1. Missed the live Ask the Expert event?
    Catch up on the conversation about fertilization strategies for success with the experts at Koch Turf & Ornamental in the Fertilizer Application forum.

    Dismiss Notice

State Sales Tax

Discussion in 'Business Operations' started by Wells, Nov 10, 2003.

  1. Wells

    Wells LawnSite Member
    from SLC UT
    Messages: 0

    After talking with the State Tax Commision today I learned I do not need to collect and pay any sales tax.

    The reason being that i'm performing services on real property and apparantly, sales tax does not apply to real property in the state of Utah.

    Are other states the same? Are you required to collect and pay any Sales tax?
  2. newleaflandscape

    newleaflandscape LawnSite Senior Member
    Messages: 348

    Easy way to beat sales tax. On item cost always show as the price installed. Even if you do mark the plants up. Pay the tax at the nursery you buy from. Since labor isnt taxable, all you have to say is that you dont make any moeny on the plants, you only make it on the installation. They cant really prove that you mark that plants up. If you have someone buying plants from you and you are wanting to mark them up, that is simple too. Deliver the plants and charge them whatever you wnna make on the delivery. Since delivery is labor, not taxable. I have never paid any sales tax and never intend to do so.
  3. Wells

    Wells LawnSite Member
    from SLC UT
    Messages: 0

    Great info
  4. John Allin

    John Allin LawnSite Bronze Member
    Messages: 1,488

    PA, OH, NY and CT are different than what has been noted herein. Handing out "blanket advice" about how to "beat sales tax" may be valid in one state and patently illegal in another. Be careful when soliciting and dispensing such advice on a discussion forum such as this.
  5. MacLawnCo

    MacLawnCo LawnSite Bronze Member
    Messages: 1,847

    Thats great advice:rolleyes: :rolleyes: NOT! Its just part of the game, and if you dont play by the game then you are cheating.
  6. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Messages: 4,771

    newleaflandscape, that is great advice. It actually has a name.....it's called "streamline bookeeping". I attended a seminar on state taxes, given by IRS accountants and they even suggested this method to be used by small business.

    MacLawnCo, it's perfectly legal. Another business that uses this method of bookeeping is bars, taverns and clubs. When was the last time you paid sales tax there.....seperately. It's just included in the price, same as lawn service. Some landscapers might not include it so that their bid on a job is lower than a competitors, then hit the client with sales tax on the plants. Now the total cost of the job to the client has came out to be the same as the competitors. Catching my drift.

    Now I am speaking from the state of KS. There could be different laws and regulations on this is different states.
  7. gramps

    gramps LawnSite Member
    Messages: 241

    I don't buy into that (fair share) bit. Why would anyone pay sales tax on my labor. Thier looking into this communication form we are using here. To some how tax. More fair share. My thoughts.
  8. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Messages: 4,771

    I guess I need to add to my post....I am talking about goods that I have purchased and have already paid sales tax on. I would never advice exempting yourself from the sales tax and not taxing the customer.
  9. Green in Idaho

    Green in Idaho LawnSite Senior Member
    from Idaho
    Messages: 833

    Wells, your point is well taken. However you do need to be well aware of the USE tax laws.
    USE tax applies on items you consume when a sales tax was not previously paid. For example, if you bought plants from Oregon, they ship them to you and you install, you are responsible to pay USE tax on the value you paid since you did not already pay Utah sales tax on them. The Oregon grower is most likely not going to charge you UT tax. And if you were to go Wyoming and pay thier 4% on some fertilizer and then take it back to Utah to apply..... well you need to pay USE tax on the difference of Utahs 4.75 and WY 4%.

    You are also subject to USE tax on items such as office supplies or computer purchased on the Internet or mail-order.

    If you did not already get from the UT STC here is their sales tax brochure for greenies:

    USE Tax-- it'll drop you in a deep well if you are not careful.
  10. Green in Idaho

    Green in Idaho LawnSite Senior Member
    from Idaho
    Messages: 833

    New Leaf, without knowing the specifics of YOUR state I will say that if anyone did such transactions in a state where installation of landscape material is taxable, the contractor would eventually be responsible for paying the sales tax.

    You buy for $100 and pay $5 tax (5%) at the nursery.

    You go the property owner and invoice for $105 without charging tax AND without spelling out "sales tax included" You will be responsible for paying $5.25 (5% of $105) in sales tax that you failed to collect from the property owner.

    If you invoice for $105 and say "sales tax included" you had better have a sales tax permit and then remit the $5 of tax.

    The fact that you paid the tax when you bought it is your own fault... too bad.

    On the other hand in a state where real property improvements and/or landscape installation is not taxable. Pay when you buy the materials.

    IF you sell plants retail to customers, i.e. deliver a flat of petunia for them to install you are going to be considered a retailer and should be collecting sales tax.

    "and never intend to"-- good luck!

Share This Page