taxable.
In many states, even if the service of removing snow is not taxable, the salt or sand you spread to keep ice from forming may be subject to sales tax. For example, Iowa doesn’t add sales tax to the service of plowing or spreading salt or sand, but both materials are listed as building supplies and therefore subject to sales tax.
Tax Exemptions on Snow Removal
Tax-exempt organizations don’t have to pay sales tax on snow removal. You can get the church parking lot or the sidewalk in front of the nonprofit plowed without adding sales tax to your bill, no matter what state you’re in.
Research Your Sales Tax on Snow Removal
This is not a comprehensive guide to sales tax on snow removal in every state. Before you hit the streets with your new ScoopDogg Snow Pusher (yes, it’s a real thing) attached to your tractor, it’s a good idea to check your state’s Department of Revenue website to find out whether snow removal is a taxable service.
If you want a way to simplify managing sales tax on snow removal, sales tax automation software can lend a hand. That way you can focus on clearing the path through what looks to be a snowy winter -- and a one prosperous for snow plow operators.