What is the tax on services provided?

See Rule 3, 366, Internet Access Services. Laundry, cleaning and garment services are taxable. When it comes to sales tax, the general rule has always been that “products are taxable, while services are not taxable. Sales of services are generally exempt from New York sales tax, unless specifically taxed.

When a service provider combines Internet access with a taxable service, such as a telecommunications service or a cable television service, the service provider should not levy taxes on the amount allocated to Internet access if the service provider can establish through its books and register an allowance for taxable service and for non-taxable Internet access. Pest control and extermination, the collection or disposal of garbage and other debris, cleaning and custody services (including sweeping or cleaning parking lots), garden and lawn maintenance (including tree surgery and plant leasing), and surveying are taxable real estate services. In this case, the company separately stated that pet care services did not affect taxation, since the maintenance of tangible assets is a taxable service in New York. You don't want to charge or pay unnecessary sales tax for services that are exempt and, on the other hand, you don't want to realize in the future that you should have paid taxes for one of your services and owe back taxes plus interest and penalties.

See Rule 3.344, Telecommunication Services and Publication 94-132, Sales Tax on Telecommunications Services. 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. Delving into state definitions of key concepts, such as tangible personal property, will help you understand what products and services the state imposes taxes on from the start. Advance sales tax laws generally allowed only “tangible personal property” (TPP) to be taxed, rather than taxing services.

If sales tax rates and rules are not properly applied to products and services, costly mistakes can be made. If you charge a single price for a package of taxable and non-taxable goods and services, the state will likely consider you a seller of goods rather than services and impose taxes on the entire sale price. Companies that sell services in multiple states need to know where those services are subject to sales tax. This 90-minute live webinar will cover the ins and outs of service taxation with real-life examples so you're prepared to manage sales tax in this changing landscape.

See Section 151.025 (d) of the Texas Tax Code and Rule 3.313 (b) (, Cable TV Service and Combined Cable Service). While services aren't subject to sales tax in every state, it's important to note that the exclusions aren't absolute. Taxes must be paid for credit reporting services if the credit applicant's address is in Texas at the time a report is requested and the person who requested the credit report is in Texas or is doing business in Texas.

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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