ST 2002-04 - Building Maintenance and Janitorial Services

ST 2002-04 - Building Maintenance and Janitorial Services - UPDATED September 2015. UPDATE

Supersedes Information Releases Dated November 2012, November 2004, November 2002 and

September 2000

The purpose of this information release is to answer some of the commonly asked questions

regarding building maintenance and janitorial services. Ohio Revised Code section (“R.C.”)

5739.01(B)(3)(j) imposes sales tax on the providing of building maintenance and janitorial

services. Additionally, this information release is being updated to exclude necessary sanitation

services for certain meat processing plants from the definition of building maintenance and

janitorial service. This change is effective October 1, 2015. R.C. 5739.01(II) defines building

maintenance and janitorial service as follows:

“Building maintenance and janitorial service” means cleaning the interior or

exterior of a building and any tangible personal property located therein or

thereon, including any services incidental to such cleaning for which no separate

charge is made. However, “building maintenance and janitorial service” does not

include the providing of such service by a person who has less than five thousand

dollars in sales of such service during the calendar year. As used in this division,

“cleaning” does not include sanitation services necessary for an establishment

described in 21 U.S.C. 608 to comply with rules and regulations adopted pursuant

to that section.

The following questions and answers explain how sales tax applies to sales of building

maintenance and janitorial services.

1. What kinds of activities are considered a “building maintenance and janitorial

service?”

In general, this service includes washing, vacuuming, dusting, polishing, and waxing in

offices, houses, and other buildings. Some examples are:

• disinfecting and deodorizing;

• cleaning carpeting and upholstery;

• chimney sweeping;

• cleaning venetian blinds and window shades;

• cleaning windows, walls, ceilings, and indoor pools;

• washing and waxing floors;

• sandblasting, chemically cleaning, power washing or otherwise cleaning building

exteriors, including siding, roofs, chimneys, and gutters;

• cleaning grease traps, sludge pits, blast furnaces and other similar industrial

cleaning if the trap, pit, blast furnace, etc. is located inside the building;

• snow removal & sweeping dirt off parking garage decks (buildings);

• cleaning ventilating systems, including furnace and ductwork;

• emptying waste baskets and picking up trash for the immediate or eventual

removal from a building; and

• housekeeping (maid) service.

NOTE: Cleaning includes the removal of soil, dirt, wax, grease, or other pollutants or

contaminants from exterior and interior surfaces of a building or from personal property

located in the building. However, the intentional removal of a permanent finishing or

coating such as paint, varnish, stain, sealers, wallpaper, tile or carpet adhesives, etc., in

conjunction with refinishing the surface, is not “cleaning” and is not a taxable janitorial

service.

2. What are some examples of activities that are not a taxable building maintenance

and janitorial service, but may be associated with the service?

• applying a stain repellant to carpeting;

• repairing chimneys, carpeting, roofs, ceilings, walls, floors, and other forms of real

property;

• painting exterior and interior building surfaces;

• miscellaneous maintenance;

• plumbing, electrical, and heating, ventilating, and air conditioning repair or

maintenance;

• snow and ice removal from parking lots, driveways and sidewalks; (see note 1)

• cleaning outdoor pools;

• unclogging drains and pipes;

• clearing leaves, grass, and other debris from lawns, sidewalks, patios, etc.; (see

note 2)

• removing unwanted articles from buildings (only in connection with the service of

hauling them away);

• off-site cleaning of building contents such as draperies and venetian blinds;

stripping wallpaper, paint, varnish, etc. off walls, floors, and ceilings. (see note 3)

NOTE 1: Snow removal is a taxable service if sales exceed $5,000 in a calendar year under

R.C. 5739.01(B)(3)(t).

NOTE 2: Clearing leaves and other debris from lawns is a taxable landscaping and lawn

care service if sales exceed $5,000 in a calendar year under R.C. 5739.01(B)(3)(g)

NOTE 3: Cleaning draperies and other fabrics is a taxable laundry and dry cleaning service

under R.C. 5739.01(B)(3)(d).

3. If I provide a building maintenance and janitorial service, must I have a license, and

if so what type of license is required? How do I obtain one?

Yes. Anyone providing building maintenance and janitorial services must be licensed as a

vendor, unless they are an employee of the person using the service (e.g. paid a wage,

has income tax withheld, covered by unemployment insurance, etc.)

A vendor’s license may be obtained through the Ohio Business Gateway at

business.ohio.gov, or at the county auditor’s office. There is a $25 application fee for a

vendor’s license.

4. If I sell cleaning supplies outright, as well as provide taxable services, can I report

both types of sales on the same license?

Yes.

5. What price should I use in calculating the amount of tax to be charged?

The total amount billed to the customer for a taxable service is the “price,” even though

you may choose to itemize certain parts of the bill, such as cleaning supplies consumed in

the service or mileage charges to travel to the building being cleaned. If you provide

nontaxable services with a taxable building maintenance and janitorial service, you must

separate the charges otherwise the entire invoice is subject to tax.

Example 1: A power washing company is hired to clean the exterior of a house. While

there, the customer requests that the driveway also be washed. If the power washing

company separately states the charge for cleaning the driveway, no tax is due on that part

of the bill. If it does not separately bill the charge associated with driveway cleaning, the

entire amount is taxable.

Example 2: A pool cleaning company contracts with a hotel to clean and maintain pools.

There are two pools, one indoor and one outdoor. Cleaning the indoor pool is taxable.

Cleaning the outdoor pool is not taxable since it does not meet the definition of a building

maintenance and janitorial service. If the pool cleaning company separately states the

charge for cleaning the outside pool, no tax is due on that part of the price. If the charges

are not separately stated, the entire charge is taxable.

6. Am I required to register as a vendor based upon the total amount of sales made of

the building maintenance or janitorial service?

Yes. You must register and collect the sales tax if your sales of this service equals or

exceeds $5,000 in a calendar year. Once you reach the $5,000 threshold, you are required

to collect and remit sales tax on all sales until you cease business.

7. When is the tax to be reported?

The sale is made when the service is provided or when the price for the service is paid,

whichever comes first. You must report your sales and tax liability on the return that

covers the period in which sales are made regardless of when the price is paid. Returns

are due on the twenty-third day of the month following the close of the reporting period.

8. What rate of tax should be charged?

The sales tax rate for a service is determined by the county where the customer receives

the benefit of your service; that is, where the building is located. If you provide a building

maintenance and janitorial service for a customer with buildings in more than one county,

you must separate the charges for each county and bill the tax based on the appropriate

rate for each county. The sales tax rate applicable to a particular location can be found on

the Department’s website at https://www.tax.ohio.gov/online_services/thefinder.aspx

If you’d like to be automatically notified of any sales tax rate changes please register for

the Department’s Tax Alert notification service at

https://www.tax.ohio.gov/Other_Webpages/TaxAlerts/odtalerts.html.

9. How do I report the tax collected on this service?

All vendors must file sales tax returns electronically via the Ohio Business Gateway or

using the Department’s Telefile service. You must file a sales tax return even if you made

no sales during the period. If you temporarily suspend business for a time longer than

your return period, the Department suggests that you file your return(s) early or have a

responsible person file them on time in order to avoid delinquent filings and possible

penalties.

You are entitled to a 3/4 of 1% (.0075) discount on the tax to be paid, if tax returns are

timely filed with full payment of the amount due.

10. Am I entitled to claim exemption on the purchase of equipment, tools, or supplies

used in providing a building maintenance and janitorial service?

Your purchases of equipment tools and supplies used in providing building maintenance

and janitorial service generally are not exempt. However, you are entitled to claim

exemption on your purchases in two circumstances.

You may claim the “resale” exemption for those products that are sold outright. You may

also claim exemption on the purchase of personal property used to perform the building

maintenance or janitorial service if the property will be permanently transferred to the

customer of the service as an integral part of the performance of the service.

Example 1: A building maintenance and janitorial service company uses products and

equipment to clean and wax floors. It sells some of the products directly to customers for

the customers’ own care of their floors. The company may claim exemption for any

products sold outright to customers as personal property “purchased for resale.”

Example 2: The company may also claim exemption for the floor wax it uses to polish the

floors because the wax is “permanently transferred to the consumer of the janitorial

service.” The company may not claim exemption for other products, which it does not

permanently transfer to the consumer of the service, such as soaps, cleaning solutions,

mops and brooms. Other exempt items include, but are not limited to: furniture polish,

stain or water repellants and trash can liners. Taxable items include, but are not limited

to: mops, rags, brooms, trash carts, vacuum cleaners, floor polishing equipment, sponges,

pails, cleaning/stripping solutions and other chemicals.

11. Am I entitled to claim exemption on the purchase of any other service that is

considered “sale” and “selling” under the Ohio Revised Code?

If you purchase another “building maintenance and janitorial service” for the purpose of

reselling that service to a customer, you may claim “resale” from that service supplier.

However, you must charge tax on the total price of all the building maintenance and

janitorial service provided.

Example 1: Company A has a contract to clean an office building daily. The contract also

calls for a periodic carpet cleaning every six months. Company A does not have the

personnel or equipment to adequately clean carpeting, so it contracts with Company R.

Company A may claim exemption from tax on its transaction with Company R based on

its resale of R’s service.

Example 2: Company C has the same contract as Example 1, except when it is time to

clean the carpet it hires temporary help from an employment agency [employment

services are taxable under R.C. 5739.01(B)(3)(k)] and rents the equipment needed for the

job. Since Company C is consuming both the employment service and the rental of the

equipment and not reselling either, it is not entitled to claim exemption.

12. If a building maintenance and janitorial service is provided for a customer and that

customer claims to be nontaxable, what proof does the law require?

If the customer is never subject to tax (such as the U.S. government; the state of Ohio; a

city, county or other political subdivision of this state), a copy of the sales invoice is all

that is needed, provided that the name and address of the customer are clearly identified.

(Note: Leasing to an exempt organization does not entitle the owner of a building to claim

exemption from tax.)

If the customer is claiming that the use of the service is not subject to tax (see example)

or that it is a nonprofit charitable organization or a qualifying state veterans’ organization

headquarters, obtain a fully-completed exemption certificate from the customer and

keep it in your files. If the customer claims to hold a direct payment permit with Ohio, the

customer must furnish evidence of the permit. (A direct payment permit number is always

98 + six digits.)

Example: Retailer A sells and cleans carpeting. Rather than use its own employees to clean

carpeting, it subcontracts the cleaning service to company B. Since A is considered to be

the retail seller, it is responsible for collecting tax from its customers on both types of

sales. B is selling its service to A and does not charge A tax, if B obtains from A a fully-

completed exemption certificate (claiming “sale for resale” as a reason.) For more

information regarding exemption certificates please refer to R.C. 5739.03 and Ohio

Admin. Code 5703-9-03.

13. What are my responsibilities if the consumer refuses to pay tax?

As a provider of a taxable service, you are responsible for charging, collecting and

remitting the tax. If the purchaser of your service is not exempt, you may pursue

collection as you would any unpaid debt. R.C. 5739.26 reads, “No consumer shall refuse

to pay the full and exact tax as required by ...[Chapter 5739.], or refuse to comply with

such sections and the rules and regulations of the tax commissioner, or present to the

vendor a false certificate indicating that the sale is not subject to tax.” See also R.C.

5741.19.

14. If my company is hired by a construction contractor to clean a building, am I

providing a building maintenance and janitorial service and, if so, who must pay the

tax?

Yes. You are providing a building maintenance and janitorial service and the construction

contractor is the consumer of the service provided. You must charge the tax and the

contractor must pay the tax based on the total price of the service you provide.

To determine if the cleaning service you are performing is a taxable building maintenance

and janitorial service ask the following questions:

1. Am I cleaning tangible personal property that is located inside a building? or

2. Am I cleaning the interior or exterior of the building itself?

If the answer to either question is yes, you are performing a taxable building maintenance

and janitorial service.

Please note that taxable building maintenance and janitorial services includes services

one may typically consider to be industrial cleaning, such as removing the excess mortar

from brick and cleaning grease or sludge from pits or traps located inside a building.

15. As a heating and air conditioning company, we perform many yearly “clean and

check” multi-point tune-ups on residential and commercial building systems. These

service calls involve adjustments, calibrations, lubrication, efficiency tests, checking for

leaks, and cleaning of components when necessary. Since this service includes cleaning

are the tune-ups subject to the tax?

No. The service provided is more than mere cleaning of the systems. The cleaning is

incidental to the overall scope of the service provided. However, if a vendor makes a

service call for the sole purpose of cleaning a system (e.g. ductwork cleaning), the sale

would be taxable.

16. What types of establishments are described in 21 U.S.C. §608?

21 U.S.C. §608 applies to facilities that perform slaughtering, meat canning, salting,

packing, rendering, or similar establishments in which animals are slaughtered and the

resulting food products are sold for commercial purposes. This section does not apply to

retail establishments such as meat markets, grocery stores, or restaurants conducting

ordinary retail activities.

17. What sanitation services are necessary for an establishment described in 21 U.S.C.

608 to comply with rules and regulations adopted pursuant to that section?

Those cleaning services that are required by the regulations established by the Secretary

of Agriculture of the United States that address the cleaning of food contact services of

facilities, equipment, and utensils are eligible for the exclusion. Additionally, other

cleaning may fall under the exclusion if it is found to be necessary to remedy a violation

issued by the United States Department of Agriculture.

Caution: The actual services performed determine whether or not tax must be charged. The tax

cannot be avoided by merely calling the service something other than the work that is actually

performed. The Department suggests that the records of service providers be sufficiently clear

to reflect the actual work done to avoid problems in the event of a sales or use tax audit.

If you have additional questions, contact Taxpayer Services at 1-888-405-4039, or e-mail us

through our website at tax.ohio.gov.

OHIO RELAY SERVICES FOR THE HEARING OR SPEECH IMPAIRED Telephone: 1-800-750-0750