Can you tax services?

Sales tax also doesn't apply to most services. Examples of services not subject to sales tax include capital improvements in real estate, health care, education, and personal and professional services. Sales of services are generally exempt from New York sales tax, unless specifically taxed. Medical equipment and supplies purchased by a person for use in providing medical services in exchange for compensation are subject to sales and use taxes.

However, several state legislators have begun to re-examine the exclusion of the service from the sales tax liability because they realize that a potentially large source of revenue is not being collected. The IRS Voluntary Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free basic tax return preparation to qualified individuals. However, taxpayers should be aware that subsequent changes to the Tax Law or its interpretation may affect the accuracy of a tax bulletin. See Pub 718-S, Local Sales and Use Tax Rates on Sales and Installations of Residential Solar Energy System Equipment and Pub 718-CS, Local Sales and Use Tax Rates on Sales and Installations of Commercial Solar Energy System Equipment.

For example, in Hawaii, New Mexico and South Dakota, a sales tax is imposed on all services provided. At some tax sites, taxpayers also have the option of preparing their own basic federal and state tax return for free using web-based tax preparation software with an IRS-certified volunteer who will guide you through the process.

Janis Urso
Janis Urso

Passionate zombie specialist. Unapologetic social media evangelist. Infuriatingly humble pop culture maven. Lifelong bacon lover. Wannabe web nerd. Incurable social media geek.

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